The Pigeon Movement – A rallying cry for French startups(rudebaguette.com)
rudebaguette.com
The Pigeon Movement – A rallying cry for French startups
http://www.rudebaguette.com/2012/10/01/the-pigeon-movement-frances-last-hope-for-startups/
22 comments
The thing that people are missing here is that complaining about this is not even anti-left. Current French civil servant's pensions (the govt. accounts for the majority of the French economy at 55% GDP) are worth more than a million euros and employees pay tax on this at 7% (average retirement under age of 60 on 75% of your maximum salary) http://en.wikipedia.org/wiki/French_special_retirement_plan
So in other words, a person who takes a 'blue collar' job gets to be a guaranteed millionaire paying 7% tax whereas an entrepreneur taking the risk of making nothing will pay 60% tax if he makes the same as a civil servant's pension.
If people don't point this out it makes French people think that not giving back tax is some kind of capitalist arrogance, when in fact the socialists pay a tenth of what the capitalists do.
So in other words, a person who takes a 'blue collar' job gets to be a guaranteed millionaire paying 7% tax whereas an entrepreneur taking the risk of making nothing will pay 60% tax if he makes the same as a civil servant's pension.
If people don't point this out it makes French people think that not giving back tax is some kind of capitalist arrogance, when in fact the socialists pay a tenth of what the capitalists do.
This article does not mention CIR. When you factor-in CIR the French tax environment becomes extremely favorable for entrepreneurs, at least those who hire developers.
I find it funny that the underlying assumption in all the arguments against the 60% exit rate is that VC funding is the only way technology is funded.
Maybe the French as a society should figure out how to fund technology in a different way.
It appears to me that Silicon Valley, which is supposed to be innovative, is really only producing one kind of technology. Even in the USA, technology used to be funded primarily in other ways. At some point the US government decided to give all the technology funded by the public away to private interests.
Notice that we went from distributed systems like email, IRC, etc to centralized systems like facebook, twitter.
This is no accident and it is because the funding system changed.
Maybe the French as a society should figure out how to fund technology in a different way.
It appears to me that Silicon Valley, which is supposed to be innovative, is really only producing one kind of technology. Even in the USA, technology used to be funded primarily in other ways. At some point the US government decided to give all the technology funded by the public away to private interests.
Notice that we went from distributed systems like email, IRC, etc to centralized systems like facebook, twitter.
This is no accident and it is because the funding system changed.
[deleted]
For the Frenchies reading this, if you feel like it would be a good thing for us to show our faces and that we're just regular people trying to build something, maybe we should just talk a few minutes on youtube and send it to people we know to raise awareness. Here's my attempt (in french, sorry): https://www.youtube.com/watch?v=zvMxlTavMVU
France is dead... they just don't know it yet.
You can follow the movement with the hashtag #geonpi alongside the handle @DefensePigeons.
To put the 43% approval rating in even more context - Julia Gillard's (PM of Australia) rating hit 28% last year -- http://www.essentialmedia.com.au/tag/approval-of-julia-gilla...
43% does not seem all that low.
43% does not seem all that low.
It is somewhat low for a government that should still be in its honeymoon period. They were only let into office this May.
Timed out, no Google cache (yet). Anyone got a summary?
Guy whines because high taxes on exit.
I made a copy of the article on Framapad in case it happens again:
https://framapad.org/yiHBXpdYN6
Regarding the soundbite in the article on the 60% tax rate: I find it extremely misleading, bordering on bad faith.
1. The baseline is not the money made selling, but the capital _gain_, that is income, not revenue.
2. Keeping those 15% social charges into account negates the fact that those will accrue your retirement, invalidity, unemployment, what-have-you fund
3. France has a 35 hour workweek. Companies who ask their employees to work longer than that without compensating them in extra days of holiday are breaking the law. So much for the quoted 70 hour workweek.
4. The 10 years of uncertainty are not so uncertain in a country with such a strong welfare state: in case of failure you would have several months of unemployment checks which have a very high cap (as demonstrated by a recent scandal with soccer players).
1. The baseline is not the money made selling, but the capital _gain_, that is income, not revenue.
2. Keeping those 15% social charges into account negates the fact that those will accrue your retirement, invalidity, unemployment, what-have-you fund
3. France has a 35 hour workweek. Companies who ask their employees to work longer than that without compensating them in extra days of holiday are breaking the law. So much for the quoted 70 hour workweek.
4. The 10 years of uncertainty are not so uncertain in a country with such a strong welfare state: in case of failure you would have several months of unemployment checks which have a very high cap (as demonstrated by a recent scandal with soccer players).
In response to the social taxes, all taxes are like this; they end up in a pool that (hopefully) provides services to the taxpayers.
In the case of significant capital gains, the taxpayer is unlikely to be a welfare recipient, and is paying into the system without benefit.
I have no problem with this; it's the nature of taxation. But lumping it in with general taxation is not misleading at all.
If it were a superannuation scheme, and you got the money back when you retired, you might have a point - but it's not.
In the case of significant capital gains, the taxpayer is unlikely to be a welfare recipient, and is paying into the system without benefit.
I have no problem with this; it's the nature of taxation. But lumping it in with general taxation is not misleading at all.
If it were a superannuation scheme, and you got the money back when you retired, you might have a point - but it's not.
I don't agree. Taxes are not the same thing as social charges, here's why.
If you make 250k a year, you pay a lot in social charges, but not as much in percentage (usually retirement charges are regressive) and in exchange you get unemployment checks and retirement that are proportional to how much you've put in. In short you get back what you've put in.
On the other hand income taxes are usually progressive (the richer you are the larger the percentage you pay) and richer people benefit less from them, in that they go to finance public transportation, education and hospital which rich people tend to use as much if not less than commoners.
If you make 250k a year, you pay a lot in social charges, but not as much in percentage (usually retirement charges are regressive) and in exchange you get unemployment checks and retirement that are proportional to how much you've put in. In short you get back what you've put in.
On the other hand income taxes are usually progressive (the richer you are the larger the percentage you pay) and richer people benefit less from them, in that they go to finance public transportation, education and hospital which rich people tend to use as much if not less than commoners.
Except your lifetime worth of contributions is one policy shift away from becoming worthless. Unlike a superannuation scheme, paying into it now guarantees you nothing in the future.
Nobody making moderate capital gains would pay these charges voluntarily, in exchange for benefits it gives them. Thus it makes complete sense to lump it in with the other capital gains taxes when discussing incentives.
From Wikipedia:
"The mandatory state pension is an unfunded contributory penison based on redistribution of contributions from those working to those in retirement. The scheme aims to provide up to a maximum of 50% of the retirees highest earning years up to a limit of 35,000€ annually (in 2010)."
Nobody making moderate capital gains would pay these charges voluntarily, in exchange for benefits it gives them. Thus it makes complete sense to lump it in with the other capital gains taxes when discussing incentives.
From Wikipedia:
"The mandatory state pension is an unfunded contributory penison based on redistribution of contributions from those working to those in retirement. The scheme aims to provide up to a maximum of 50% of the retirees highest earning years up to a limit of 35,000€ annually (in 2010)."
> Nobody making moderate capital gains would pay these charges voluntarily, in exchange for benefits it gives them.
Almost nobody who pays taxes would pay them voluntarily, especially the rich who get no benefits from paying them. Yet we force them to, it's the redistributive nature of taxes.
Almost nobody who pays taxes would pay them voluntarily, especially the rich who get no benefits from paying them. Yet we force them to, it's the redistributive nature of taxes.
Phew - some "straw men" there don't you think?
It is the entrepreneurs who do the 70 hour weeks (no 35 hour limits for the boss/owner).
Start a company with €100 and grow it to be worth €500,000 on exit - that is an almost total capital gain (if you get to put something in a pension fund at the same time then you would be very lucky).
And all the while paying the very high social charges that accrue in France
It is the entrepreneurs who do the 70 hour weeks (no 35 hour limits for the boss/owner).
Start a company with €100 and grow it to be worth €500,000 on exit - that is an almost total capital gain (if you get to put something in a pension fund at the same time then you would be very lucky).
And all the while paying the very high social charges that accrue in France
Well you don't need to put money in a pension fund if you pay social charges.
Wrong: the state funds/agencies themselves recommend and propose extra (non obligatory) pension funds on top of obligatory social charges because, as they warn every French working, return on social charges is forecasted to steadily decreases over the years. (Aging population: less people working to pay for more retirees)
It says "60% Capital Gains tax - the real innovation killer" in a big bold font. We're talking about startups in France here. You can be in 3 other (more tax-friendly) country's in a few hours drive.
Also founders are not employees. You can easily work 70 hours (and still fail, that's why people looking to sell their company will hate the 60% capital gains tax).
And again: As founders are not employees they do not receive the same benefits when they fail / get sick / whatnot.
Yes they do if they pay their social charges.
Wrong. eg. If company fails, employees get several month salaries from the State (ok) but founder (ownership >50%) while he paid social charges will receive 0. You'd have to get your own (expensive) private insurance if the biz does not work out to get something back.
This sounds more like how it would be (and how it is in the Netherlands).
Ah, I stand corrected. So as a founder in France you can receive money from the government when you're sick or if your business tanks? (Most start ups do). Didn't know that. In most other European country's you need to arrange your own thing (via an insurance).
The 35 hour workweek is not as simple as "only working 35 hours". It is the case for blue-collar workers (ouvriers) but things are less rigid for white-collar workers and management (cadres).
"Ouvriers" are paid by the hour and "Cadres" per day. All engineers working in IT should have a "cadre" contract, so they do not really count their hours.
Boss or staff, in the French startups with whom I did have the pleasure to work, the 35 hours are far away from the really worked hours.
"Ouvriers" are paid by the hour and "Cadres" per day. All engineers working in IT should have a "cadre" contract, so they do not really count their hours.
Boss or staff, in the French startups with whom I did have the pleasure to work, the 35 hours are far away from the really worked hours.
I know engineers who get up to 8 weeks of paid holiday because they accrue JRTT (days of reduction of work time) when they work overtime.
Regarding your points 3 and 4, he is talking about founders, not regular employees.
Here's the Mailchimp-version of the article, if the site is down.
http://us5.campaign-archive1.com/?u=a2b057f584a796c058282094...
http://us5.campaign-archive1.com/?u=a2b057f584a796c058282094...
Thanks!
I not so sure that mixing business and politics is such a good idea and I'm having somewhat of a hard time concluding what it is exactly that they want. Times when things get thrown up in the air is generally a good for my "kind" of entrepreneur, because even the established players have to work to stay relevant.
We think considering the risks we take as founders, being taxed 32.5% (the current rate) is already quite enough. But more to the point, investors who make do with this kind of taxes on their return will never accept an increase to 60% and will by and large invest somewhere else, effectively killing off funding for startups in France. That's the whole ecosystem we're trying to protect here.
Maybe VC funding is not the best way to fund technology.. just throwing that out there. Maybe France should figure out a different way to fund technology than VC.
If France cannot figure out an alternative, I would say that killing existing funding is bad...
If France cannot figure out an alternative, I would say that killing existing funding is bad...
there is a solution for French entrepreneurs (particularly in the context of software and services) - move across the channel to the UK and run your business from there. Easy to pop home for the weekends and there is already a very large French working community.
French entrepreneurs are upset because they can't get as rich in an exit as they would like, so they protest? And you want the rest of the country to support you in this? Okaaaaay.... This is the sort of greedy childishness that we could do without in the tech business world. If you're in it for hacking cool shit, you're not going to spend this much time thinking about your exit. This is similar to people protesting the tax rate on lottery winnings -- absurd.
Go back to work, stop whining.
Go back to work, stop whining.
Greedy childiness? We sweat our asses off trying to build a business and overnight we're being told that in the rare case we do get an exit, it'll be taxed at 60% as opposed to 30%. How is that either greed or childiness? Do you even know what the live of a founder with little funding and no personal income can be like?
And of course we love what we do, but bills don't pay themselves. And maybe one day I want to have a family and a better income to support it, as opposed to not paying myself for over a year now (goodbye savings from 5 years of working before that), year during which I did pay my team btw.
We're not whining. We're fighting this.
And of course we love what we do, but bills don't pay themselves. And maybe one day I want to have a family and a better income to support it, as opposed to not paying myself for over a year now (goodbye savings from 5 years of working before that), year during which I did pay my team btw.
We're not whining. We're fighting this.
(Trolling here but) perhaps president Hollande can take an example from another famous president and claim " If you’ve got a business. you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet".
Or go to Belgium just next door where there is no capital gains tax on exits at all.
Ah, so there's the taboo against wanting to be rich babarock was referring to. As a francophile european, I am grateful for your volunteering to be poor so my vacations will be cheaper. Keep up the good work!
Not fixing the deficit is surly a superior way to "volunteering to be poor".
It was mainly in reference to the attitude (how DARE you want to make money?). Step number one in creating growth is to stop casting suspicion on the ambition and successful - and France is not alone in being bad at this, most of "old" Europe is.
But anyway, thinking you can fix the deficit by doubling your already high capital gains taxation while your neighbor Belgium, which whom you have open borders and share a language, have a 0% rate is ... naive, at best. Same naivety covers the 75% income tax rate, which is attempted applied to the single most mobile class of people ever to walk this earth.
But anyway, thinking you can fix the deficit by doubling your already high capital gains taxation while your neighbor Belgium, which whom you have open borders and share a language, have a 0% rate is ... naive, at best. Same naivety covers the 75% income tax rate, which is attempted applied to the single most mobile class of people ever to walk this earth.
Who do you think provides jobs and economic growth? Your government or new businesses?
On the other hand, who paid for the education of your employees ? Who pays when they go to a hospital ? Who built the roads they use to get to work ? Who is going to give them money when they get old ? Who pays the policemen who protect your office from robberies...
I see you. You think government paid for all those things. Let me correct your view: You and I pay for all those things (through government which takes it's own cut out of everything).
yes, and if you pay less taxes, then it won't be able to pay for it, and if a government can't pay education, then there's less employees competent enough for your start-up.
Same goes for a lot of thing the government pays. And government is the only one who is (realistically) able to pay for it.
We're not talking about paying less taxes. We're talking about the more and more taxes to pay for a government that is -in essence- broke. Hollande basically promised everybody everything and is now facing reality. Like they say: "You can deny reality, but you can not deny the consequences of denying reality".
Let's face it, there's not an infinite number of unnecessary spending, at some point you have to be close to a balanced budget and even though I think taxing entrepreneurs too much is a bad idea, they aren't starving and I think asking for a little solidarity isn't too much to ask.
You probably don't want to pay for "those lazy public sector employees" (and if you do, forget this sentence) but it's just a front for selfishness.
You probably don't want to pay for "those lazy public sector employees" (and if you do, forget this sentence) but it's just a front for selfishness.
"Asking for a little solidarity" is in my opinion not the point. You know, entrepreneurs are a resourceful bunch. Every society needs people that are willing to take risks. Hollande is acting like he's on an island. I can tell you right now his actions are causing reactions. Startups that won't happen in France/ Paris but in Berlin, Brussels, Amsterdam, London... All are just a few hours away.
By the way, you make it sound as if being selfish is a bad thing ;-)
By the way, you make it sound as if being selfish is a bad thing ;-)
Then what are they complaining about ? If you don't care about France, just leave
They are it's not something to rejoice about...
"“Seen from abroad, France is the last country where an entrepreneur wants to go,” Marc Simoncini, the founder of French dating site Meetic. com, said in an interview on BFM TV last week.
“I don’t know of any British person who’s come to set up a business in France. But I know plenty of young French people who’ve gone to London to do that.”" http://business.financialpost.com/2012/05/14/french-entrepre...
“I don’t know of any British person who’s come to set up a business in France. But I know plenty of young French people who’ve gone to London to do that.”" http://business.financialpost.com/2012/05/14/french-entrepre...
We can all agree that France isn't entrepreneur friendly but it's easy to say "don't tax us" and it's a lot harder to find places where money can be saved.
Right now if you want to tax the high middle class and higher (that includes entrepreneurs who can leave France), they threaten to leave, I don't see how starting negotiations by making threats is a good thing.
Right now if you want to tax the high middle class and higher (that includes entrepreneurs who can leave France), they threaten to leave, I don't see how starting negotiations by making threats is a good thing.
I would suggest not looking at the people and raise their taxes, but instead look at government itself and see how they can spend less. (Not talking about cutting benefits but the size of government itself and everything regarding it's operations).
Funny, the US should be the worse place for startups then since the government doesn't pay for people to go to universities there.
Notice many people working at tech startup in silicon valley are either A) Rich already and went to Ivy League or could afford a good university education, or 2) Foreigners who got their education elsewhere.
Well, before the student loan craze it was not difficult to find an affordable university in the US.
Certainly not Ivy League, but not bad.
E.g.: http://usatoday30.usatoday.com/news/education/2004-09-08-tui...
Today an Ivy League tuition year will set you back around 40k (possibly more) http://colleges.usnews.rankingsandreviews.com/best-colleges/...
Certainly not Ivy League, but not bad.
E.g.: http://usatoday30.usatoday.com/news/education/2004-09-08-tui...
Today an Ivy League tuition year will set you back around 40k (possibly more) http://colleges.usnews.rankingsandreviews.com/best-colleges/...
They still pay until high school.
When you get a chance, go find a copy of your national budget and find out how much of it goes towards education, health and infrastructure. Then stop using that argument.
http://voila-le-travail.data-projet.com/budget2012 in proportion, I think the budget is fine, more than 1/4th goes to education (if you include universities)
Wow, that's a great visualisation!
Total: 676,625 millions (hover on the top bar, I can tell what the 366 bln in the headline refers to?).
Schools: 62,330 mln = 9.21%
Higher ed+research: 25,439 mln = 3.76%
Transport: 4,307 mln = 0.64%
Health: 1,379 mln = 0.2%
For a grand total of 13.81%. I'm not sure how you get to 1/4 going to education?
Total: 676,625 millions (hover on the top bar, I can tell what the 366 bln in the headline refers to?).
Schools: 62,330 mln = 9.21%
Higher ed+research: 25,439 mln = 3.76%
Transport: 4,307 mln = 0.64%
Health: 1,379 mln = 0.2%
For a grand total of 13.81%. I'm not sure how you get to 1/4 going to education?
There's an error with the 676,625 millions I think, the correct total is 366,000 millions
If you look at this one from 2011 : http://www.performance-publique.budget.gouv.fr/fileadmin/med...
you can see that 23.6% went to education in 2011
If you look at this one from 2011 : http://www.performance-publique.budget.gouv.fr/fileadmin/med...
you can see that 23.6% went to education in 2011
OK. Not being fluent in French, and not knowing the vocabulary used in France, I can't evaluate these and find other sources. But, for one thing, however, the pie chart doesn't seem to include debt payments. Also, a proper comparison would include the regions.
The 12.7% is debt payment, regions are in charge of secondary education and transportation mainly
I agree.
Please stop whining :)
Please stop whining :)
This also means that there is an opportunity for US buyers (or others) to grab high-quality French startups as founders might be willing to settle for less.
Selling their company twice the price in a few months will give them the same return!
Selling their company twice the price in a few months will give them the same return!
I used to live in France and work in technology. To be honest increasing capital gains tax to 60% is not that significant. The entire structure of taxation and social charges and the rights of employees means that French entrepreneurs should simply abandon their country if they want to build a startup as might be seen in the US or UK.
Between the inability to fire people who aren't working out, to the huge amount of time off people can claim (on top of their vacation) because of all sorts of rights, to the 35 hour employee work week, to the amount of tax and social charges the employer contributes, France is unsuitable for startups. Various governments have talked about different incentives for small companies, but the on the ground situation has not really changed.
I have a good friend who runs a small company in France making medical devices. The litany of employee problems that he has to face because he cannot fire people is a nightmare and then there's the taxation. The reality is that he is working to transfer the company's IP away from France and then leave. At that point France starts getting 0 EUR in revenue from him and his firm.
Now, in case you think I 'hate France', here's the thing: I think it's a wonderful country to live in, but it is not suited to startups.
Between the inability to fire people who aren't working out, to the huge amount of time off people can claim (on top of their vacation) because of all sorts of rights, to the 35 hour employee work week, to the amount of tax and social charges the employer contributes, France is unsuitable for startups. Various governments have talked about different incentives for small companies, but the on the ground situation has not really changed.
I have a good friend who runs a small company in France making medical devices. The litany of employee problems that he has to face because he cannot fire people is a nightmare and then there's the taxation. The reality is that he is working to transfer the company's IP away from France and then leave. At that point France starts getting 0 EUR in revenue from him and his firm.
Now, in case you think I 'hate France', here's the thing: I think it's a wonderful country to live in, but it is not suited to startups.
I live in France, I work in the IT sector. I can completely agree with what you say.
From my point of view here are the biggest problems entrepreneurs have to face here:
- French labor law gives much more power to the employee over the business owner. 35 hours weeks may not be applicable for IT employees, but there are high compensations. Where I work, a 50 hour week is considered "way too much". We get 35 days of paid vacation per year, my manager gets 50, I'm not even counting the myriad of public holidays. Everything from parenting leaves, to medical leaves can last weeks and cost a ton to the employwer. Did I mention that once the "trial" period (usually 3 months renewable once) is over, there are no cheap ways to fire an employee unless she screws up big time? This may all seem nice and righteous, but it's not very motivating to start your own company.
- Taxes are so high it's not even funny. For every euro I earn, my employer has to pay a euro in social charges, and this isn't counting the exhorbitant taxes you pay on top of it. It's true that startups do get a grace period of 3 years, but from experience (and talking to other entrepreneurs), this is barely enough. The sickest part is that there's a market developed here where expert accountants teach young entrepreneurs how to "game" the system to minimize "tax-damage". I was shocked when I first discovered this. Until I found out how high taxes are.
- Finally, and this one is the most powerful and less obvious one, there's a strong social taboo in France about being rich or even wanting to be. One thing that drives most startups I've encountered, is the drive to become insanely rich. In the US, or at least that's the impression I got there, there's no shame related to wealth. In France it is completely different. Having money, or desiring it, is bad. The rich are the "enemy" (look at recent taxation laws by our government) and the rest of us would be content with very little. Of course this is a bad generalization, but this point of view is prevalent. And this is why, I believe, the proper environment for startups is not a priority for most French people out there.
From my point of view here are the biggest problems entrepreneurs have to face here:
- French labor law gives much more power to the employee over the business owner. 35 hours weeks may not be applicable for IT employees, but there are high compensations. Where I work, a 50 hour week is considered "way too much". We get 35 days of paid vacation per year, my manager gets 50, I'm not even counting the myriad of public holidays. Everything from parenting leaves, to medical leaves can last weeks and cost a ton to the employwer. Did I mention that once the "trial" period (usually 3 months renewable once) is over, there are no cheap ways to fire an employee unless she screws up big time? This may all seem nice and righteous, but it's not very motivating to start your own company.
- Taxes are so high it's not even funny. For every euro I earn, my employer has to pay a euro in social charges, and this isn't counting the exhorbitant taxes you pay on top of it. It's true that startups do get a grace period of 3 years, but from experience (and talking to other entrepreneurs), this is barely enough. The sickest part is that there's a market developed here where expert accountants teach young entrepreneurs how to "game" the system to minimize "tax-damage". I was shocked when I first discovered this. Until I found out how high taxes are.
- Finally, and this one is the most powerful and less obvious one, there's a strong social taboo in France about being rich or even wanting to be. One thing that drives most startups I've encountered, is the drive to become insanely rich. In the US, or at least that's the impression I got there, there's no shame related to wealth. In France it is completely different. Having money, or desiring it, is bad. The rich are the "enemy" (look at recent taxation laws by our government) and the rest of us would be content with very little. Of course this is a bad generalization, but this point of view is prevalent. And this is why, I believe, the proper environment for startups is not a priority for most French people out there.
the "wanting to be rich" thing is frankly a cliche. Lots of people like money in France as much as everywhere else, and I don't see much difference between France and UK. It is certainly more prevalent in the US, but I would say the US are the exception. And if you want money, I am not sure startup is the likely way of doing it. Certainly, for people with the right diploma, working in the finance sector is much more rewarding financially speaking.
Regarding the taxes, I will say what I always say: yes they are higher than in the UK, but you get more. So you need to compare what you're getting, otherwise the comparison is meaningless. I am working in the UK, where I paid around 35 % of taxes, so quite lower than France, where it would be closer to 50-55 % I think for my salary. But then, I get shitty health care and essentially no pension. And if I have kids, I will have to pay a lots of money to get them a decent school. I would love paying 15-20 points more taxes in exchange for that in the UK.
IMO, the main issue in France is more the education system and how the incentives are highly biased toward going to a big company. The whole society is highly biased against failure, and the only path to a 'career' is through 'soft' areas. I am just over 30 and my parents don't understand why I am still doing engineering instead of 'managing' people, for example. This is the main reason why I have been leaving outside France for the last 8 years or so, not taxes.
Regarding the taxes, I will say what I always say: yes they are higher than in the UK, but you get more. So you need to compare what you're getting, otherwise the comparison is meaningless. I am working in the UK, where I paid around 35 % of taxes, so quite lower than France, where it would be closer to 50-55 % I think for my salary. But then, I get shitty health care and essentially no pension. And if I have kids, I will have to pay a lots of money to get them a decent school. I would love paying 15-20 points more taxes in exchange for that in the UK.
IMO, the main issue in France is more the education system and how the incentives are highly biased toward going to a big company. The whole society is highly biased against failure, and the only path to a 'career' is through 'soft' areas. I am just over 30 and my parents don't understand why I am still doing engineering instead of 'managing' people, for example. This is the main reason why I have been leaving outside France for the last 8 years or so, not taxes.
I agree with what you say, but it doesn't really contradict what I'm saying:
- the "wanting to be rich" is a bit of a cliche, but it's still a major social taboo. As a foreigner who came to France, that was a major culture shock. True, people want to be rich, but politicians don't say it out loud. From what I see, much more efforts are put into helping poor people become middle class, than helping middle class become rich.
- I agree with you on the taxes thing. After all, I'm living here by my own will and I like these social securities. Nevertheless, while it may work out well on the personal level, it doesn't encourage people to start companies. It's great that my kids' schooling is afforded by the government, but these high corporate taxes are still heavy on entrepreneurs.
- I completely agree with the bias towards being a manager at a big company. Point in case, I work for a major investment bank. It's also true that failure is not easily accepted here. I know relatively few entrepreneurs (I'd say less than 5% of my graduating class 2 years ago) and those who "failed" (whatever that means) are having a hard time going back to the "regular" corporate path.
- the "wanting to be rich" is a bit of a cliche, but it's still a major social taboo. As a foreigner who came to France, that was a major culture shock. True, people want to be rich, but politicians don't say it out loud. From what I see, much more efforts are put into helping poor people become middle class, than helping middle class become rich.
- I agree with you on the taxes thing. After all, I'm living here by my own will and I like these social securities. Nevertheless, while it may work out well on the personal level, it doesn't encourage people to start companies. It's great that my kids' schooling is afforded by the government, but these high corporate taxes are still heavy on entrepreneurs.
- I completely agree with the bias towards being a manager at a big company. Point in case, I work for a major investment bank. It's also true that failure is not easily accepted here. I know relatively few entrepreneurs (I'd say less than 5% of my graduating class 2 years ago) and those who "failed" (whatever that means) are having a hard time going back to the "regular" corporate path.
> From what I see, much more efforts are put into helping poor people become middle class, than helping middle class become rich.
I really don't see the problem with that.
I really don't see the problem with that.
And who says it's a problem? I only say it's, in my opinion, a subtle obstacle to developing a truely startup-friendly environment.
Is society better off that way? probably. I actually like it here. But it's also probably one of the reasons why HN spent all morning debating the state of startup-land in France.
Is society better off that way? probably. I actually like it here. But it's also probably one of the reasons why HN spent all morning debating the state of startup-land in France.
Certainly, yes, services provided need to be compared along with the tax rate to get a fair comparison - but the idea that you get your taxes back is a red herring. There is a clear element of redistribution built in, there will always be some people who put in more than they use and some people who get out more than they put in - otherwise you could just let people buy these services for themselves.
Yes, of course, there is some redistribution going on. But that's not the main explanation of the difference between say UK and France taxes. If you remove pension funding alone, you get very close between UK and France, I believe, although I have not checked the numbers (it would cost me around 17 % of my pre-income tax to contribute to the French pension system, so I am basing my calculation only my case alone with all the associated caveats).
As for letting people buy those services, this becomes more dependent of what you believe: I don't think it is that clear cut that there is no net benefit of having everyone getting the same basic health care in terms of costs, etc... A lots of what is costly in France is closer to insurance than anything else. Buying an insurance against disability is so expensive in the UK that nobody does it (which is why it is expensive in the first place). Since everybody has to do it in France, the system becomes much more viable since the pooling is very large.
As for letting people buy those services, this becomes more dependent of what you believe: I don't think it is that clear cut that there is no net benefit of having everyone getting the same basic health care in terms of costs, etc... A lots of what is costly in France is closer to insurance than anything else. Buying an insurance against disability is so expensive in the UK that nobody does it (which is why it is expensive in the first place). Since everybody has to do it in France, the system becomes much more viable since the pooling is very large.
The difference between UK and French pension payments is that in the UK you actually own your contributions, in France you merely hope that a future politician won't decide that you're too rich to get a state pension ("means-tested benefits" is fancy word this in the UK). In Denmark it's a national sport for politicians to figure out just how many pensioners/soon-to-be-pensioners you can afford to piss off in a given election cycle and adjust various limits accordingly.
This is only a superficial difference. On a relatively big economy like France, the difference between state-based pension and capital-based ones are very minor: in both cases, you're hoping that people who work when you retire will be able to pay for your retirement. Private funds in UK are severely underfunded by the way (although I can't find a reference on the exact number, which is supposed to be around 250 billions pounds), in the same that state-based systems are underfunded.
The main factor for retirement is the 'working people'/retired people ratio (ration de dependence in French, not sure about the proper English translation), much more than how it is funded.
Governments can easily change tax benefits/incentives on those funds, so the taxation aspect is not that different either.
The main factor for retirement is the 'working people'/retired people ratio (ration de dependence in French, not sure about the proper English translation), much more than how it is funded.
Governments can easily change tax benefits/incentives on those funds, so the taxation aspect is not that different either.
A private savings account can't become underfunded. It may no be enough to comfortably retire on, but that's a different kettle of fish.
Regarding the underfunding number, I believe these are private defined benefit schemes - I'm talking about regular savings-schemes. Also, see my response to mercurial.
Regarding the underfunding number, I believe these are private defined benefit schemes - I'm talking about regular savings-schemes. Also, see my response to mercurial.
I think the situation in the UK is only superficially different. Does anything prevent the government from increasing taxes on private pensions?
I think there is a substantial difference in the political tactics required, mostly founded in the awareness of those affected. It's easy to promise that the lowering of pensions is temporary until the crisis passes, while once you've taxed somebody's savings (rather than properly borrowing them, which is very common - pension funds are enormous holders of public debt), there's no cover to pretend you'll give it back.
EDIT: Also, public pension schemes can be allowed to become progressively underfunded to the point where it's impossible to fix and the responsible officials have long since retired. No so with private savings.
EDIT: Also, public pension schemes can be allowed to become progressively underfunded to the point where it's impossible to fix and the responsible officials have long since retired. No so with private savings.
Interesting, but what I don't understand is why businesses aren't adapting and working around this sort of issues.
Look at Canada - you can't discriminate based on gender, age or race, but you can hire beautiful young girls as models that also happen to wait tables in Cactus Club and Earls. If full-timers are such a pain to deal with in France, why not hire more contractors? In fact, why not skip full-timers altogether. Seems perfectly doable, especially in startups context, no?
Look at Canada - you can't discriminate based on gender, age or race, but you can hire beautiful young girls as models that also happen to wait tables in Cactus Club and Earls. If full-timers are such a pain to deal with in France, why not hire more contractors? In fact, why not skip full-timers altogether. Seems perfectly doable, especially in startups context, no?
Sure it's totally doable. But contractors have the drawback to be able to leave very quickly on the other side full-timers once their trial period ended (up to 3 month renewable, so 6 month) have a 3 month period before quiting.
French entrepreneurs can already have flexibility. They only want it to be one way.
French entrepreneurs can already have flexibility. They only want it to be one way.
It appears the rich are the enemy if what you say is correct. The rich want to pay people less, have them work more, and in the end they also want the system to help them do this.
How are the rich not the enemy here? Maybe VC funding and the startup culture is really not the best way to build technology, despite what Americans may have you believe.
How are the rich not the enemy here? Maybe VC funding and the startup culture is really not the best way to build technology, despite what Americans may have you believe.
Have you actually been to france? You most certainly can "fire people who aren't working out". The car companies put thousands of people on the streets when the economy tanked. France also tends to have long "probation" periods to ensure they can do exactly that: fire people who aren't working out. What you can't do in France as easily is screw people the way you can in places that aren't as interested in worker's rights (e.g. Zynga and the "google cook").
> to the 35 hour employee work week
Again, if you'd actually worked in France you'd know this doesn't apply to everyone. IT workers work long hours in France just like anywhere else. But it seems you also have a misconception about how human productivity works if you think 60 hours a week (you didn't say this, I'm just guessing based on your tone) will give you a more productive year than 35 or 40 hours.
> to the 35 hour employee work week
Again, if you'd actually worked in France you'd know this doesn't apply to everyone. IT workers work long hours in France just like anywhere else. But it seems you also have a misconception about how human productivity works if you think 60 hours a week (you didn't say this, I'm just guessing based on your tone) will give you a more productive year than 35 or 40 hours.
Did you actually read the first line of my comment?
"But it seems you also have a misconception about how human productivity works if you think 60 hours a week (you didn't say this, I'm just guessing based on your tone) will give you a more productive year than 35 or 40 hours."
No, I didn't say that and you shouldn't read that into what I was saying. I was specifically comparing the situation for startups that I've seen having worked in them in the UK, US and France.
And I am specifically NOT wishing to comment on the moral or political motivations for the work environment in those countries. Each country has developed its own history and culture which I do not seek to criticize. My original point was that I do not believe France is a good place for startups. That is all.
"But it seems you also have a misconception about how human productivity works if you think 60 hours a week (you didn't say this, I'm just guessing based on your tone) will give you a more productive year than 35 or 40 hours."
No, I didn't say that and you shouldn't read that into what I was saying. I was specifically comparing the situation for startups that I've seen having worked in them in the UK, US and France.
And I am specifically NOT wishing to comment on the moral or political motivations for the work environment in those countries. Each country has developed its own history and culture which I do not seek to criticize. My original point was that I do not believe France is a good place for startups. That is all.
>Did you actually read the first line of my comment?
The part where you claimed to have worked in france? I don't know you, so why should I take your word at face value when the rest of your comment seems to suggest that you actually haven't worked in france?
The part where you claimed to have worked in france? I don't know you, so why should I take your word at face value when the rest of your comment seems to suggest that you actually haven't worked in france?
It took me about 5 seconds to find John Graham-Cumming's bio:
http://blog.jgc.org/2010/03/my-bio.html
"As a programmer he has worked in Silicon Valley and New York, the UK, Germany and France and currently works at CloudFlare."
http://blog.jgc.org/2010/03/my-bio.html
"As a programmer he has worked in Silicon Valley and New York, the UK, Germany and France and currently works at CloudFlare."
You could do worse things with your day than learning who JGC is.
Hi, I run a business for a couple of years in France now and you're factually wrong and mixing things up.
There's a difference between a lay off for economical reasons by a big company (which can afford it) and a small company trying to get rid of an inappropriate person (extremely hard).
Even getting rid of someone during probation can be cancelled in trial and become very expensive.
I'm not saying employment at will is the solution, but the system we have in France doesn't work.
There's a difference between a lay off for economical reasons by a big company (which can afford it) and a small company trying to get rid of an inappropriate person (extremely hard).
Even getting rid of someone during probation can be cancelled in trial and become very expensive.
I'm not saying employment at will is the solution, but the system we have in France doesn't work.
Labour laws are one of the big issue in France, you're right. I would love for the current gvt to negociate the end of CDI, with a simpler way to fire bad people, in exchange for a much better unemployment insurance. I am not sure how the economics would work, but the current system where a large minority is working under shitty contracts because CDI is too expensive is a shame. That's a recurring desire from many economists both from the left and right in France.
"Much better unemployment insurance" => I don't follow you, there's already one of the most generous unemployment insurance of the world in France.
Well, for once, you need to give something back if you need to take something, that's basic negotiation tactics :) That's an approach largely defended by economists who are not especially on the left, like Wyplosz (see here if you can read French: http://econo.free.fr/index.php?option=com_content&task=v...).
Of course, given the current climate (austerity, etc...), that's not gonna happen any time soon.
Of course, given the current climate (austerity, etc...), that's not gonna happen any time soon.
The litany of employee problems that he has to face because he cannot fire people is a nightmare...
The workaround for that in France: don't hire people.
I worked for a French startup. The founder rented all his employees from a consulting agency that assumed the risks and costs of providing fulltime employment. The end result was something that resembled American at-will employment, but with a higher cost of labor.
The workaround for that in France: don't hire people.
I worked for a French startup. The founder rented all his employees from a consulting agency that assumed the risks and costs of providing fulltime employment. The end result was something that resembled American at-will employment, but with a higher cost of labor.
I rebut everything you just said with one article: http://www.rudebaguette.com/2012/02/07/six-lies/
No, you didn't. My major points were: high taxation and employee laws.
Your rebuttal on taxation is: "In addition, these high taxes are the same high taxes that allow entrepreneurs in France to live off of a 70% unemployment salary for 18 months after they are let go from their company. What goes around comes around."
And? That's fine, but that's not what a startup cares about. Sure, it's what a person cares about, but it does nothing to address my fundamental point about the tax/social charge burden. And your other point about there being an 18 month delay in the first tax return is pointless: the taxes still have to be paid.
On employee mobility, you say: "well, unless of course, you have a periode d’essai (“trial period”) written into the contract (which is the case ~100% of the time), which allows you to let go of an employee with little to no notice for the first three months. Oh, and you can also request to renew the trial period for an additional three months, legally – but you know, if you suddenly hate your employee after six months, well then, buddy, you’re S.O.L."
And? After 6 months you hit all the problems of an employee who is very, very hard to fire.
Your rebuttal on taxation is: "In addition, these high taxes are the same high taxes that allow entrepreneurs in France to live off of a 70% unemployment salary for 18 months after they are let go from their company. What goes around comes around."
And? That's fine, but that's not what a startup cares about. Sure, it's what a person cares about, but it does nothing to address my fundamental point about the tax/social charge burden. And your other point about there being an 18 month delay in the first tax return is pointless: the taxes still have to be paid.
On employee mobility, you say: "well, unless of course, you have a periode d’essai (“trial period”) written into the contract (which is the case ~100% of the time), which allows you to let go of an employee with little to no notice for the first three months. Oh, and you can also request to renew the trial period for an additional three months, legally – but you know, if you suddenly hate your employee after six months, well then, buddy, you’re S.O.L."
And? After 6 months you hit all the problems of an employee who is very, very hard to fire.
Wait, your rebuttal to "France is not a country where they really promote entrepreneurship" is that the French president gave a speech admitting that the country was risk averse and needed to become more entrepreneurial?
If that's the caliber of argument you're bringing to the table, I would soften your tone a bit.
If that's the caliber of argument you're bringing to the table, I would soften your tone a bit.
could you maybe summarize your refutations here?
What you say is right, but we also have advantages, like the quality of our engineers, etc. The point is, it might not be optimal but we can deal with it. This 60% exit tax, we won't be able to, and this is why I think it is significant.
"Funny" side-effect: "bootstrapped in France" may soon become a label of perennity, given the complete counter-incentive to take outside funding...
We may see less "Sparrow effects" now.
We may see less "Sparrow effects" now.
I don't know how it works in France, but in Denmark, we have a capital gains tax of ~50%. However, that only applies if you pull the cash out directly. You can do all sorts of things, such as moving the money into another company, which you then use to make investments from or pull it into a pension fund, both of which gives you a huge tax benefit. So I don't think that part is as prohibitive as it is made out to, although it certainly has some impact. The bigger problems are probably with labour law and general cultural issues.
We don't need more help, we already have a lot of it. We're one of the most generous country of the OECD in terms of help for R&D.
If you add more help, companies will stay in France as long as they can benefit them an relocate the minute they expire.
I already know, that in order to grow our company, I will have to relocate it in the forthcoming years.
The problem is cultural.
Big Companies don't work with small companies. The labor laws are extremely rigid and employees care more about vacations than getting things done. Failure will doom you forever. Taking risks is "bad". Everybody looks up the government for help instead of getting things done, and this call for action is another example "Please give us more money!".
We don't need more money, we need a cultural shift.
If you add more help, companies will stay in France as long as they can benefit them an relocate the minute they expire.
I already know, that in order to grow our company, I will have to relocate it in the forthcoming years.
The problem is cultural.
Big Companies don't work with small companies. The labor laws are extremely rigid and employees care more about vacations than getting things done. Failure will doom you forever. Taking risks is "bad". Everybody looks up the government for help instead of getting things done, and this call for action is another example "Please give us more money!".
We don't need more money, we need a cultural shift.
Like in "The Wire", problems are never simple and usually systemic.
France is rigid :
- renting is hard which makes moving and adjusting to varying earnings hard.
- banks are rigid : lots of companies need liquidity especially during the crisis and banks give them a hard time, lending to unnecessary bankruptcies.
- laws are rigid : labor laws tend to make bosses and employees assholes "fighting" each other. Finance laws prevent more capital coming in.
On the other hand, Health and natality rate are one of the better of the world and general quality of life remains very good.
France is rigid :
- renting is hard which makes moving and adjusting to varying earnings hard.
- banks are rigid : lots of companies need liquidity especially during the crisis and banks give them a hard time, lending to unnecessary bankruptcies.
- laws are rigid : labor laws tend to make bosses and employees assholes "fighting" each other. Finance laws prevent more capital coming in.
On the other hand, Health and natality rate are one of the better of the world and general quality of life remains very good.
I see several comments saying that welfare is worth this tax rate, that is a false dilemma. There are no shortage of countries in Europe with all the welfare you could wish for with a capital gains tax rate around 30%. And with the inner market there is no way for French authorities to stop companies from these countries from targeting the French market.
So, welcome to Sweden!
So, welcome to Sweden!
If welfare includes things like having somewhere to live and being able to get around I wouldn't exactly choose Sweden as the poster boy. If I were to start a more SV style startup I would move to Berlin like Soundcloud, Readmill, Researchgate, Twago, Wooga etc.
I'm trying to get the pigeon symbology. The article says it's essentially the French word for what would be called a "sucker" in the US, so the people who are using it are obviously calling themselves suckers. But is this a protest of the French tax situation (i.e. French society is for suckers), or is a statement in defiance of traditional capitalist attitudes toward this sort of thing (i.e. perhaps we ARE suckers, but we don't care; we're still doing what we were before)? I couldn't get a sense from the article.
Business owners abuse CDD contracts, effectively running full time employees on rolling short term contracts (making it easier to hire and fire). Lots of employees work beyond 35 hours a week, with any hours over the 35 limit paid cash in hand i.e. black. A lot of businesses that deal with cash (garages, repair men, small bed and breakfasts, florists etc.) regularly declare much less turnover than they should. Newsagents, butchers etc. usually use family members to help out and pay them in cash (because they need staff but can't afford the tax burden if they were to legitimately hire them).
It's not uncommon for pool installation or irrigation companies (i.e. the ones who fit sprinkler systems in your garden) to offer to quote a job in two parts in return for a discount on the overall job price. One part will be the official invoice and the second part is paid in cash.
Without bending the current tax and labour laws, most small businesses in France would simply cease to trade.