Steve Heckman
Aug 27, 2017 · 2 min read

That is not entirely true.

First, EU companies do not pay payroll taxes the same way as a US company pays. In Europe, the citizen pay income taxes (near 50%, approaching 70% in Denmark for high earners). They also have the VAT, which are similar to sales taxes but paid at every step “value” is added. Such taxes are the equivalent to a 25% sales tax. Ironically, corporate tax rates are lower than in the US, though they do lack the deductions that allow companies to have net 0% tax rates (but keep in mind that a company obtaining such rate had to jump through so many hoops to get them). Nevertheless, I’d prefer companies talent work on their core competencies rather than creative tax accounting.

Also, do not forget that the primary reason that US companies move the corporate HQ to the EU (often Ireland) or even Canada (as Burger King did) is their lower tax rate. Tax inversions was even a campaign issue.

Thus, though we claim the EU is more socialist than the US, they are still very much in favor of capitalism, and support their businesses quite actively. The reason is business provide job, and jobs create tax payers. One American who lives in Denmark wrote how the government hound unemployed to get jobs, and even puts a lot of effort in getting disabled people jobs. Again, to support their social net they need all hand on deck. Of course, that won’t fly here. I’m old enough to remember the 70’s-era “workfare” debates, in making people on welfare work for their benefits. It was shouted down as “slavery”, whereas I call working for money a “job”.

Also, keep in mind a US employer already pays about 50% of you paycheck in the form of taxes, health insurance and other bene fits (PTO, etc). One of the largest drawback of diversity in the US is everyone one of us has a different idea of how that money should be spent. The EU with its near lily white monocultures gets to avoid that debate.

Last, you mention that the high level of taxation would magically make it easier to start a business. I guess if your startup is one person (yourself) or a group of equal partners, perhaps so. The moment you hire someone you immediately have a serious cash-flow problem. Given in the US only 1 out of 5 business survive any length of time, it would be interesting to compare statistics. One thing for sure: Europe has not be able to create any serious tech giant compared to Apple, Google or Microsoft. Outside the automotive industry (Germany has embraced robotics even more than Japan) and traditional electrical segment (Siemens has ben around nearly as long as GE), the only “new” high-tech industry to be a major player is Airbus, and that is largely subsidized, and because many of its major customer are national airlines.

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