I think the article forgets one reason why Scandinavian countries do well in IT start ups: Allmost all Scandinavians speak English quite well. Given that most new technology and research is communicated in English, a decent level of English is necessary to adapt new technology. This gives Scandinavians and Dutch entrepreneurs an edge compared to most other European entrepreneurs, except obviously the Irish and British entrepreneurs.
> This gives Scandinavians and Dutch entrepreneurs an edge compared to most other European entrepreneurs
how? the world's ranking of english proficiency is dominated by Europeans https://en.wikipedia.org/wiki/EF_English_Proficiency_Index#2... I am pretty sure among the IT branch the scores are much higher although you don't need perfect language skills to understand technical concepts.
You do notice that all of the countries listed as "Very High Proficiency" are Scandinavian or Dutch, just like he said, right? And many of the continental European countries, like France, Italy, and Spain are listed at only "Moderate Proficiency."
While you don't need perfect language skills to understand technical concepts, not being at full proficiency can be a barrier. I know that when I help people out on StackOverflow, one of the main barriers to answering some people's questions is that they can't formulate it in English in a way that I can understand. Proficiency is a two-way thing; besides being able to read English, you need to be able to speak and write it well to fully interact with the technical community.
Moreover, trying to study CS in a language other than English leads to lots of misinterpretations and misunderstandings.
English, fluent reading at least, is absolutely must have for a CS person.
There is a huge difference between, say, Indian guys being taught in English and Russian being taught in Russian.)
And, of course, never read any serious books, like TAOCP or SCIP in translation.) Master your English first and then enjoy non-distorted flow of author's thoughts in his own wording.
A related factor is that it's very common for even the first iteration of a product to be in English, which means it can start to get international appeal. This is possible partly because even the domestic market is fairly open to English-language products/services, so you don't need to make something in Swedish in order to sell it to Swedish people.
Every single experience I've had with a swede, (technical, entrepreneur, or otherwise) has been extremely pleasant. It might be selection bias - most of those that I've met were outside sweden at the time I met them - but from spending some time in Lund, I got the impression that it's a national trait, to the point that I have considered moving to sweden for a few years if the stars align properly.
Perhaps we can have a sweded version of NYC in the US? :) That would be ideal.
Beware of possible problems when relocating. I know an experienced graphic designer who moved there, due to personal reasons, to see her career go to a sudden stop. At some point she forced a HR person from one of the companies ignoring her CV to answer why. It went more or less like that:
- Oh, that's simple, you completely lack experience.
- Have you missed the entries in my CV?
- No, but none of them was in Sweden.
On the other hand, this may be completely irrelevant in startups.
Where did she gain her experience? I don't want to assume anything, but I think experience from some countries are looked more favorable upon, but I could be wrong.
That's probable. She worked in Poland, usually for big international companies. The last one was actually a Swedish one, but apparently being located in an office on the other side of a pond invalidates your experience.
That, or this was just an excuse to hide a real reason (could be pretty well crisis-induced).
I've had the same experience. Though on an interesting note - I had drinks with one recently and told him as much, and he was taken aback by my observation. "Really? I've found them to be quite difficult at times." Maybe there's something cultural about the way they interact with themselves vs outsiders? Or, as you pointed out, maybe it's the ones who leave Sweden regularly :)
Individuals from all nationalities are nice. Especially the ones you meet out of their national cocoon. They're just nice in different ways. It's when you deal with them as groups that the cultural differences start to grate you. And when the group becomes a crowd, they all turn into monstrous beasts with no brains.
I love Stockholm. It's an awesome city and despite the high taxes, it's very progressive in terms of trends. In other words, there are many early adopters there, which is something that is very unique to SV.
Also, much of Swedish design is built on simplicity. You can see this everywhere from web design, to store design and of course furniture. The only downside, as others have pointed out, is that its extremely expensive.
EDIT: Discrepancies around definitions of conservatism.
Highest bracket in Tel-Aviv is, as far as I know, ~60% (50% income tax + 10% health/social taxes) + 17% VAT (=~sales tax equivalent, essentially applicable to individuals but less so to companies)
Highest bracket in NYC as of 2013 (unless the "fiscal cliff" is averted) is a few % short of 60% (40% federal, 13% state, 2% fica, 2% social security, and a few more). If the fiscal cliff is averted, it's still 53% or so. + 8.5% sales tax. (sales tax applies everywhere)
Also, what do you get for these taxes?
In Israel, you get comprehensive universal healthcare (services paid by tax, drugs and medicines subsidized by tax), comprehensive public education - no tuition for high school, $3000/year tuition for public universities, $6000/year for private universities or colleges. (All Israeli universities are world class; most colleges aren't). You also get reasonable social security payments when you retire, and reasonable unemployment for 6 months or so after getting laid off (and unreasonable barely-but-enough-to-not-starve unemployment later). And also mandatory conscription when you reach 18, and the occasional bus bombing.
In NYC, you'll get free public schools (some of which are excellent and some of which are glorified babysitting institutions), and other than that ... mostly nothing. You're supposed to get social security payments when you retire, but the books don't balance (unlike the Israeli pension fund books, which do). You also get the occasional hurricane (but only one in the last 100 years had really been devastating - two in the last 106 years)
They differ all over sweden depending on how old you are, how long you've been working for and how much you earn.
In Stockholm you pay about 30% in income tax (add 20% if you earn more than 401 100 SEK annually, you earn about 360 000 SEK annually as a newly graduated MS CS student). However you also have another tax, the employment tax, which isn't displayed on your salary specification and is paid by your employer in addition to your salary. The employment tax is 31%. This makes the effective income tax about 81%...
The sales tax is 25% for most things.
We do have free public education, and healthcare for everyone under 18 (it's heavily subsidized after 18 but not free). The standard of our universities is not bad but i wouldn't call it world class as they try to make you believe... We do have problems with the earlier education. Stockholm doesn't have any problems with natural disasters or bombings but the housing situation is pretty crappy.
Sorry but that calculation is just stupid. Thanks to deductions, the income tax paid for even a high earner does not surpass 28%. The 20% state tax is only paid on income in excess of 401 100 something that is always conveniently forgotten when discussing taxes. E.g. the tax scale is progressive which is to offset the trend that the more you earn, the likelier you have other incomes such as investments returns which are taxed significantly lower than salary tax. Yes, Sweden still has high taxes but the situation is not nearly as bad as you make it out to be.
Yes, sorry about that, that's true. I forgot that for a few minutes when reading up on the actual percentages (regarding the state tax).
However the regular income tax is still around 30% and while regular employees don't see the employment tax (arbetsgivaravgifter) i'd still say it's an income tax because it's based on your income and not on how much you work or when you work.
Your math doesn't make any sense - the 81% (assuming that all is right, and bjourne says it isn't) is out of 131%, not out of 100% - so the actual tax is 61%. Still high, but on par with Tel-Aviv and NYC (assuming fiscal cliff) - and you get back infinitely more than NYC and just "a lot more" than Tel-Aviv.
For many people there are also substantial tax deductions you can make. E.g. you can subtract 30% of interest expenses on private loans (ränteavdrag) and 50% of renovation costs of owned houses/apartments (ROT). Now unfortunately these deductions lead to higher property and apartments prices, so it might not reduce your total expenses after all.
Well the state tax isn't as i said it, bjourne is correct about that part.
I see that extra tax as money that if not for the tax would be part of my salary (at least some of it) because it's based on how much I earn, not how much I work or when I work. Thus making it of 100% of my salary, not 131%.
I never said it's bad. It's OK. I'd just rather pay for something great/world class than having someone else take some of my money throughout my whole life and pay for average things for me (whether i want them or not). It's a lot harder as a consumer to demand things when you're not paying for it and you loose options when there's a single entity that pays for everything and wants everything done a certain way.
If your salary is 10,000SEK/month (to make numbers simple), then you cost your employer 13,100SEK/month. You pay 3,000 SEK in taxes, so your take home is 7,000/13,1000 = ~55%, and the tax rate is 45%.
If the employer didn't have to pay those 31% to the government, he would have paid them to you, and you would have been taxed on them.
It doesn't matter how the line items are listed from the employer's perspective, and it shouldn't matter to you. Just assume that this appears as another line item, and also a grand total "employer expense". This is what you negotiate when you negotiate your salary - not the 10,000 SEK.
Someone here asked what you get for the Swedish taxes. This is the post to tie in to to describe how Swedish welfare is funded.
What is called "employment tax" in the thread above, partly is a kind of insurance premium. For example, of the close to 32% that are added on top of the "salary you see", 11% goes to pension, 5% pays mandatory sickness insurance, 2,6% pays for maternity / paternity leave privileges. That gives you kind of sense "what you get for your taxes in Sweden".
The 30% that everyone pays of their salary goes for services in their local municipality: schools, child care, care for the elderly, hospitals, roads, local infrastructure such as water, drains etc,, and also subsidies for commuter traffic.
The approx 20 % that are added on top for some, together with the 25% sales tax is taken by the government, and goes into the national budget.
> If the employer didn't have to pay those 31% to the government, he would have paid them to you, and you would have been taxed on them.
It's unlikely the employer would pay you more. You negotiated and expect 10,000 SEK. Yes, the employer knows it'll cost 13,000, but you only get 10,000. So if there's no employer tax, you'll still likely get 10,000, but now the employer can hire another person using the money that's freed up, or invest in some other ways.
On the first day. But then, a couple of years later, you are smarter and you know that before the tax was canceled, your boss was willing to pay 13,000 SEK to employ you. So the next time you negotiate (possibly with another employer), you know you are worth 13,000 SEK, so that's what you'll demand, and that's what you'll get.
The specific line item in which this expense is listed with the employer, whether "employment tax" or "salary", makes no difference to them, and shouldn't to you.
It's a completely different tax, if the employer didn't have to pay that to the government you'd have to renegotiate your salary to get any of it (because it's not part of your salary).
But in Sweden you do negotiate the 10,000 SEK. You generally don't talk about the 13,100 unless you are an employer and have to think about it. That is my point and that is what I think is stupid.
What you say might be true on the day this tax is canceled, but if you like a few years later, you realize:
a) it was worth 13,000 SEK for your employer to employ you
b) you're only getting 10,000 SEK.
c) you ask for a 3,000 SEK raise, and get it.
So, not immediately, but after a while it will reach the steady state that I described.
The bottom line is: it's arithmetics; It doesn't matter to the employer which line item the 3,000 SEK are listed under, whether "employment tax" or "salary"; it comes out of their pocket either way. It shouldn't matter to you either in the grand scheme of thing. Employment is a reasonably efficient market in the time frame of a few years, and you will realize, and then demand, and get, a salary of 13,000 SEK.
The transient is going to be weird. But in the steady state - it doesn't matter which lines appear in your pay stub and which do not.
I am amazed at how many people have your response. If you are looking at a timescale of days, you are right. If you are looking at a timescale of just a few years, you are dead wrong.
The employer down the road was profitable paying 13,000 SEK for an employee like you just yesterday. They know you're still getting 10,000 SEK. When they need an employee, they'll offer you 11,000 SEK. Many people will happily switch job for a 10% raise. Later, rinse, repeat: It will eventually converge to how much the employer was willing to pay before. Not more, of course - but why would YOU settle for less than you did before?
The time it takes salaries in high-tech to converge in active economic times is 2-4 years.
I'm talking about the steady state, the transient is short lived and irrelevant in the grand scheme of things.
Hm; might be unreasonable - but I'd worry about the security situation in Israel. In the US, not much of a safety net; I'd guess in stockholm things are alright for the taxes you pay.
I live in one of the safest neighborhoods in NYC, and yet, there's an essentially random killing within 1 mile radius of my house every couple of months. If you're in a neighborhood that's not as nice, like some parts of the bronx, it's even scarier. And I'm not just talking about homicide statistics: The police has a scary track record, most recent example is in the Empire State shooting (where with one exception, all dead were shot by the police).
When I was in Tel-Aviv, I used to go for an hour long jog at 3am every day, feeling completely safe. In NYC, it's not safe enough to do that.
I know of a prominent hacker establishment in Brooklyn, 3 members of which were mugged within a 3 month period (one of them snatching, one of them more violent, and one I don't remember). These things happen in Tel-Aviv, but at maybe a 1:10 or 1:100 lower rate.
Also, look at the real numbers. The headlines look scary - 1400 rockets fired on Israel. 1000 air raids on Gaza. But the number of casualties (both Israeli and Palestinian) is lower than Hurricane Sandy's death toll.
By all means, I estimate Israel is more likely to become a much more dangerous battlezone than NYC is to become unsafe due to natural disasters (or terrorist attacks - don't forget the '90s WTC attack and 9/11). But if you do the math, rather than the emotion, Tel-Aviv is as safe as New York.
Most of NYC is very safe, if you don't feel safe at 3am you're living in the wrong place. Within a mile of where I live in Clinton/Midtown there's been 4 murders since 2006[1].
I also work right by the Empire State building and walk to work along 34th where the shooting happened and I don't worry. None of my co-workers do either. You can't let random infrequent events worry you.
I admit that some areas aren't great, for instance the Bronx or the part of Brooklyn bounded by Flatbush, Bushwick, and East New York. If living in an "edgy" or "up and coming" neighborhood isn't your thing, the majority of Manhattan below 110th is as safe as you can be, whatever time of day or night.
I'm not sure where this database is from, but I'm in Union Square. This database only lists one murder last year (I remember more than that, but I can't find them right now). But just from the last 2 months:
(Correcting self: police only killed the killer; but wounded 9 others)
> You can't let random infrequent events worry you.
That exactly WAS my point. Despite how scare the situation in Israel looks, it is just as safe and just as random as NYC.
> Most of NYC is very safe, if you don't feel safe at 3am you're living in the wrong place.
Boerum Hill is a place a lot people I know don't feel safe at night. Is union square (where I live) the wrong place? I see people arrested (handcuffs at all) after mugging / snatching / sexual assaults on a monthly basis on my 5 block walk to work. (That's in the daytime).
It's not that I feel unsafe in NYC. But compared to Tel-Aviv, crime in NYC is rampant.
I previously lived in Curry Hill for a few years, and I did go down to jog in the neighborhood at 3am. But chelsea/union square does not feel as safe.
I don't know a single person in NYC who actually pays at a 60% tax rate. Yes, the city and state taxes are very high (and is on par with other countries). But, anyone in that tax bracket has and will pay for an accountant to shed a lot more off of that. So the effective tax rate is much less.
Second, I know quite a few who are at almost-the-maximum. Most people, when they talk about their taxes think only federal. AMT at 28% is a bitch, and NYC at 13% is too, so if you're less than 40%, you might be an audit away from serious action (despite what your highly paid CPA tells you).
Ask high-worth individuals in NYC with >$500,000/year income and a few millions to lose what their overall tax rate is.
Third, deductions are available everywhere (at least they are in Tel-Aviv) and can be used to lower your tax burden. If you use them as intended, it means that your tax rate is not lower - it's just that your books do not reflect expenses in the right place.
If you use them too aggressively, you risk criminal charges.
Finally, you should add your accountant fees to your taxes. No one does. Most people in Sweden submit their tax return with an SMS saying "all has already been reported by employer / stock exchange / bank".
I spent two full time weeks doing my US returns this year. Officially, I'm paying much less than the highest rate. In practice, I'm paying it, and possible more, if I put Tel-Aviv, Stockholm and NYC on equal footing.
Context: mbesto said (essentially) "well, yes, that's the theory, but in practice no one pays it because you can engineer your taxes around it". My reply was "people who have a lot to lose if they are found guilty of evasion do not actually try to engineer around it".
Or, I'll say it another way: The reason most people believe it is easy to engineer around it, is because they have not yet been audited. It's actually not at all easy to engineer around it.
Case in point: Mitt Romeny "only paid" 18% in taxes, so you might assume that's his tax rate - but it isn't; he paid 10% more to his church. Had he not done that, his tax rate would have been 28%. Also, for the privilege of being shielded from lawsuits (through corporate structures), his corporate paid some nontrivial corporate tax - 20-30%. So he actually paid ~50% for his work. I'm not defending him - I would be glad if he paid more - I'm just explaining that people are completely irrational in their discussions of tax rates. The ONLY number should be (what I take home)/(employer's out-of-pocket expense to employ me), for salaried employees.
Hehe. Yeah. Most people don't realise that the US has insanely high taxes for almost zero in return. Plus, double taxation on corporate profits.
Most sane countries have things like franking credits where owners only pay to top up from the corporate rate to the personal rate. You can sort of get around this in the US with a S Corp, but you're still paying something like ~50% for zero social services.
Let's not forget world wide taxation and other arcane issues in the US tax code.
I disagree that corporate tax is double taxation: It is the premium you pay for limited liability. You can run things personally, thus avoiding the higher ("double") taxation, but then if you are successfully sued, you can lose everything you ever earned.
Whereas a corporate structure shields you from personal liability (theoretically, not including criminal liability - but in practice, it's quite effective for criminal liability as well).
I don't see how limited liability is an argument for double taxation when 9/10 Western democracies have franking credit systems that eliminate the double taxation on corporate profits paid to owners (and I'm only addressing this from a startup owner perspective, since this is HN).
The simple fact is that the US has something like this already, with qualified dividends taxed at 15% to try to reduce the burden of double taxation. That's still not low enough.
The point is moot when you start talking about S Corps since those offer the same limited liability while passing through the tax burden onto the shareholders directly.
When social security will pay out more than comes in, the difference will come out of general tax revenue. There are no books to balance. The retirement age may go up, but reducing or eliminating social security is electoral suicide.
I'm sorry to burst your bubble, but that's not how math and economy works.
The US is borrowing half of what it is spending right now. That can only go so long (maybe 10 more years, maybe 20 more years, but definitely not for 50 more years). "General tax revenue" right now covers approximately half of government expenses, without having to cater to social security.
social security + medicare spending grow at 8%/year for the last 20 years or so. In about 30 years at this rate, it will be larger than the current federal budget.
And the math must add up.
If you are below 50, you will most certainly NOT have the same qualitative benefits that retirees today do. Either benefits will be cut nominally, or inflation will cut them really; But either way, if when you retire you get (in real terms of purchasing power) half of what this generation of retirees is getting, you should consider yourself lucky.
Federal US budget is ~$4T$/year, taxes are ~$2.4T, loans taken ("government bonds") are ~$1.6T/year.
Highly recommended: reading Karl Deninnger on "the market ticker" on a daily basis. His style of writing is not for everyone, but the facts are, and it's hard to find them so coherently laid out in other places.
The U.A.E. is a country where you have zero, yep zero taxes. Dubai is a pretty great city to live in, and it's not that expensive. You could live well easily on $1000/month. The only downside to U.A.E. is that the tech scene is barely starting up. So you'd have to find talent abroad. On the bright side, it's fairly easy to get visas both to bring people over and to start your own company.
I'd consider the flagrant human rights abuses in the U.A.E. to be a pretty substantial downside. The U.A.E. routinely imprisons rape victims for extramarital sex, imprisons or castrates people convicted of homosexuality. There is little or no protection for freedom of speech or of the press, etc. The U.A.E. would be a terrible country to live and work in, and a low cost of living does nothing to change that.
The press has a story every quarter or so about a couple indicted for kissing in public, and stuff like that. Also, Alcohol is reputedly not available, and the internet is filtered.
Is that true? How restrictive is the regime towards migrant entrepreneurs?
As a pointer: if you're thinking of doing a startup in Dubai, it's best to open a company in one of the two techno parks there: Dubai Silicon Oasis & Dubai Internet City.
The minimum investment to register a company (FZ LLC) in one of these technoparks is about $12500 (AED 50'000) which you could then pay yourself as salary over the months.
In what ways do you consider Sweden a conservative country? It is very socially liberal and while it's finances are run mostly sanely, it has a huge re-distributive welfare state.
Conservative in the sense that they are trying to preserve continuity and stability. Probably not the best choice of words on my part. I'll edit it out.
Despite the fact that nominally conservative parties implement such policies does not make those policies 'conservative' in any meaningful political-history/ideological sense. Just like Obama renewing the Patriot Act doesn't make it liberal legislation.
Conservative in the sense of personal and societal responsibility and a strong adherence to tradition. Switzerland is the same way, very conservative by European measures, but by the way we (Americans) rate conservatism, not at all. All these countries are socially progressive with strong safety nets, but relatively liberal economically (again, in the real sense of "liberal"). I would think that the American/New world conservatism is the one that's messed up and twisting the meaning of these words.
Tel Aviv is probarbly larger than Stockholm though.
The Swedish definition of "metropolitan" area is skewed, it consists of several cities and according to wikipedia its 6,519 km2 that is compared to Tel Avivs metropolian area of 1,516 km2. Still Tel Avivs has a metropolitan population of 3.4 million people compared to Stockholm's 2.1 million.
Just for others' reference, the metropolitan area of Stockholm[0] is the whole of the Stockholm county.
Just looking at the map, a slightly better/more conventional measure of Stockholm might be Stockholm municipality[1] + Huddinge, Sundbyberg and Solna, which gives an area of 350 km2 and a population of about 1.1 million.
Also, the Stockholm startup scene mainly attracts talent among the 9.5 million Swedes, whereas Tel Aviv benefits from immigration from Russia (http://www.bbc.co.uk/news/business-15797257).
San Francisco attracts talent from all over the US, or rather from all over the world.
The article missed Tobii, which this year got a $20 million investment by Intel, and has raised over $50 million in total. They're making a very cool eye tracking product that you (among other use cases) can use to control a computer with your eyes.
Some downsides with Stockholm:
(1) It is difficult to make friends in Stockholm, because Swedish people are generally very reserved;
(2) It is very dark and cold most of the year; and (3) Summer is short.
Like Seattle but colder and darker. Example: Seattle in mid-December is typically mid-40s F with sunset around 4:15pm, while Stockholm is typically mid-30s F with sunset around 2:45pm. Also, more snow, but actually slightly less cloudy.
I've lived in both, and I think I prefer Seattle a little bit. It's pretty close though, because while Stockholm is colder and have shorter days for a longer period of time, Seattle is gray for literally 200 days straight. Stockholm can be pretty gray too, but you get nice winter days pretty often, with white snow and sunny days. Summers in Seattle are preferable though, very dry compared to Stockholm.
Yes, I would say so. The software developer pool in Stockholm is running really dry. So the market is really hot and it has been this way for a few years now.
Here at $MEGA_CORP we did some recruiting recently and we hired from all over Europe. One good(?) thing is that the political situation in Russia is quite crappy at the moment, so there it is possible to recruit top talent from there.
I guess hiring from the across the pond is slightly harder. But if you pass the normal skype/phone/online interviews and you are good it shouldn't be a huge problem to fly you over for an onsite interview.
