Consumption yes. But how do you get to 70-80% for reinvesting? Corporate taxes are 20%, dividend taxes 30% on remaining 80? That gets you to 44% net tax. From gross to net. Income taxes are higher but still not 70-80%?
I agree income taxes are high throughout most of Western Europe, but the way to grow wealth is by acquiring assets that can grow without having to sell them and pay taxes.
An investment fund (or a property) can often grow for a long time and throw off cashflows that are taxed more efficiently. So can a business where you build up value in the equity. Cashflow keeps the lights on, but equity (even in a small business) builds wealth.
> Corporate taxes are 20%, dividend taxes 30% on remaining 80? That gets you to 44% net tax. From gross to net.
No, there are special tax rules for small companies (the so-called 3:12 rules). You can pay yourself a small dividend ($15k or so), but above that you’re taxed as if it was regular income.
> Income taxes are higher but still not 70-80%?
Payroll tax is 31% and then you pay around 55% marginal tax on what’s left.
It’s debatable how you should count VAT in this context. Your consultant invoices will have 25% VAT on them that you have to pay the government. Your customers can get that back from the government, but will have to pay VAT on any value your services create. Since the name of the tax is value added tax I think it’s fair to say you are adding the value with your labor and are in fact the one paying the tax, but others may disagree.
I agree income taxes are high throughout most of Western Europe, but the way to grow wealth is by acquiring assets that can grow without having to sell them and pay taxes.
An investment fund (or a property) can often grow for a long time and throw off cashflows that are taxed more efficiently. So can a business where you build up value in the equity. Cashflow keeps the lights on, but equity (even in a small business) builds wealth.