Hate to break it to you but... $40k a year in extra income is a lot of money. Taking your numbers, 147k is 37% higher than 107k. That money has higher order effects more than just the 40k the employee gets, since all else equal higher salaries attract better talent and winner take all market dynamics mean only the best companies make a lot of money. You might note that Silicon Valley salaries are much higher now than in the 1990s and early 2000s, and this kind of snowball effect is a partial contributor to that. Also, 37% is a LOT and even if you add healthcare and miscellaneous costs that gap is still massive. I would consider anything more than 10% a big difference.
Your own numbers show taxes are absolutely one cause of lower salaries in the U.K., although certainly I don’t claim they’re the only cause.
I said it was partially responsible; it is by no means even close to the sole factor by which startup ecosystems are formed. Arkansas lacks in education, research, and a number of other metrics that make it undesirable to develop in. Income taxes are only one part of the tax equation as well, since employers pay a larger chunk of overall taxes in France and other EU countries [1] compared to the US. Again, an employer (or startup) being forced to pay very high taxes on worker income gives a lot of incentive to reduce worker income and makes it more difficult for cash strapped startups to find personnel. Factoring in the employer side makes the tax difference more in the range of 10-20%, not 3%. That difference gets passed on to the worker, either in cash for large companies or in stock options for startups, since the software job market is highly competitive.
Healthcare costs for FAANG and other big tech employees (such as those that would be making $500k) are on the order of $2000/year or less. The company I currently work for covers all health insurance costs for me and I can choose to enroll dependents at a small cost per month. Again, adding high healthcare costs here for an engineer making $500k is unrealistic.
Lower income tax allows high earning engineers to found their own companies and become angel investors. This builds the startup ecosystem and makes it more self sustaining; new startups receive angel funding from prior employees that are moderately wealthy, and when they get big they fund the next generation. A social safety net is not a substitute for this because you can’t invest government welfare into your company.
As for regulation, [1] suggests EU employment regulations for performance can require documented performance improvement plans before firing an employee is permitted. This basically makes early stage startups untenable, as you can’t easily remove employees that are incompatible with the company’s goal. For example, if you suddenly pivot you can’t just let go of an entire product line’s employees in a week. A recent example of this happening that made it to the HN front page is Gumtree laying off most of their employees a few years back. The trade off is obviously employment stability for employees, but in a hot labor market like software engineering there is not much downside to decreased stability.
Ultimately startups provide competition for big tech and drive up salaries, since if big tech doesn’t pay high enough people will flock to startups that will eat the big tech company’s lunch. That ecosystem doesn’t exist in Europe at least partially because of high income taxes and burdensome labor regulations.
Curious, would you apply the same logic to the other propositions that received massively disproportionate funding on one side (e.g. Prop 16) but still are failing? Perhaps the voters of California don't 100% share the views of the people elected to represent them. That is the disadvantage of first-past-the-post democracy.
My cofounder Deven Navani (dnavani) and I have spent the past couple months working on Homepage: a fast browser that gets you organized.
We're both software engineers and students and we have a lot of tabs open when we work. We realized that it's really hard to find the tabs you want quickly once you've got enough, since Chrome's UX isn't suited for a lot of tabs (imagine using Finder with horizontal file listing!). Even worse, your laptop starts slowing down to the point that scrolling can develop noticeable latency.
Homepage solves this by displaying your tabs vertically, like in Finder, and letting you drag and drop them into folders. Simple addition, but makes life with 50+ tabs much easier.
We also realized that the main reason your computer slows down with many tabs open is because of disk paging. Browsers and CPUs are blazing fast when they don't have to wait on your SSD/HDD to give them data, but as soon as disk paging kicks in performance drops off a cliff. That's why we built a caching system that automatically unloads tabs you haven't used in a while, so no matter how many tabs you have your experience stays performant.
We also use the same Rust-based ad blocking engine Brave does, so even pages with many ad elements should load quickly.
All your browsing data is stored locally - no clouds involved here :)
Give it a shot - we'd really appreciate your feedback. Both my and Deven's emails are in our bios.
Some fun technical trivia:
- Our tab cache is built on an LRU cache (turns out those coding interview questions do come up eventually!)
- We've managed to get to what you see now in 3 months of work in our spare time every day. We chose to build on Electron since it let us build and experiment with features and the UI much more quickly, and the extra RAM usage compared to the RAM used by web pages is minimal.
Your own numbers show taxes are absolutely one cause of lower salaries in the U.K., although certainly I don’t claim they’re the only cause.