Wealth Taxes Result in Rich People Fleeing, Turns Out

[Kamaji]

Wealth Taxes Result in Rich People Fleeing, Turns Out

Norway hiked its wealth tax. A bunch of rich people got the hell out.

LIZ WOLFE
5.26.2023

If your net wealth is approximately $135,000 or more and you live in Norway, you've long been subject to a 0.85 percent wealth tax. That rate has, as of this year, been hiked to 1.1 percent by the center-left government, and even more gobs of cash will be taken from rich people worth roughly $1.8 million, who will be taxed at a rate of 1.3 percent.

Unfortunately for the Norwegian lefties—and their American counterparts who argue for similar taxes to be instituted here—this wealth tax hasn't really generated the revenue they'd expected. It has instead resulted in rich people boarding their superyachts and leaving those fjords behind forevermore.

Per the Norwegian newspaper Dagens Næringsliv, 30 of the country's multimillionaires and billionaires left the country last year in advance of the wealth tax hike. "This was more than the total number of super-rich people who left the country during the previous 13 years, it added," noted The Guardian. "Even more super-rich individuals are expected to leave this year because of the increase in wealth tax in November, costing the government tens of millions in lost tax receipts."

The research department for Statistics Norway admits the same in a 2021 paper: "The tax revenue from wealth taxation is modest, only approximately 15 billion NOK per year, which corresponds to around 1.1 percent of the total tax revenue and 0.4 percent of GDP." (Other gems: "The richest Scandinavians keep a substantial part of their wealth in offshore tax havens. The wealth of the top 0.01 of Norwegian households increases by about 25 percent if offshore wealth is included.")

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In other words, wealth taxes work exactly as libertarians warned: They generate far less revenue than anticipated and result in the ultra-rich hopping to fairer locales that don't see them as cash cows to milk.

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Source:  https://reason.com/2023/05/26/wealth-taxes-result-in-rich-people-fleeing-turns-out/

[Hoodat]

OMG !!!  You mean to tell me that human nature exists?  That people will react to the conditions placed upon them?

[Kamaji]

OMG !!!  You mean to tell me that human nature exists?  That people will react to the conditions placed upon them?

It is a useful object lesson, because leftists have been pushing a wealth tax on the premise, at least in part, that people will not react by moving to avoid it.

What's interesting is that (a) there is a certain amount of inertia when it comes to things like taxes - how many people are going to quit their old job, find a new job in a different state, and uproot their entire family and move to that different state simply because, for example, their home state raises its income tax rate from, say, 4% to 4.5% - and (b) the change in the rate was from 0.85% to 1.3% - i.e., a change of 0.45 percentage points.

One thing this also demonstrates - something which should not come as a surprise to those who pay attention - is that financial wealth is much more mobile - and therefore much more sensitive to cost changes - than is landed wealth or labor.

[Smokin Joe]

Gee. Hoodathunkit?