Here in Norway we have a sort of unique wealth tax, and ever since, there's been nothing but doom and gloom in the media about wealthy people exiling to Switzerland. Especially the past couple of months, in the run-up to the election. The wealth tax debate was all-consuming, and really did reach a fever pitch.
Turns out, of course, that some of the rich folks that did move to Switzerland, were funding PR and social media campaigns on this topic.
It was so omnipresent, that even high school kids had "wealth tax" as one of their most important topics.
EDIT: Personally, I think their strategy kind of backfired. There was just too much talk about wealth tax, which doesn't seriously affect too many here. They did try to angle it as "If all the billionaires leave, who's gonna create jobs for the rest?" - but it still didn't resonate too much with the average citizen.
TrackerFF sounds like someone on the left trying to defend the wealth tax. As a Norwegian who believes in freedom and the right for anyone to start their own business, I think the wealth tax is one of the most toxic taxes ever introduced. In practice, it makes Norwegian-owned companies about 30% less competitive than foreign-owned ones.
It’s sold as a “tax on the rich,” but in reality it’s a 2.1% annual tax on businesses. The companies have to cover these costs, and the result is that everyone — rich or poor — ends up paying for it. The only winner here is the state, which wastes the money on useless projects and subsidies.
It gets even dumber: businesses that invest in emergency preparedness — like storing gravel or materials for war or disaster scenarios — actually get punished by the wealth tax. Imagine paying 2.1% tax every year on a gravel pile. No, this is not a joke: link: https://www.dn.no/innlegg/beredskap/sikkerhetspolitikk/formu...
The consequences are clear: more than half of the 400 wealthiest people in Norway have already left the country. There’s no risk capital left for startups, and outside the oil and gas sector, businesses are struggling. Plenty of smart young engineers fresh out of university can’t find work, and hiring of junior software developers has basically stopped.
When we talk about taxes, we should be talking about incentives and motivation. If you tax people so hard that they lose the drive to work and create, then you’ve got a real problem.
If I had the chance, I’d move to Sweden or Switzerland immediately. But I can’t, because I’ve got a family to take care of here.
> The only winner here is the state, which wastes the money on useless projects and subsidies.
They should use that to reduce other taxes instead. Especially income taxes.
> If you tax people so hard that they lose the drive to work and create
That a bigger problem for income taxes. If the top marginal rate is over 40% people will prefer chilling out instead of working hard for the next promotion.
> more than half of the 400 wealthiest people in Norway have already left the country
Did they take their money too? And their factories and land and patents and other assets? Does it matter that they're not physically present in the country?
> There’s no risk capital left for startups
Was Norway previously known for having a lot of capital for startups? I thought Europe was generally bad for startup funding.
> hiring of junior software developers has basically stopped
>Did they take their money too? And their factories and land and patents and other assets? Does it matter that they're not physically present in the country?
The better question is the impact on future investment. Once a factory is in place, it's a sunk cost and it won't make sense to move it unless the political situation is dire. The same can't be said for investments that haven't been made yet.
> I thought Europe was generally bad for startup funding.
> The same can't be said for investments that haven't been made yet.
We can debate counterfactuals all day long. People invest when there are profits to be made and refrain when there aren't. Everything else is bullshit.
> I wonder why that'd be the case...
Definitely not wealth taxes because most European countries don't have them. It might be because they don't have the world's reserve currency. Or the million other reasons commentators and economists have written about elsewhere.
It's not really a counterfactual. My point was that deployed capital is less subject to flight, so using that as a measure for a policy's impact is incomplete and short sighted.
>People invest when there are profits to be made and refrain when there aren't. Everything else is bullshit.
This is also incomplete. People also seek the highest returns. That's why the magnificent 7 tech companies (which happen to be all American) have seen their valuations skyrocket, whereas the appetite for Volkswagen is tepid, despite it turning a profit. That's not to say there's no investment in Europe, but based on startup funding and IPOs, it's pretty clear that the US is the favored place to invest.
>Definitely not wealth taxes because most European countries don't have them.
My point is that europe is generally business-hostile. Wealth taxes is only one of the factors. There's also high taxes and onerous regulations.
This is correct, I called out high income taxes as a problem in my original post. There's no point in working harder when more than half the gain is taken away.
Wealth taxes != income taxes.
> onerous regulations
When I wrote "the million other reasons" - this is one of them.
The negative impact of wealth taxes is vastly over-stated.
Obviously the impact depends on the level of taxation, but it is instructive to compare it with inflation. Typical wealth taxes are in the region of 1% per year; a 1% (additional) annual rate of inflation would have the same impact on wealth as the tax and not be considered disastrous for any business except those with very marginal profitability.
>Typical wealth taxes are in the region of 1% per year; a 1% (additional) annual rate of inflation would have the same impact on wealth as the tax
Or to put it another way: a 50% rise in the "normal" level of inflation (assuming 2% target that most countries target). Moreover this is a bad comparison because most rich people don't keep their wealth in cash, they invest it which mostly shields it from inflation. You end up overstating the current costs that capital owners are paying.
All assets are denominated in currency, so there exists no "shield" from inflation, except perhaps government-issued bonds that guarantee a return above inflation. Most so-called shields against inflation are investments that yield more than the rate of inflation.
The reason I used the comparison between wealth tax and inflation is to illustrate that modest wealth taxes in the order of 1% are not more onerous than many other influences on wealth.
All assets can be valued in currency, but most are not denominated in currency (and even more are not denominated in whichever specific currency it is that you are trying to hedge against inflation in.) Debt instruments are usually denominated in some currency, but stocks are a claim on a particular share of the assets of a corporation at dissolution, not denominated in a particular currency.
A stock of a physical commodity is denominated in the physical commodity, not a currency.
Inflation affects the value of all assets whose value is frequently traded using currency (which is most of stock markets, property, etc). To argue otherwise would be to deny the seriously negative impact high inflation can have on all aspects of the economy.
There are assets whose value is mostly not financial, e.g. physical, social, intellectual, or otherwise. These retain their value despite inflation.
Nevertheless, I aimed to show that a modest 1% tax is not onerous compared to other impacts on accumulated wealth.
The threshold for Norway's wealth tax is having a total net worth around 150,000 euros, regardless of income. That should affect pretty much everyone who's owned a house for more than a decade.
Wealth tax on houses (and apartments, cabins etc..) are calculated as 25% of market value up to 10 MNOK and 70% over that. So you'd need to own a rather luxurious house before having to pay a rather modest tax.
Some municipalities also have a separate property tax which iirc is usually an order of magnitude lower than the wealth tax.
Buying a house is actually a simple way to avoid the wealth tax.
If you've owned a house for a decade you typically have like 15 or 20 years left on your mortgage and are in debt. The tax worth of the house is some fraction of the sale price, so for a house that one might sell today for €500k the tax value could be like €50k. At the same time, typical debt after only ten years is probably almost half the house price (assuming you had some savings before buying the house). And with debt, that's what your earnings go to... I as an above-median earning Norwegian with house (and thus very negative worth) will probably have decades before getting anywhere near the threshold. And even then you only pay for what's over the threshold, so if you're At the threshold you pay nothing.
If someone's aim is to avoid a wealth tax, then moving to Switzerland (one of the few other countries with a wealth tax) seems like a confusing choice. The Swiss wealth tax is payable in some cantons from ~50k Euros.
Switzerland's wealth tax is a lot more reasonable though. UK is 2%, Norway is 1.1%, the Swiss ones are all below 1% (depends on your canton), ex the Zug canton is 0.21%.
All that matters is the total tax. You calculate the toes tax in Switzerland (including wealth tax) to that of Norway and then you may see it’s a clear choice.
What a delightfully sane and refreshing response. It's nice to hear that places outside the US are capable of rational discourse. I'll go back to my burning dumpster fire now.
"Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires." Steinbeck (disputed)
I find it amusing, because clearly everyone can't be super rich. It is an interesting alternative to telling poor people that, if they behave well, they will be reincarnated as something better in the next life.
Turns out, of course, that some of the rich folks that did move to Switzerland, were funding PR and social media campaigns on this topic.
It was so omnipresent, that even high school kids had "wealth tax" as one of their most important topics.
EDIT: Personally, I think their strategy kind of backfired. There was just too much talk about wealth tax, which doesn't seriously affect too many here. They did try to angle it as "If all the billionaires leave, who's gonna create jobs for the rest?" - but it still didn't resonate too much with the average citizen.