Norway, one of the world's most advanced economies, has taxed its wealthiest citizens for more than a century. If an individual's net assets exceed NOK 1.8 million, 1% of the amount is paid annually; above NOK 20.7 million, the rate rises to 1.1%. This tax is levied on assets rather than income, making it challenging for entrepreneurs who may have substantial paper wealth but little actual income.
In 2022, an increase in the wealth tax led to a mass exodus: hundreds of millionaires and billionaires moved to Switzerland, Singapore, and the UAE. Over NOK 600 billion in capital has been transferred abroad, reducing the budget instead of increasing tax revenues. The annual loss is about $448 million.
The experience of Norwegian entrepreneurs, such as Dune Analytics founder Fredrik Haga, illustrates the problem: even without cash or real income, they often face high tax bills, encouraging emigration.
Sweden serves as a contrast. The country abolished its wealth tax in 2007 after similar capital flight, resulting in renewed investment and economic growth. Meanwhile, Norway tightened exit rules, introducing an additional tax on unrealized gains for emigrants, predicted to decrease production by 1.3% in the long term.
Norwegian society is divided on the future of the tax: some support its continuation, others call for its abolition. However, few countries are eager to follow Norway's example. While the country remains one of the most economically equal, this comes at the cost of losing entrepreneurs and innovation.
