7 ms·

Norway’s Wealth Tax Is Backfiring

22 points by tomohawk 3y ago

downrightmike 3y ago
Doesn't really matter as America can go after funds regardless of where you move to. Just pay your fucking taxes, you got the benefits of the system, pay back into it.
- Calvin02 3y ago
  The article isn't about income taxes. Income taxes are taxes on income that you earn in any calendar year. The article is about wealth taxes. In addition to income taxes, Norway has a wealth tax, which taxes net wealth above $170k (NOK 1.7M) at 1% [0]. So, if your net wealth is $200k, you are taxed 1% on $30k every year. Separately, it is a myth that the wealthy don't pay taxes. This isn't Reddit. Wealthy pay taxes but they also maximize the value of any benefits already included in the tax code. AMT is an attempt to fix this but has its own problems. [0] https://www.lifeinnorway.net/wealth-tax/ https://www.lifeinnorway.net/wealth-tax/
  - seanmcdirmid 3y ago
    Ironically, America does have a wealth tax if you want to relinquish your citizenship. I don't think Norway does, and many rich Scandinavians change citizenship to Switzerland negotiating their taxes straight with the canton they move to (like the founder of Ikea did). It is easier for a Norwegian to optimize their taxes than an American (since America also taxes worldwide income, and you can't just change your citizenship without paying a penalty).
    - laurencerowe 3y ago
      Presumably they don’t need to change their citizenship, they just become tax resident in another country. Most countries only tax residents. Norway is part of the EEA so its citizens have the right to live in Switzerland.
      - seanmcdirmid 3y ago
        Ya, so it is even easier for Europeans. And it wouldn't matter if they were a part of the EEA or not, they would almost definitely negotiate their taxes with the canton of their residency as part of their move (you can easily buy residency in Switzerland). The EEA is more for normal people from the EU who want to work in Switzerland and pay normal taxes (which are still low for Europe).
    - s1artibartfast 3y ago
      The US exit tax is not a wealth tax. It is calling due any deferred capital gains taxes. If you have a billion dollars cash, you can leave and pay zero tax. If you have a billion dollars in assets that have not appreciated since you bought them, you pay zero tax. It is only comes into play if you have investment assets that have gone up since purchase, and you have paid no taxes on them because they are taxed at the time of sale.
      - seanmcdirmid 3y ago
        Ok, that makes sense. Thanks for the clarification.
- prottog 3y ago
  > you got the benefits of the system, pay back into it The "system" isn't the government, though it's easy to muddle that line, considering some developed countries have government spending that's over half of the GDP (with Norway sitting at around a fifth as of 2021); and the existence of a government that facilitates the "system", which is in reality the private activities of the people, does not make it that without that particular government the system will not exist at all. Imagine a parent who tells a fully-grown child well into his adulthood that they have an ever-increasing claim on what the child produces by virtue of having given birth to and raised him. Does that not sound abusive? That's not the kind of relationship I want with my government. The government, or at least the American one, is meant to serve the people, not rule over them and allow the people to keep whatever scraps the government allows them to keep. Every time you perform a service for somebody or make a widget for somebody -- basically any economic activity -- you are paying back into the system by fulfilling a demand that someone else has. And not just remunerative efforts: every time you pick up a cigarette butt off the street that you didn't smoke, or every time you watch someone else's kid for a night, or you volunteer at a local soup kitchen. Those are all ways that people pay back into the system. Let's not make the mistake of thinking taxation is the only way, or even the most important and effective way. Many roles that are currently performed by government funded via taxation have only been that way very recently in human history, and I'm in no way convinced that this is either optimum or necessary.
  - balderdash 3y ago
    >Imagine a parent who tells a fully-grown child well into his adulthood that they have an ever-increasing claim on what the child produces by virtue of having given birth to and raised him. Does that not sound abusive? That's not the kind of relationship I want with my government. The government, or at least the American one, is meant to serve the people, not rule over them and allow the people to keep whatever scraps the government allows them to keep. Thank you for putting that into words, I’ve struggled to succinctly frame the unease that this way of thinking makes me feel.
- s1artibartfast 3y ago
  How much benefit does someone get and how much should they pay back in? These are reasonable questions.
feerceKitteh 3y ago
“Trickle down job creators flee to another country that still allows them to freeload off the system without paying their fair share”
kelipso 3y ago
> wealthy Norwegians took with them a total fortune of $54 billion when they left. This means that the wealth tax, which was projected to increase revenue by nearly $150 million annually, will result in about 40 percent less revenue than it currently generates So the problem is revenue from wealth tax will only be $90M instead of $150M? As opposed to $0M without the wealth tax? How does having these billionaires physically located in Norway benefit the average citizen? Capital investments should happen wherever they're physically located because economics, big corpos have their HQs wherever they want anyway. Is trickle down economics the entire argument here?
- dontlaugh 3y ago
  If anything, it seems that improving the weak controls against capital flight is all it would take to correct this problem.
  - balderdash 3y ago
    That would work. But it’s a terrifying worldview that citizens should be vassals to the state instead of the other way around.
    - dontlaugh 3y ago
      How so? Capital flight is a form of class warfare. Controls against it are the majority, workers who don’t own capital, enforcing a social contract against those who do. Of course, that will only happen in states where workers are in power. In most countries that isn’t the case and, unsurprisingly, there are weak capital flight controls.
      - prottog 3y ago
        Almost every country with significant capital controls are ones you likely wouldn't want to voluntarily move to.
        3y ago
marssaxman 3y ago
But of course an institute called the "American Institute for Economic Research" is going to say that; from the about page, they believe in "the value of personal freedom, free enterprise, property rights, limited government, and sound money."
- unmole 3y ago
  They sound like a monstrous bunch of people. /s
  - deleted 3y ago
    [deleted]
  - w______roy 3y ago
    An important skill is reading between the lines, and recognizing libertarian dog whistles. Freedom to them = freedom from government regulating business. Freedom to me = freedom from worrying about businesses poisoning me and my family.
    - unmole 3y ago
      Equating "Wealth taxes are counterproductive" to "Let's posison people" is a quite a leap. It's less reading between the lines and more deranged hallucination.
- prottog 3y ago
  Do you not believe in the value of those things? Separately, every institute or person that has published anything has an agenda; so the fact that this particular institute has a mission that you perceive to align with their words doesn't mean that their words are wrong. It is by definition an ad hominem fallacy.
  - hotpotamus 3y ago
    I'd love to have the same personal freedom as a billionaire. If a wealth tax is a means to accomplish that, then I'm willing to accept it.
expertentipp 3y ago
> mass exodus of wealth creators What exactly wealth they create and for whom? They're guilty of hyper-centralizing all services, assets, and resources. Your yacht will not fit in Lugano Lake, Mr. Viking. Try Marbella or Malaga, the places for Scandinavian success people.
ZeroGravitas 3y ago
A site that has articles attacking the entire concept of wealth taxes thinks it's not working in Norway? Kind of predictable.
zeroCalories 3y ago
Only anti intellectual leftists would deny that increasing taxes increases the odds of capital flight, but it's not the only factor to consider. There are various benefits to living in a country, and a tax increase will not necessarily cause capital flight, or more importantly, decreased tax revenue. Seems like Norway overplayed their cards this time, but that doesn't necessarily mean a wealth tax is bad. Just important to keep in mind that economics is real. Also noticed that a lot of people are suggesting laws against capital flight, but this is also a very risky idea. Having capital that can't be moved inheritly decreases its value. You might be able to capture short term value, but you risk future investment, which could lead to a death spiral.
rdtsc 3y ago
> Dellanna, a management advisor and author, points out that Norway collected about $1.46 billion on its wealth tax in 2019. But the exodus of the wealthy will result in an estimated $594 million in lost revenue. This is the tricky part of "just raise it a few percent" for these wealthy entities. It seems a small increase won't make a large difference". But if they go from 2% to 2.5%, for instance, but there is a country, somewhere which, has a 2.1% tax, they'd all start feeling. So, in some ideal situation, when we consider only one particular country in a vacuum, it should work. But, it's a lot tricker when there are other countries to consider. Even more interesting, other countries could specifically target these wealthy entities by lowering their wealth tax to 2.4%. That's not unheard of with US states and companies: if one state raise their taxes, some state might start courting companies headquartered in that first state and promising tax cuts if they move their headquarters.
deleted 3y ago
[deleted]
ofcourseyoudo 3y ago
[flagged]

22 points by tomohawk 3y ago

Doesn't really matter as America can go after funds regardless of where you move to. Just pay your fucking taxes, you got the benefits of the system, pay back into it.

Calvin02 3y ago
The article isn't about income taxes. Income taxes are taxes on income that you earn in any calendar year. The article is about wealth taxes. In addition to income taxes, Norway has a wealth tax, which taxes net wealth above $170k (NOK 1.7M) at 1% [0]. So, if your net wealth is $200k, you are taxed 1% on $30k every year. Separately, it is a myth that the wealthy don't pay taxes. This isn't Reddit. Wealthy pay taxes but they also maximize the value of any benefits already included in the tax code. AMT is an attempt to fix this but has its own problems. [0] https://www.lifeinnorway.net/wealth-tax/ https://www.lifeinnorway.net/wealth-tax/
- seanmcdirmid 3y ago
  Ironically, America does have a wealth tax if you want to relinquish your citizenship. I don't think Norway does, and many rich Scandinavians change citizenship to Switzerland negotiating their taxes straight with the canton they move to (like the founder of Ikea did). It is easier for a Norwegian to optimize their taxes than an American (since America also taxes worldwide income, and you can't just change your citizenship without paying a penalty).
  - laurencerowe 3y ago
    Presumably they don’t need to change their citizenship, they just become tax resident in another country. Most countries only tax residents. Norway is part of the EEA so its citizens have the right to live in Switzerland.
    - seanmcdirmid 3y ago
      Ya, so it is even easier for Europeans. And it wouldn't matter if they were a part of the EEA or not, they would almost definitely negotiate their taxes with the canton of their residency as part of their move (you can easily buy residency in Switzerland). The EEA is more for normal people from the EU who want to work in Switzerland and pay normal taxes (which are still low for Europe).
  - s1artibartfast 3y ago
    The US exit tax is not a wealth tax. It is calling due any deferred capital gains taxes. If you have a billion dollars cash, you can leave and pay zero tax. If you have a billion dollars in assets that have not appreciated since you bought them, you pay zero tax. It is only comes into play if you have investment assets that have gone up since purchase, and you have paid no taxes on them because they are taxed at the time of sale.
    - seanmcdirmid 3y ago
      Ok, that makes sense. Thanks for the clarification.
prottog 3y ago
> you got the benefits of the system, pay back into it The "system" isn't the government, though it's easy to muddle that line, considering some developed countries have government spending that's over half of the GDP (with Norway sitting at around a fifth as of 2021); and the existence of a government that facilitates the "system", which is in reality the private activities of the people, does not make it that without that particular government the system will not exist at all. Imagine a parent who tells a fully-grown child well into his adulthood that they have an ever-increasing claim on what the child produces by virtue of having given birth to and raised him. Does that not sound abusive? That's not the kind of relationship I want with my government. The government, or at least the American one, is meant to serve the people, not rule over them and allow the people to keep whatever scraps the government allows them to keep. Every time you perform a service for somebody or make a widget for somebody -- basically any economic activity -- you are paying back into the system by fulfilling a demand that someone else has. And not just remunerative efforts: every time you pick up a cigarette butt off the street that you didn't smoke, or every time you watch someone else's kid for a night, or you volunteer at a local soup kitchen. Those are all ways that people pay back into the system. Let's not make the mistake of thinking taxation is the only way, or even the most important and effective way. Many roles that are currently performed by government funded via taxation have only been that way very recently in human history, and I'm in no way convinced that this is either optimum or necessary.
- balderdash 3y ago
  >Imagine a parent who tells a fully-grown child well into his adulthood that they have an ever-increasing claim on what the child produces by virtue of having given birth to and raised him. Does that not sound abusive? That's not the kind of relationship I want with my government. The government, or at least the American one, is meant to serve the people, not rule over them and allow the people to keep whatever scraps the government allows them to keep. Thank you for putting that into words, I’ve struggled to succinctly frame the unease that this way of thinking makes me feel.
s1artibartfast 3y ago
How much benefit does someone get and how much should they pay back in? These are reasonable questions.

feerceKitteh 3y ago

“Trickle down job creators flee to another country that still allows them to freeload off the system without paying their fair share”

kelipso 3y ago

> wealthy Norwegians took with them a total fortune of $54 billion when they left. This means that the wealth tax, which was projected to increase revenue by nearly $150 million annually, will result in about 40 percent less revenue than it currently generates So the problem is revenue from wealth tax will only be $90M instead of $150M? As opposed to $0M without the wealth tax? How does having these billionaires physically located in Norway benefit the average citizen? Capital investments should happen wherever they're physically located because economics, big corpos have their HQs wherever they want anyway. Is trickle down economics the entire argument here?

dontlaugh 3y ago
If anything, it seems that improving the weak controls against capital flight is all it would take to correct this problem.
- balderdash 3y ago
  That would work. But it’s a terrifying worldview that citizens should be vassals to the state instead of the other way around.
  - dontlaugh 3y ago
    How so? Capital flight is a form of class warfare. Controls against it are the majority, workers who don’t own capital, enforcing a social contract against those who do. Of course, that will only happen in states where workers are in power. In most countries that isn’t the case and, unsurprisingly, there are weak capital flight controls.
    - prottog 3y ago
      Almost every country with significant capital controls are ones you likely wouldn't want to voluntarily move to.
      - 3y ago

marssaxman 3y ago

But of course an institute called the "American Institute for Economic Research" is going to say that; from the about page, they believe in "the value of personal freedom, free enterprise, property rights, limited government, and sound money."

unmole 3y ago
They sound like a monstrous bunch of people. /s
- deleted 3y ago
  [deleted]
- w______roy 3y ago
  An important skill is reading between the lines, and recognizing libertarian dog whistles. Freedom to them = freedom from government regulating business. Freedom to me = freedom from worrying about businesses poisoning me and my family.
  - unmole 3y ago
    Equating "Wealth taxes are counterproductive" to "Let's posison people" is a quite a leap. It's less reading between the lines and more deranged hallucination.
prottog 3y ago
Do you not believe in the value of those things? Separately, every institute or person that has published anything has an agenda; so the fact that this particular institute has a mission that you perceive to align with their words doesn't mean that their words are wrong. It is by definition an ad hominem fallacy.
- hotpotamus 3y ago
  I'd love to have the same personal freedom as a billionaire. If a wealth tax is a means to accomplish that, then I'm willing to accept it.

expertentipp 3y ago

> mass exodus of wealth creators What exactly wealth they create and for whom? They're guilty of hyper-centralizing all services, assets, and resources. Your yacht will not fit in Lugano Lake, Mr. Viking. Try Marbella or Malaga, the places for Scandinavian success people.

ZeroGravitas 3y ago

A site that has articles attacking the entire concept of wealth taxes thinks it's not working in Norway? Kind of predictable.

zeroCalories 3y ago

Only anti intellectual leftists would deny that increasing taxes increases the odds of capital flight, but it's not the only factor to consider. There are various benefits to living in a country, and a tax increase will not necessarily cause capital flight, or more importantly, decreased tax revenue. Seems like Norway overplayed their cards this time, but that doesn't necessarily mean a wealth tax is bad. Just important to keep in mind that economics is real. Also noticed that a lot of people are suggesting laws against capital flight, but this is also a very risky idea. Having capital that can't be moved inheritly decreases its value. You might be able to capture short term value, but you risk future investment, which could lead to a death spiral.

rdtsc 3y ago

> Dellanna, a management advisor and author, points out that Norway collected about $1.46 billion on its wealth tax in 2019. But the exodus of the wealthy will result in an estimated $594 million in lost revenue. This is the tricky part of "just raise it a few percent" for these wealthy entities. It seems a small increase won't make a large difference". But if they go from 2% to 2.5%, for instance, but there is a country, somewhere which, has a 2.1% tax, they'd all start feeling. So, in some ideal situation, when we consider only one particular country in a vacuum, it should work. But, it's a lot tricker when there are other countries to consider. Even more interesting, other countries could specifically target these wealthy entities by lowering their wealth tax to 2.4%. That's not unheard of with US states and companies: if one state raise their taxes, some state might start courting companies headquartered in that first state and promising tax cuts if they move their headquarters.

deleted 3y ago

[deleted]

ofcourseyoudo 3y ago

[flagged]