Wealth taxation is one of the most self-destructive policies that politicians can impose on a nation.
Such laws directly divert existing capital from the private sector and discourage the accumulation of new capital.
This means less long-run prosperity, with ordinary workers losing out.
I also view such laws as immoral, which means we should cheer for taxpayers who take steps to protect their (already-taxed) assets from greedy politicians.
This is why I applauded earlier this year when reading about successful Norwegians fleeing to Switzerland in response to an increase in the burden of the wealth tax.
Let’s revisit that issue today. Ott Ummelas wrote a story for Bloomberg about the ongoing damage of that nation’s wealth tax.
Some of Norway’s richest citizens…rage at a fiscal regime that drove dozens of them into exile in Switzerland. One of the world’s most prosperous diasporas has swapped the fjords for the Alps to escape a double whammy of higher wealth and dividend taxes since…Prime Minister Jonas Gahr Store stepped in less than two years ago. …Tord Kolstad, an entrepreneur listed among Norway’s 400 richest people by local media, is among expatriates fuming at the clampdown. “There are people coming down here every week from Norway, still,” he said in a phone interview from Lucerne in central Switzerland. “A lot of people do it because they feel they are forced. The main thing is the taxation system.” …Kolstad isn’t alone in voting with his feet. Some 65 rich Norwegians with combined net wealth exceeding 47 billion kroner moved to Switzerland in the space of a year… They include oil billionaire, Aker ASA Chairman Kjell Inge Rokke, the country’s seventh-wealthiest person, according to Kapital; Kristoffer Reitan, an heir to retail tycoon Odd Reitan, and more recently, Alfie Haaland, the father of soccer superstar Erling Haaland. Bjorn Daehlie, a multiple Olympic champion in cross-country skiing, and Jorgen Dahl, a home security tycoon, have also emigrated, as has Norway’s richest woman, Ninja Tollefsen.
I’m glad all of these people escaped.
But that’s not the purpose of today’s column. Instead, I want to focus on the whining and entitled mindset of Norway’s Prime Minister.
This economically illiterate buffoon (just like a former French Prime Minister) believes in victim-blaming.
The 63-year-old prime minister has called the emigration of wealthy people “a breach of a social contract.”
Maybe I’m just a cranky libertarian, but I don’t think successful people have an obligation to be passive victims of bad government policy.
Though, as explained by Wikipedia’s page about social contract, it depends on whether you believe in “negative rights” or “positive rights.”
That being said, nobody signs a contract to be a victim. As such, I don’t think there’s an obligation to surrender to expropriation.
Let the people who believe in redistribution and entitlements all live with each other. We’ll see how well that works out.
P.S. By the way, I’ve been wondering why so many rich Norwegians decided to escape when the wealth tax was increased.
Such a tax is economically foolish and a terrible example of double taxation, to be sure, but boosting the rate from 0.85 percent to 1.1 percent did not seem that dramatic. At least not dramatic enough to produce a sudden and massive exodus.
But the story notes that effective rate almost doubled because of other changes. And politicians also increased the double taxation of dividends and capital gains.
Norway’s maximum wealth tax rate, applicable to fortunes in excess of 20 million kroner, was increased to 1.1% by Store’s cabinet from 0.85%.., Conservative-led government. A reduction in rebates means the effective rate almost doubled. On top of that, the effective tax rate on dividends and capital gains on shares rose to 37.8% last October, up six percentage points from two years ago.
P.P.S. The article states that the leftist prime minister is wealthy. But it also notes that he “inherited money from his grandfather.” By contrast, the vocal opponent of the Norway’s class-warfare, Tord Kolstad, “has a self-made fortune.”
All of which supports the stereotype that self-made people (i.e., ones who create wealth) are much more sensible than those who inherit wealth (and thus tend to be leftists who try to assuage their guilt by supporting higher taxes on other people).
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Image credit: Jim Nix | CC BY-NC-SA 2.0.
