Norway Has a Message for Democrats Pushing a Wealth Tax

With a higher wealth tax hitting, Norway’s rich are abandoning the Land of the Midnight Sun for countries that allow them to keep more of what they earn, a warning to the Democratic senator from Massachusetts, Elizabeth Warren, as she drums up support for her Ultra-Millionaire’s Tax.“A small tax on the great fortunes of more than $50 million,” Ms. Warren says, “can bring in nearly $4 trillion to rebuild America’s middle class.” The operative word is “can,” as human beings are dynamic and react to factors such as a higher cost of living.Norway is learning this lesson the hard way. It is one of the few nations in the Organization for Economic Co-operation and Development that taxes not just income but net wealth. Its Labor Party increased the bite that the government takes out of nest eggs. Now the golden geese are roosting elsewhere.The third-largest newspaper in Norway, Dagens Naeringsliv, found that more than 30 Norwegian multimillionaires and billionaires pulled up stakes last year, more than in the previous thirteen years combined.“Even more super-rich individuals are expected to leave this year because of the increase in wealth tax in November,” reports the Guardian’s wealth correspondent, Rupert Neate, “costing the government tens of millions in lost tax receipts.”Norway’s fourth-richest person and its highest taxed last year, Kjell Inge Røkke, relocated to Lugano, Switzerland, taking his $1.9 billion fortune with him. The move will allow him to keep $16.3 million each year and change the calculus of Oslo’s government.Mr. Røkke’s open letter explaining his flight to the Alps from the fjords illustrated the fact that people and capital are more mobile than ever. While the city across the Italian border “is neither the cheapest nor has the lowest taxes,” he said, it has “a central location in Europe” and “for those close to the company and to me, I am just a click away.”Like Ms. Warren’s “small tax,” the Norwegian increase sounds tiny, a 0.1 percent hike on the old top state bracket of 0.3 percent, which is combined with the 0.7 percent municipal tax rate for a maximum bill equaling 1.1 percent of an earner’s net worth.The municipal wealth tax rate applies to single taxpayers with assets of $158,000 and $316,000 for married couples and the state rate — with the new, higher bracket — to net worths of $1.8 million and $7.4 million for single and married citizens respectively, the figures converted from Norwegian Kroner.Those aren’t the “great fortunes” Ms. Warren and others describe when pitching their tax hikes, yet those citizens and others making even less are now left to pick up the slack for earners who fled. A projected increase in tax receipts on paper is now projected to bring in about 40 percent less in practice.“The recent wealth tax increase in Norway was expected to bring an additional $146M in yearly tax revenue,” a management advisor and author, Luca Dellanna, tweeted. “Instead, an estimated $54B-worth of ultra-rich left the country, leading to a lost $594M in yearly wealth tax revenue, a net decrease of $448M.”Norway’s pursuit of class warfare over common sense recalls many similar examples, the most infamous being the 10 percent luxury tax on yachts, private planes, and scores of other items, part of the 1990 budget deal championed by Massachusetts’ Democratic senator, Edward Kennedy.Congress estimated that $31 million would gush into the Treasury. The actual sum was half that, not to mention losses when boatbuilders were forced to fire thousands and file for bankruptcy as customers shopped — and paid taxes — elsewhere, turning America from a net exporter of yachts into a net importer.In 2003, the Democratic congressman from Rhode Island, Patrick Kennedy, sought to rescue the industry from his father’s legacy with a subsidy he called “exactly the opposite of a luxury tax,” but damage done by government is not so easily undone by it.Democrats like Ms. Warren often cite Scandinavian countries as roadmaps for America’s path to a socialist utopia. On the wealth tax, Norway is flashing a stoplight, warning that you can only tax golden geese so much before they fly away, taking their golden eggs with them.

Norway Has a Message for Democrats Pushing a Wealth Tax

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