Super-rich abandoning Norway at record rate as wealth tax rises slightly | Hacker News Reader

Super-rich abandoning Norway at record rate as wealth tax rises slightly

theguardian.com

27 pointsjimnotgym75 comments

Wealth taxes are probably the most unfair tax that exist as they negatively compound. a 1% wealth tax will make you lose 10% over 10 years. Factor in inflation and you lose maybe 50% of your wealth real quick. This ensures you can never really retire and you have to continue to work no matter what.

Scandinavians love their countries and most would never want to move away. Many rich people could just move a few hundred kilometers in, but yet they haven't even through many places your effective tax rate is 50-80%. They believe in their country, but at some point it just becomes too ridiculously to stay.

Wealth taxes are unfair for the middle class they inevitably end up hitting. Multi billionaires being taxed on their wealth is not really unfair but they never really end up paying those taxes as they have access to legal tax avoidance loopholes so it's always the well off middle class that ends up footing the tax bill.

Wealth taxes should be dependent on what you do with your wealth. Is your wealth creating jobs, start-ups, education, research and innovation that benefit society and the environment? How about no wealth taxes for you. Is your wealth just sitting in hoarded land and real estate, looking to appreciate or for rent seeking opportunities? How about pay up or go fuck yourself.

You open up a lot of conversations here not related to wealth tax. The question is, do you think it is okay for a government to say "hey, we changed our mind and the money you have that we already have taxed we want to tax again". Besides this, are you okay with keeping people in perpetual wage slavery and force people to work until death. The income tax in the US was introduced only for the rich and was only like 2%? But now the taxes is well above 50% for most Americans. It is always a slippery slope.

The federal income tax rate is nowhere near 50% for anyone, much less most Americans.

didn't say federal income tax. I said tax. Federal, state, municipality taxes. Now adding other things like rent tax etc.. Your steak is now 50% more expensive. If not more

Still nowhere close to 50% for anyone.

what makes you think the money is already taxed? People are increasingly against inheritance taxes and the biggest predictor of whether someone is rich is whether their parents are rich

This is no different than the property taxes ordinary home owners have to pay. People generally pay with money from their already taxed wages.

The idea that these incredibly wealthy people are using their money to create jobs is nonsense, they play games with borrowing against their assets they don't spend it. Once money is in the hands of someone like this it is effectively taken out of circulation damaging the economy as a whole

They do play games borrowing against their assets. Why can they do this? Becomes the government have monopolized *the cost of capital* I completely agree this is bad. But giving the government more taxes will not make them suddenly change their mind about this.

What do you mean by negatively compound? I assumed you meant that if you gain no income, losing 1% per year means you lose less than 10% over 10 years, but you don’t seem to have acknowledged that.

0.99*10 = 90%. Why do you need to work just to keep your wealth at the same level? Isn't that a big red flag?

0.99*10 = 9.9, I should think; of course, 0.99^10 ≈ 0.9 but 0.99^n is not in general well-approximated by 1-0.01n.

Yeah, that's right. I wrote two stars but apparently they're removed by HN.

I think it should be 0.99^10, since you lose 1% every year, just like interest.

Example showing final balance at end of each year:

Year 0: Start with $1000

Year 1: $990 (1% is $10)

Year 2: $980.1 (1% is $9.9)

...

Year 10: $904.38

Yes, you're right. I made two stars but HN removes that. Many times in programming we use two stars for meaning ^

Other follow up, you can always buy government treasuries for yield to offset the tax, which requires very minimal work. At billionaire wealth level, you most certainly have someone managing the funds for you.

They yield 3-5% right now. Official inflation is 8%. You're losing 3-6% based on official inflation data. I don't know about you though, but things went up a lot more than 8% for me. But let's say just 3% a year loss, that's a loss of almost 30% over 10 years.

You’re not entitled to be sheltered from inflation, especially not for just passively investing income.

That has nothing to do with the term “negative compounding”.

Although for what it’s worth, I don’t think it makes a lot of sense for the wealthy to comfortably do nothing and contribute nothing to society.

I would prefer wealth weighted income taxes personally.

> This ensures you can never really retire and you have to continue to work no matter what.

Norway has a state pension and isn’t especially notable for late retirement (modulo life expectancy). One usually also invests one’s savings which rather mitigates the effect of the tax and inflation.

>One usually also invests one’s savings which rather mitigates the effect of the tax and inflation.

There are no guarantees that these investments will beat the higher hurdle rate. Assuming it automatically mitigates negative effects is incorrect.

Presumably this is to be treated as a probabilistic objection, in which case I’d suggest that in expectation actually there are many strategies that will do better than holding cash. Otherwise the wealth tax isn’t exactly a problem given the lack of absolute guarantees that e.g. humanity won’t go utterly extinct in our lifetime.

What?

Income taxes are far more painful for the middle class, because they prevent them from accumulating any wealth in the first place.

And since the middle class spends most of its life trying to accumulate wealth, and only a small part of it living off it, income taxes make up a vastly larger share of what they will pay.

Wealth taxes horrify the rich, which is why they try so hard to convince someone making 60k/year from their job, and 5k/year from their investments that taxes on the latter are what keeps them from becoming a millionaire.

That's a silly argument. Every home owner in America pays a "wealth tax" in the form of a percentage of the value of their house. Somehow we homeowners generally manage to survive, most of us actually have growing property values over time. Rich people say I can't just sell some of my valuable assets to pay the wealth tax, they might not generate cash. Well tough luck, we homeowners have to deal with that too.

It's really funny later in the article where the billionaire says he didn't have friends at first, but then several other Norwegians (presumably also tax dodgers) moved there and now they can have coffee. I'm really curious about the coffee shop that they all go to.

I'd be less curious about the shop and more about how much they tip

>>Some politicians are, as you know, blaming the wealthy people moving.

These politicians truly are the stupidest form of humans alive.

>> “The model in Norway is that everyone should contribute relevant to ability and therefore those that have a greater ability to pay taxes, should pay a little more.”

Since taxes are based on % rich already paid more.

Not just percentage but a progressive percentage. So they paid even a higher percentage already!

I could understand wealth taxes in a deflationary environment only. In an inflationary environment wealth taxes are an abomination.

Instituting them against only the ultra-wealthy is just “boiling the frog” as the income targets will only possibly go down over time.

you’ve got that the wrong way round. tax raises reduce inflation

Taxes increase inflation. You buy a steak at a restaurant. If they have to pay 50% extra for their employees in tax, and 50% extra for the meat then it will be more expensive for them to sell you the steak.

Modern Monetary Theory disagrees with you. Increasing taxes reduces spending & money supply, thus reducing inflation.

I don't take MMT serious. It has been wrong about almost everything. The theories are just theories without substance or evidence.

The detractors of MMT have been wrong far more consistently than it has been.

Which in effect leads to everyone wanting more money. So everything starts costing more. Thus inflation goes up.

Tax raises reduce inflation because hoarding money increases inflation. These people don't spend their money, they borrow against their assets. Taxing that hoarded money beings it out of the dragons' dens and back into circulation

Some day people who only ever took econ 101 and decided that they therefore understand completely how a complex set of interrelated systems work will realize that they're suffering from Dunning-Kruger effect, but apparently it won't be today.

Can only agree with you ;)

accusing others of the Dunning-Kruger effect is rarely a sign of a healthy mind

Is accusing others of having mental health problems less so, I wonder?

I suspect that implying someone is unhealthy is less unhealthy than implying someone is stupid

Capital gains is taxed at a lower % than salary. I work as a contractor to be able to save on taxes, while my co-workers doing the same work are taxed at around 50% total. I'm not sure what the solution is, but while the working and middle classes are taxed to death the rich have all kinds of loop-holes giving them an unfair advantage when they already own everything.

A good start would be to tax all income at the same rate. Raise it for capital and lower for salary to meet in the middle. This would mean I pay more yes, but I'm not a hypocrite and actually want to see a better system.

This article is missing some key numbers, % of tax that these “lost” receipts make up. The investment that 30 people make up for the entire economy. How much investment does the country loose if any?

All they lost were money sinks. A place that money gets sucked out of the economy and does nothing, so it's a benefit overall

I suppose the Government could change the rules to adjust for this. Change the rules for non-domiciled people reducing the days they were able to spend in country, for instance.

Rules like this already exist.

Indeed, but they could lower the number of days...

Ahh Yes, the privileged of being born a certain place makes you forced to continuously pay them money... That's definitely not slavery

    More than 30 Norwegian billionaires and multimillionaires left Norway in 2022

And the country is better off without them, good riddance.

This is obviously a propaganda piece for why we shouldn't have progressive taxation. Articles like this are a clear attempt at keeping the Overton window[1] on the side of regressive tax policies.

Sorry, I'm not buying it. There's no fundamental right that you should be allowed to siphon that much wealth out of the global financial system. Pretending that everyone would actually be better off if we continued to let these people lock up all the wealth is a joke.

This little shell game they're playing only works today because the global community is only just now waking up to the grift that's been taking place.

1: https://en.m.wikipedia.org/wiki/Overton_window

I expect better from The Guardian to be honest

What would have made the reporting better?

100%, I keep seeing this argument being trotted out like every country should have a race to the bottom to keep billionaires within their borders whatever that means.

I don't really think you can stop them at the global financial system level, but I would think at the national level, a country could at least control their financial system; it doesn't seem like you have much sovereignty over your nation otherwise.

How is this a propaganda piece? It seems quite neutral, including both perspectives of the debate, and The Guardian itself is biased to the left! The article doesn't seem to include anything beyond factual reporting.

Its subtle, but its definitely not neutral.

The issue is that the (extremely short and light on any meaningful discussion of the issue) article is presenting this situation from the perspective of the inconvenienced Billionaire and from the perspective of how much tax revenue is being lost.

This immediately frames progressive tax policies, in the readers mind, as having "bad" outcomes, since the outcomes for the Billionaire and the tax base are "bad". No government policy is going to have completely positive outcomes for all parties all of the time and cherry picking two "bad" outcomes is the problem.

Assuming for the moment that it should even continue to be legal for people to amass that level of wealth, the challenges the Billionaire class face should be the absolute lowest possible priority for public policy. The fact that it's the first talking point is the issue.

There are myriad ways this article could be written that don't focus on how "hard" these policies are for the Billionaire class and instead focus on how good they are for everyone else.

> The Guardian itself is biased to the left

I would describe The Guardian as being biased towards neoliberalism

I don’t see any propaganda here. The Guardian lays out the facts and obtains quotes from both sides. Reporting a statistic is not propaganda.

There is an argument to be made that all journalism is intrinsically biased and the simple decision of _which_ statistic to publish is meaningful.

So, the guardian should have suppressed these facts in an act of non-propaganda?

Actually, that would _also_ be propaganda.

Sounds like the game is rigged.

The Guardian is overwhelmingly progressive already. Its writers are generally pro-worker and anti-corporate. I don't see how publishing one article about one statistic points to an anti-tax bias.

If we were talking about the WSJ I would agree.

Im not sure what you're complaining about.

People left, thats not opinion it’s fact. Reporting facts isn't propaganda.

Policies have consequences. Governments are free to enact them and people are free to leave if they dont like them.

they aren't free to leave if you setup the right policies.

just seize all their assets through imminent domain and don't allow them back in the country.

Obviously a little extreme but there are a lot of policy options between do nothing and the most extreme.

That would be illegal. Private property is private property. It belongs to the individual, not the state. The state can use eminent domain if it wants to build a road for example, but not to retaliate against a person leaving.

Presumably the suggestion is to enact legislation under which the state would effect such seizures, which wouldn’t facially be unlawful. It might be unconstitutional, or impermissible in a rechtstaat, or inconsistent with a basic structure, but that wouldn’t be the case everywhere. In the Norwegian case the unconstitutional operation of a law is disapplied inter partes but not erga omnes at least de jure, although the state may take a hint.

Even better, make it like East Germany and set up barbed wire and guard posts to prevent people from leaving. Life would be so great.

Sounds like a great way to make sure nobody invests in your country in the first place!

i.e. Argentina and their constantly poor choices

I'm trying to point out there are a spectrum of policy options and the whole thing is not black and white like most people look at it.

taxes are knobs and dials not on off switches. also, the levels of those taxes make sense based on the economy and the outcomes desired.

some services can be managed better by private enterprise and others by the government. It takes money to fund those government services.

Your comment that the rich "siphon that much wealth out of the global financial system" is wrong and is an argument often made by people with limited knowledge of economics. The pie is not fixed.

> The pie is not fixed.

Nor is it infinite.

It is true it can grow and shrink.

It is not true that the growing and shrinking are always non-zero sum.

It is also not true that the growing can go on forever unbounded.

It is also not true that the growing should be the most important priority.

It is also not true that the benefits of the growing or the deficits of shrinking are always distributed equally.

Protecting the vulnerable from the above is one of the core responsibilities of the state and is the exact purpose of progressive taxation.

Some people think the people that are most willing and capable of rearranging their financial situation won't when it's advantageous to them

> Ole Gjems-Onstad, a professor emeritus at the Norwegian Business School, said he estimated that those who had left the country had a combined fortune of at least NOK 600bn.

(which is around 60bn EUR), well this does not sound like a good idea

Why, were they spending that money or was it just sitting in bank accounts? Why does non circulating money matter? It seems like a drain more than anything else

The only money that doesnt circulate is cash under your bed.

I doubt they are doing that.

Bank deposits are lent out. Equity investments enter the system, etc.

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