More Than 30 Norwegian Billionaires Left Norway In 2022 After Wealth Tax Hike: Report

Norway's super-rich people are leaving their country after the government increased wealth tax to 1.1%, a new report revealed. More of the northern European country's billionaires and multimillionaires are expected to flee this year due to the wealth tax hike.

In 2022, more than 30 Norwegian billionaires and multimillionaires left Norway after the government hiked wealth tax in November, The Guardian reported, citing a from the newspaper Dagens Naeringsliv. The said number is more than the total number of super-rich Norwegians who left the country in the past 13 years, the report added.

"In my opinion it is a little bit like Brexit. Norway has no great tradition of self-harm, and the flood of entrepreneurs moving abroad has come as something of a shock. Some politicians are, as you know, blaming the wealthy people moving, but I think many ordinary people simply do not like that our best investors are leaving," said Ole Gjems-Onstad, professor emeritus at the Norwegian Business School of the exodus of Norway's super-rich.

Gjems-Onstad believes the wealthy who've left the country had a collective fortune of at least NOK 600 billion (approximately $57.1 billion).

The exodus of super-rich people in Norway has been attributed to the "relatively small" wealth tax increase. The maximum wealth tax rate was increased to 1.1% in November, including a municipal tax of 0.7% on assets exceeding NOK 1.7 million (approximately $161,000) for individuals and NOK 3.4 million (approximately $323,600) for couples.

Industrial tycoon Kjell Inge Røkke, who has an estimated fortune of NOK 19.6 billion (approximately $1.8 billion), wrote in an open letter in September to other shareholders of industrial investment company Aker ASA that he moved out of Norway and into Lugano, Switzerland, as the city "is neither the cheapest nor has the lowest taxes" but that "it is a great place with a central location in Europe."

The Dagens Naeringsliv estimated that Norway lost about NOK 175 million (approximately $16.6 million) after Røkke's relocation. Røkke, who is the chairman of the board at Aker ASA, was one of the country's highest-taxed individuals, as per the Norwegian newspaper, and he is believed to have paid about NOK 1.5 billion (approximately $142.8 million) in taxes since 2008.

Another business mogul, Tord Ueland Kolstad, told Norwegian broadcaster TV 2 that moving to Lucerne, Switzerland, was "not what I wanted" but the "toughened and increased tax rules of the current government means that I, as the founder and responsible owner, have no choice," as per The Guardian.

Kolstad told the Norwegian newspaper Aftenposten that he initially had no friends in Switzerland but "now there are several of us [Norwegians]" and they meet at times for coffee. Kolstad called the wealth tax increase "unjustifiable."

In December, the Financial Times reported that the latest super-rich Norwegian to join other tycoons to leave Norway was the 31-year-old co-founder of cryptocurrency data firm Dune, Fredrik Haga. At the time of his exodus, Haga said it wasn't about not wanting to pay his taxes. "It's about paying taxes on money I don't have," he explained. As with other Norwegian business moguls, Haga made the switch to Switzerland, in the town of Zug.

Tax expert at think-tank Civita told FT that Norway's wealth tax "distorts Norwegian business in all sorts of ways" as it forces business owners "to ask their companies for dividends, sometimes bigger than profits" and in turn, this "substantially increases the will not to invest in companies."

Several weeks after the wealth tax was increased and reports of fleeing billionaires emerged, Norway introduced a proposal to further hike taxes on the super-rich attempting to leave the country, according to a Bloomberg report.

Officials reportedly agreed to end a five-year limit on exit taxes for unrealized gains, as per Bloomberg. Norwegian officials also reportedly agreed to extend the rules "to apply to the transfer of shares to close family members living abroad."

Meanwhile, in the United States, some states are pushing for a wealth tax as Congress continues to dampen hopes for a national wealth tax.

Lawmakers from eight states have reportedly stepped up action in introducing state wealth taxes in a bid to raise funds for social programs. "Today we are here to put billionaires and multimillionaires on notice: they will pay what they owe," said Noel Frame, a Democratic state senator of Washington, in a January Zoom meeting that discussed state wealth policy, CBS reported.

While states introducing wealth tax had different approaches for taxing the rich, most of the strategies included policies for assets, as per CBS.

So far, the states looking to tax super-rich Americans are California, Connecticut, Hawaii, Illinois, Maryland, Minnesota, New York and Washington. On the possibility that wealthy people will move to a different state if they are taxed, Frame said "the data doesn't support it," adding that lawmakers have received threats whenever they tried to tax billionaires but no mass exodus of the wealthy has been seen in the U.S. yet.