The Wealth Tax (again)

The Norwegian Wealth Tax - A Critical Reflection

Across much of the Western world, political leaders are struggling to meet the expectations of the very populations they claim to serve. Expansive welfare systems, costly geopolitical commitments, and growing state expenditures increasingly rest on the shoulders of a shrinking group of productive taxpayers. At the same time, values that once defined Western civilisation—individual liberty, personal responsibility, and the protection of private property—are steadily eroding under expanding government intervention and reckless spending by political incompetence and arrogance.

Few policies illustrate this shift more clearly than Norway’s Wealth Tax.

Illustration from www.peoplespundit.com

A Growing International Push for Wealth Taxes

The debate over wealth taxation is not confined to Norway. Across the Western world, several countries are now openly considering the introduction—or re‑introduction—of a wealth tax:

• United Kingdom: Former Labour leader Lord Neil Kinnock publicly urged a 2% wealth tax on fortunes above £10 million, and government officials have refused to rule it out. [ssb.no]

• France: Lawmakers have demanded that the government reintroduce a wealth tax as part of ongoing budget negotiations, and a proposal for a 2% levy on the richest 0.01% is actively debated. [finance.yahoo.com], [lifeinnorway.net]

• Denmark: The government has proposed reinstating a wealth tax, potentially taxing fortunes over DKK 35 million, sparking national controversy and relocation threats. [news.bloom..bloombergtax.com], [learn.stateless.to]

• Italy: The idea of a wealth tax is the subject of heated political debate, particularly as EU‑level discussions evolve. [taxfoundation.org]

• European Union: The European Commission is actively studying the possibility of a EU‑wide wealth tax, confirming that the idea “is being explored.” [taxfoundation.org]

• United States: While no federal wealth tax exists, several states—including California—are pursuing wealth‑based levies, and national debate remains intense. [finance.yahoo.com]

The trend is unmistakable: wealth taxation is regaining political momentum—despite its historical failures.

Why Wealth Taxes are becoming more likely

Despite their poor economic track record, wealth taxes continue to attract political support. This happens for three reasons:

a)   They sound morally justified

A wealth tax is marketed as a moral policy asking “the rich to pay their fair share.” In times of crisis or fiscal pressure, this framing becomes politically irresistible. Media narratives about inequality reinforce the illusion that a simple, benevolent solution exists, even when evidence suggests otherwise.

b)   They are initially sold as targeting only “the super‑rich”

Proposals in the UK, France, Denmark, and elsewhere all follow the same script:“This will only affect billionaires or multimillionaires.”But as the Norwegian case shows, thresholds always shift downward. What begins as a tax on extreme wealth soon expands to include ordinary homeowners, savers, and retirees.

c)    Most people support taxes they believe will not hit themselves

Wealth taxes poll well because the majority of voters do not consider themselves wealthy. When UK voters say they support taxing fortunes above £750,000, or when Norwegians support taxing net worths that would be considered less than middle class elsewhere, the political incentive is obvious: People will always support taxes they think someone else will pay.

This dynamic is clear:  Wealth taxes start small but expand rapidly as governments seek more revenue. In 2023, 671.639 Norwegians paid wealth tax. That is approximately 25% of employed persons in Norway.

Norway’s Wealth Tax: A Case Study in Harm

Norway offers one of the clearest examples of a wealth tax gone wrong. Despite already taxing property at the municipal level, Norway imposes a national wealth tax on nearly all assets—property, savings, business equity, and more. The thresholds are low by international standards (2025: USD 170.000), meaning a large portion of ordinary citizens fall under its scope.

Capital Flight and Lost Competitiveness

The economic consequences have been severe. Wealthy individuals, entrepreneurs, and investors have left the country at unprecedented rates, often relocating to Switzerland or other low‑tax jurisdictions. Their businesses, capital, and job creation leave with them. Norway has even imposed exit rules taxing unrealized gains to prevent departures—creating what is effectively a fiscal barrier around the country.

John Fredriksen, long considered Norway’s richest man (though now a Cypriot citizen), recently relocated from London to Dubai primarily because of major UK tax reforms that directly affected wealthy foreign‑born residents. He renounced his Norwegian citizenship in 2006 for the same reasons he now has left the UK. Mr. Fredriksen is not known to mince his words, and his official statement to UK media was brief:

"Britain has gone to hell — like Norway"

Wealth Tax refugee John Fredriksen

Liquidity Problems for Ordinary Citizens

Because the tax is based on asset value rather than income, many citizens face tax bills higher than their annual earnings. Small business owners, individuals with illiquid assets, and pensioners owning modest homes are often the hardest hit.

Concrete Example: An Impossible Tax Burden

To understand how devastating the Wealth Tax can be for a Norwegian taxpayer, consider the case of one of my clients, who is currently preparing his taxes.

This man is 63 years old, built his company from scratch. His wealth is not liquid — it is tied up in productive assets and long‑term value he created through decades of work. Yet the tax system treats him as if he has millions in cash available.

Here is his situation for 2025 (all numbers in NOK):

• Annual salary income: 711,784 (barely above Norwegian median income)

• Value of assets: 125,123,272 (almost entirely the company he built himself)

• Income tax: 284,400

• Wealth tax (1.1%): 1,376,356

  
  

This is where the system becomes absurd:

He cannot simply “take money out of the company” to pay the tax

Loan agreements and creditor covenants prohibit him from withdrawing more than a minimal amount. Banks require the company to maintain liquidity, equity ratios, collateral levels, and operational buffers.

If he violates these terms, he risks:

• triggering technical default,

• immediate loan repayment demands,

• loss of credit lines,

• collapse of the company itself.

  
  

In other words: The state demands money he legally cannot access.

If he could take money out, the tax system punishes him again.

If he tries to extract funds through dividends, he is hit with a 37.4% dividend tax.

So, to pay 1,376,356 in wealth tax, he would need to withdraw 2,2 million.

In practice, this means:

He must pull 2.2 million out of his company to pay a tax bill larger than his salary — and be taxed heavily for doing so.

His situation is financially impossible

His total tax bill (income tax + wealth tax) is much higher than his income. He is effectively taxed 233% of his gross income.

Of course, this is not sustainable, nor it is rational. Still, the state funded Norwegian media, many liberal academics, and labour unions defend this as “social justice”.

A Tax That Fails on Its Own Terms

Even after all this damage to individual taxpayers and businesses, the Wealth Tax contributes only a fraction of national revenue. In Norway it amounts to 0,4-0,6% of its fiscal income. It does nothing to reduce inequality, discourages investment, and erodes the foundations of economic growth.

The bloated Norwegian state holds the world’s largest sovereign wealth fund but still imposes a wealth tax on ordinary middle-class taxpayers. It is a punishment on productivity and savings set aside for a rainy day.  

The Broader Political Shift

Western political culture has increasingly embraced dependence on state support. Governments promise benefits to voters; taxpayers foot the bill. As expectations rise, politicians search for new revenue sources— the wealth tax becomes an easy target. But as Norway shows, the burden quickly shifts to those never meant to pay it.

Conclusion: A Clear and Urgent Warning

Wealth taxes may be gaining political traction across Western nations, but their appeal is deceptive. They appear noble, seem targeted only at the ultra‑rich, and enjoy broad support from voters who assume they will be exempt. Yet history—and Norway’s present—prove the opposite:

• Wealth taxes expand.

• They harm the productive.

• They drive away the very innovators and investors that societies rely on.

• And they ultimately affect everyone.

  
  

Countries considering wealth taxes today should look closely at the Norwegian experience. The evidence is overwhelming:

• A wealth tax does not create fairness—it creates decline.

• It does not strengthen societies—it weakens them.

• And once introduced, it rarely remains limited to the “super‑rich.”

  
  

The warning is unmistakable: A wealth tax is not a solution—it is a slow‑moving economic disaster.

It is often said in Norway that envy is stronger than even our most fundamental instincts, a sentiment that finds its clearest expression in the Wealth Tax.

The American economist and long-time Senior Fellow at the Hoover Institution at Stanford University, Thomas Sowell seems to agree:

Envy was once considered to be one of the seven deadly sins before it became one of the most admired virtues under its new name, “social justice”.