Norway Wealth Tax
Source
In 2022, Norway increased their wealth tax to 1.1%. In response, some high profile billionaires moved out of the country. According to a viral claim, this resulted in a net loss of revenue. Is this true? No. Over the next two years, wealth tax revenue soared to all time highs.
To understand how the false claim came about, here is the original source calculation. It is reasonable enough napkin math, where it went wrong was in using the Guardian's claim that the net worth of emigrants was $54B USD
The Guardian estimates the wealth of the relocated millionaires at 600B NOK, or $54B. That would have been taxed at 1.1%, which means $594M in wealth tax lost Norway raised NOK 16.1B = $1.46B in wealth taxes in 2019 (page 3 of the PDF below); increasing the wealth tax from 1% to 1.1% would have increased that amount by 10%, or $146M The net decrease I cite in the first tweet relates to wealth tax revenue alone and neglects that the millionaires who flew the country would also have paid other taxes and would likely have contributed to the economy directly and indirectly. Of course, one should also consider whether those people would have left anyway, etc. Still. A cautionary tale. theguardian.com/world/2023/a…. wealthandpolicy.com/wp/BP138…
If you do the rough math from the original post, but plug in the verified $4.3 billion number rather than the $54 billion claim, you get a net gain of about $100 million rather than a loss of $448 million. Contrary to the original claim, Norway is on the left of the laffer curve.
This comports with more careful academic studies of wealth taxation and migration. This paper finds that while there was some effect from a similar wealth tax in Sweden, it was statistically quite small, and thus well below the peak of the laffer curve nber.org/papers/w32153
The whole thing has been an interesting case study in how bad information spreads. A year after the original post, a company that helps people evade taxes made this nice graphic and article repeating the false claims without citing the original tweet
🇳🇴 The recent wealth tax increase in Norway was expected to bring an additional $146M in yearly tax revenue. Instead, individuals worth $54B left the country, leading to a lost $594M in yearly wealth tax revenue. A net decrease of $448M+ ↓
From there it has gone viral countless times, often without citing any sources at all. Most recently, Elon boosted it by replying to an unusual_whales post based on the same confusion
The blog post by the tax avoidance company even got indexed by google AI and served in search, providing legitimacy to the claim of lost revenue despite that specific claim never appearing in the mainstream press coverage of the issue
