Will the rich leave and the economy collapse? That’s not how wealth taxes work.

Wealth inequality continues to grow, and we have already become accustomed to the fact that each successive year sets new records for the concentration of the world's wealth in the hands of a few. Currently, the twelve richest people possess more than the poorer half of humanity. In this situation, proposals for reforming tax systems are appearing with increasing frequency—reforms that would shift part of the burden from labour and consumption onto wealth and capital. Each time, they are met with outraged voices painting truly catastrophic visions.

If they are to be believed, the introduction of a wealth tax would result in an immediate exodus of the rich. From one day to the next, they would leave the country, taking their assets with them and starting a new life in a more tax-friendly place. This, in turn, would supposedly lead to companies closing, declining investment and mass unemployment. In short: economic ruin. But what is the reality?

Lessons from Norway

The policy of the Norwegian government provided a certain test of these predictions. After the 2021 elections, a centre-left coalition led by the Labour Party took power in the country and subsequently increased the tax burden on the wealthiest. The highest wealth-tax rate rose from 0.85 to 1.1 per cent, tax reliefs on the valuation of shares were limited and the tax on dividends was increased. The government also began tightening regulations concerning the taxation of unrealised capital gains of people moving abroad. Although these were not drastic changes, they met with fierce criticism and opposition from the right.

From time to time, the media reported on further wealthy people leaving the country, while liberal commentators treated this as evidence of the Labour Party's policy failure. It was predicted that the departure of the wealthiest taxpayers would cause budget revenues to fall, that there would be no new investment and that the entire economy would suffer as a result. Norway was supposed to serve as a warning against introducing similar solutions in other countries. However, this was definitely premature rejoicing on the part of opponents of the wealth tax.

Recently, economist Marius A. K. Ring published a study analysing the effects of Norway's reforms in recent years. His findings show that the worst-case scenarios did not come true. The tax changes prompted at most a hundred wealthy taxpayers to leave, which did not significantly affect the reform's fiscal impact. According to Ring's calculations, if the changes had not prompted anyone to leave, wealth-tax revenues would have increased by approximately 75 per cent between 2021 and 2024. After taking into account emigration caused by the reforms, the increase still amounted to 71.5 per cent. What is more, the author found no evidence of any significant reduction in investment by Norwegian companies or of an increase in the number of bankruptcies. Companies belonging to owners who emigrated remained economically active and did not reduce their investment. There was also no indication that the reforms increased the outflow of startup founders and inventors or limited the inflow of these groups to Norway. Neither in Scandinavia nor in other parts of the world is it easy to find evidence of the harmfulness of wealth taxes.

Where else is entrepreneurship “punished”?

Norway is not the only European country to have decided to tax large fortunes. In Spain, a wealth tax had been contributing to regional budgets for years, and in 2022 the government of Pedro Sánchez introduced an additional solidarity tax, whose main aim was to curb tax competition between different parts of the country—conservative authorities in Madrid and Andalusia had been abolishing their own levies in order to attract wealthy taxpayers. The new levy equalised rates, regardless of regional practices. The solidarity tax applied to net assets exceeding €3 million, with progressive tax rates, leading to an increase in budget revenues but not to an outflow of billionaires from the country.

For years, large fortunes were also taxed in France, until Emmanuel Macron abandoned this policy, hoping in this way to increase the country's economic competitiveness. Although the negative effects of the wealth tax were never proven, the effects of abolishing it, along with other tax reliefs for the rich and business, are all too visible—in the course of the liberal president's term, public debt reached record levels, largely as a result of regressive tax policy, which, depending on the calculation, cost anywhere from several dozen to several hundred billion euros.

Macron and his political camp would most gladly shift the costs onto the less affluent through cuts to public services. The left points to restoring the wealth tax in a new form as an alternative. Economist Gabriel Zucman proposed introducing a minimum tax of 2 per cent on net wealth exceeding €100 million. The wealthiest would not be able to reduce their total tax burden below this level, regardless of their use of various reliefs or loopholes in the financial system. A bill based on this idea was adopted by the National Assembly in 2025, but was rejected by the conservative Senate. Explaining their opposition, liberals and the right resorted to standard arguments—in their view, it would amount to punishing entrepreneurship, leading to declining investment and mass emigration by the rich.

One safeguard against billionaires fleeing abroad is the so-called exit tax, or a tax on unrealised capital gains. It is not a punishment for moving itself, but a tax on the increase in the value of assets, such as shares, that occurred while the wealthy person lived in a given country. This allows the state to collect the taxes due even if the owner sells their assets only after leaving. Norway tightened this type of regulation in 2022 and 2024. It is true, however, that ideally, as taxes on great fortunes became widespread, such safeguards would not be necessary.

Tax all billionaires

Many problems could be solved by introducing global tax standards in this area. Gabriel Zucman, already mentioned, is one of the leading advocates of this idea. In a report prepared in 2024, he estimated that introducing a minimum tax of 2 per cent on billionaires' wealth would generate as much as $250 billion annually. Extending it to people with assets exceeding $100 million would mean a further $100–140 billion in tax revenue. International coordination would make it more difficult for the wealthiest to exploit differences between countries, putting an end to flights to tax havens. This is still a relatively modest proposal, since billionaires' fortunes are growing much faster than 2 per cent annually.

Among other reasons, the American left is more ambitious than Zucman. Bernie Sanders presented a bill this year, the Make Billionaires Pay Their Fair Share Act, which would introduce an annual wealth tax of 5 per cent affecting nearly one thousand American billionaires. It would generate $4.4 trillion over ten years, which, according to its proponents, would make it possible to finance expanded health insurance coverage, the construction of affordable housing and direct support for many households. Of course, there is currently no chance of Sanders's proposal being adopted, since the United States is ruled by billionaires.

Media outlets and politicians subservient to the interests of the wealthiest will argue that wealth taxes are pure evil and economic suicide, contrary to all empirical data from different countries. Besides, even if they really did lead to the negative effects used to scare people, should we necessarily be concerned? The flight of billionaires would not mean the disappearance of the production base, skilled workers or the infrastructure necessary to continue operations by the “orphaned” companies or plants. With a more active state economic policy and support for cooperatives, they could continue operating without obstacles. They do not need people who are prepared to bury democracy for their own benefit.

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