“Norway’s wealth tax increase, expected to raise $146M, led to a $448M net loss as $54B in wealth left the country, reducing tax revenue by $594M.”
Citizen X explains:
The recent wealth tax increase in Norway was expected to bring in an additional $146 million in yearly tax revenue.
Instead, individuals worth $54 billion left the country, leading to a lost $594 million in yearly wealth tax revenue. That’s a net decrease of $448 million….
The mass departure of Norway’s billionaires has transformed into an unprecedented exodus, as the nation’s tax administration grapples with one of Europe’s most demanding wealth tax and income tax rates. Last year marked a watershed moment in this capital flight, with more than NOK 600 billion in assets leaving the country as high-net-worth individuals increasingly opted for tax havens over their homeland.
Incoming New York City mayor Zohran Mamdani has proposed what is labeled as a wealth tax, but actually isn’t. He has advocated a 2% income tax surcharge on New Yorkers earning over $1 million annually. “While the proposal is often referred to as a ‘wealth tax,’ it is technically an income tax surcharge on millionaires. Concerns have been raised that the tax could cause wealthy residents to leave the city.”
A 2% increase wouldn’t matter as much, if New York City didn’t already have higher tax rates on the rich than most other places. “The top marginal income tax rate for New York City residents is 14.776%, which is a combined rate of the top New York State income tax of 10.9% and the top New York City local income tax of 3.876%.” By contrast, there is no state or local income tax in Florida, where many wealthy former New York City residents have moved to avoid high taxation. So raising the tax rate further could fuel an exodus of wealthy people from New York City.
Even more significant is Mamdani’s proposal to raise the corporate tax rate in New York City to well above the rate anywhere else in the country, leaving it with a corporate tax rate 8.85% higher than in even high-tax New Jersey. That would drive many corporations out of New York City, potentially reducing corporate tax revenue despite the higher tax rate. “Mamdani also wants to see” New York “state’s corporate tax increase to 11.5 percent, tying New Jersey for the highest rate in the country,” and then use the increased tax revenue to subsidize New York City. The problem with that is that New York City also levies a corporate income tax on top of the New York State corporate tax, unlike cities in New Jersey, which don’t levy a corporate income tax. New York City imposes an 8.85% municipal corporate income tax, unlike cities in New Jersey, which impose no local income tax rate at all. New York State already has the highest taxes of any state, and New York City has much higher taxes than other areas of New York State, with higher sales, property, and income taxes than most other areas of New York State. So corporations in New York City already pay through the nose in taxes.
