Norway has had a wealth tax for more than 130
years – and it still enjoys broad public support today. In
this interview, Roger Bjørnstad, chief economist of the
Norwegian Confederation of Trade Unions, explains why. He
talks about disinformation campaigns run by wealthy
opponents and about the shift in media coverage, as outlets
ultimately decided to expose these campaigns ahead of the
parliamentary elections in September. Bjørnstad also
explains why billionaires’ threats to leave the country
are misleading, why the wealth tax is good for the economy
and for jobs – and what other countries can learn from
it.
Without a wealth tax, the super-rich in
Norway would often pay no taxes at
all
Kontrast: Norway has had a wealth tax for
more than 130 years. How is it perceived by the population
today?
Roger Bjørnstad: It is indeed
discussed a lot, especially in the run-up to the last
elections, when it was a major topic. The debate was quite
intense, but in the end the left-wing camp won the election.
This is seen as support for the wealth tax, because it was
such a central part of the electoral confrontation. Overall,
the wealth tax is therefore viewed positively by the
population, even though there are points where we as a trade
union would consider adjustments to be sensible. The
wealthy, however, have not given up hope of reducing the tax
or abolishing it altogether—after all, as inequality has
risen and untaxed capital income has led to accumulation of
lots of wealth, the super rich pay high wealth tax even if
their total tax bill is still relatively small.
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The
basic problem is this: capital income is difficult to tax.
In Norway, dividends and profits are taxed—but mainly when
they actually reach private individuals. Very wealthy people
avoid this by parking their wealth in holding companies. As
long as the money remains there, no private income tax is
due. In this way, enormous amounts of wealth accumulate in
these companies over the years. The only tax they pay on
this is the wealth tax. The more wealth is held there, the
higher the wealth tax naturally becomes. This is one of the
main reasons for the debate in
Norway.
I do think, however, that the
wealth tax has broad support overall—precisely because the
rich pay hardly any taxes on their capital income. For them,
the wealth tax is often the only tax they pay at
all.
The media played an important
role and changed their stance during the election
campaign
Kontrast: What role have the media
played in the debate and in the positive perception of the
wealth tax?
Roger Bjørnstad: The media
played an important role in the election campaign. Very
wealthy people financed large campaigns. At first, some
media outlets supported these campaigns and adopted their
messages.
Over the course of the debate
and ahead of the election, however, many media outlets
changed course and began to actively counter the
disinformation surrounding the wealth tax. They played an
important role in exposing false claims made by these
campaigns.
Kontrast: Why do
you think the media made this change in
direction?
Roger Bjørnstad: Because the
disinformation was extreme and was clearly financed by
super-rich individuals. There was an attempt to create the
impression that the wealth tax affects ordinary
people—which is simply not true. I believe the media
realized that these false claims needed to be
corrected.
Kontrast: This argument is also
very widespread in Austria, even though the models being
discussed clearly affect only the
super-rich…
Roger Bjørnstad: Exactly. That
is why we set up a task force in Norway that could respond
immediately to false information. It consisted of experts
and researchers and was therefore very credible—and it was
funded by the trade unions.
This task force sent
targeted corrections directly to the media. That was very
effective.
A right-wing government abolished the
inheritance tax
Kontrast: Apart from Norway,
only Spain in the EU still has a wealth tax, but many
countries have an inheritance tax. Norway abolished the
inheritance tax in 2014—why?
Roger
Bjørnstad: That was a right-wing government. The
inheritance tax at the time partly affected ordinary people
and therefore had little support. It was poorly designed.
The government used this to abolish
it.
Kontrast: Two years ago, the
social-democratic government increased the wealth tax. Why
did it decide to do so?
Roger Bjørnstad: To
finance the budget—and because it had become clear how
extreme wealth concentration is and how little tax the
super-rich pay. The wealth tax is the only tax that really
affects them. This increase is probably one of the reasons
why the super-rich later financed these
campaigns.
How Norway’s wealth tax
works
- All Norwegians with net wealth of
more than €150,000 (NOK 1.76 million) pay a wealth tax.
For couples, the exemption threshold is doubled. Debts are
fully deducted. - Overall, the tax amounts to about
1.1% per year — around 0.525% goes to municipalities, and
0.475% (0.575% for very large fortunes) goes to the central
government. - Wealth mainly includes real estate,
shares, and business equity stakes. Valuation is based on
market value, but in some cases there are substantial
valuation discounts, i.e. reductions: up to -75% for the
primary residence, -30% for business assets, and -20% for
shares. - It is collected through an annual electronic
tax return, much of which is already pre-filled by banks and
insurance companies. If irregularities are found,
documentation may be required or penalties
imposed. - For the state, this generates around €2.7
billion per year.
Taxes on the rich are good
for the economy, they work, and they are easy to
implement
Kontrast: A common argument is that
high wealth taxes cause rich people to leave the country.
What do your experiences show?
Roger
Bjørnstad: I believe that this is a wrong analysis. In
reality, it is about the enormous amounts of wealth in their
holding companies. The actual reason for their relocation is
the high dividend tax on private distributions, not the
wealth tax.
The dividend tax applies as soon as they
withdraw the money for private use. These people want to get
the money out of their holding companies without paying
dividend tax—and they use the attack on the wealth tax as
a pretext to support a right-wing government that also
lowers the dividend tax.
Studies
clearly show, however, that the wealth tax harms neither
investment nor employment. And even if rich people leave the
country, the capital remains in Norwegian
companies.
Kontrast: In
Austria one often hears that the wealth tax does not work,
is difficult to implement, and harms the economy. What do
you say to that?
Roger Bjørnstad: That is
not true. Studies show that it is even good for the economy
and for jobs, because it promotes investment instead of
allowing large fortunes to lie unused in accounts or in safe
assets.
And as for administration: that is not a
problem at all. We have comprehensive tax reports. Banks and
institutions automatically report assets. Real estate is
valued in a standardized way. The system already
exists—you just have to use it.
Kontrast:
Opponents of a wealth tax say that it is impossible to
control what the super-rich own—for example artworks or
luxury watches.
Roger Bjørnstad: That is
irrelevant. What matters are real estate and company shares.
No one is interested in living-room furnishings. This
argument is pure distraction.
The super-rich finance
parties and campaigns against wealth
taxes
Kontrast: Why, then, have so many
countries abolished their wealth tax?
Roger
Bjørnstad: Taxes are never popular. And today the
super-rich are more strongly involved in politics, financing
parties and campaigns—we see this, for example, in the
United States. That makes the situation politically
difficult.
Kontrast: What advice would you
give to countries like Austria?
Roger
Bjørnstad: You have to make visible how little tax is
actually paid on capital income. The wealth tax is not an
end in itself, but a consequence of this. If opponents can
propose fair taxation of capital income—fine. If not, then
a wealth tax is necessary.
This work is licensed
under the Creative
Common License. It can be republished for free,
either translated or in the original language. Original
author/source Kontrast
/ Lena Krainz and link to the English article on
TheBetter.news.
https://thebetter.news/norway-wealth-tax-interview/ The
rights to the content remain with the original
publisher.
