Here, everyone can see how much their neighbor pays.
How to build a fair tax system without scaring away entrepreneurs? This question faces many countries in Europe, but perhaps the best answer comes from Norway.
The country with one of the highest standards of living, the largest sovereign fund, and traditions of transparency has been applying a wealth tax since 1892. Since 2022, it has increased and caused the departure of hundreds of millionaires, primarily entrepreneurs. Authorities say this is the price of social cohesion. Business responds that this price is too high.
In their article published in Reuters, Francesco Canepa and Terje Solsvik analyze the consequences of the tax reform — for Norwegians themselves and for other countries looking towards new fiscal solutions.
Research from the country's statistical office and Professor Roberto Yakono from the Norwegian University of Science and Technology shows that this tax hardly hinders investment, does not reduce employment, does not stifle growth, and at the same time enhances the progressiveness of the system. Because wealth is not just income; it is assets, access to resources, influence. And when you pay on capital, not just on salary, you contribute in proportion to your real capabilities. This makes the system fairer and, importantly, more sustainable.
The Norwegian model relies not on the willingness of the wealthy to bear additional burdens but on the support of the majority. For Norwegians, redistribution is part of the familiar social construct, not a controversial measure. Therefore, the powerful can maintain and adjust this tax: it is backed by a stable public demand, not a temporary political initiative.
And this is what others lack today: not technical solutions, but a moral justification for why some should pay more. Formally, the tax rate is 1–1.1% on property valued at over approximately 1.76 million kroner (about $174,000). Therefore, the law applies not only to the wealthiest but also to a significant portion of the middle class and fairly affluent individuals.
To avoid situations where tax must be paid on non-income-generating assets, the system includes several adjustments: primary residences are assessed at a reduced value, commercial assets at a discount, and debts are deducted from the tax base. This allows for calculating tax based on a more realistic property value and reduces the risk of excessive fiscal burden on asset owners.
Moreover, studies have shown that the wealth tax has not led to a decrease in savings among Norwegian families. It was expected that the additional burden would reduce savings; however, in practice, many households began to save more, adapting their spending and financial behavior. This indicates that the system has proven resilient even amid rising taxes.
There is also another fundamental point — the exit tax. Leaving Norway to escape taxes is no longer possible. Starting in 2024, when emigrating, one must pay 37.8% on unrealized income. That is, if stocks have risen but you haven’t sold them — the tax is still assessed. And deferring payment is not an option. Thus, the state says: you can leave, but not with other people’s money.
The atmosphere itself also works in favor of the system. In Norway, tax declarations are open. Everyone can see how much their neighbor pays. This creates a transparency that is rarely found in other countries. Try not to pay — and you are not just a violator; you are an outsider in a society where transparency is the norm.
The success of the Norwegian scheme does not mean that everything is smooth. Firstly, there is the outflow of the wealthy. After the tax increase and tightening of the exit rules, hundreds of wealthy residents have left the country.
Secondly, this is a blow to startups and those who have assets but no profits yet. When tax is assessed on accumulated wealth, not just income, an entrepreneur will have to pay even before they earn their first crown. Critics argue that this reduces incentives to create companies in Norway.
Thirdly, the universality rule does not always work. Norway is a country with strong institutions, high levels of trust, and significant oil revenues. Transferring the model directly to countries with different economic structures, weaker institutions, and less social cohesion is risky. The European stock, tax, and entrepreneurial landscape differs significantly from Norway’s.
Defense spending, social policy, and the ecological transition — all of this makes the idea of a wealth tax relevant for Europe. At the same time, budget deficits are increasing, and the question of how to distribute the tax burden is becoming more acute. Therefore, attention to the wealth tax is understandably increasing. But the Norwegian example shows that the success of such a measure depends on how resilient the institutions are and how willing society is to accept redistribution.
Firstly, for the introduction of a wealth tax, corresponding institutions must be created: transparent asset valuation, reasonable debt accounting, clear and stable exit rules from the country. Where such mechanisms are not established, the tax becomes an administrative nightmare or simply does not work. And this, by the way, is not the opinion of ideologues — it is the conclusions of the IMF itself: a capital tax is good not in itself but as part of a well-tuned system.
Secondly, for effectiveness, a broad tax base is important. France has already gone through this: a 2% tax for the wealthiest seemed a significant political step, but in fact, it brought in less than a billion euros a year — too little for an economy of that scale. Practice shows that more effective are not individual "loud" levies but systemic solutions covering capital, inheritance, and assets in corporate structures. They provide stable revenues and are less dependent on the behavior of a narrow group of taxpayers.
Thirdly, it is not only the size of the tax that matters but also how its introduction is perceived by society. In Norway, the wealth tax has existed for a long time and is considered part of the general rules: if a person has significant assets, they contribute more to the system. In countries like Italy or the UK, such a step may raise concerns. Against the backdrop of already growing capital migration, any announcements of new taxes are perceived as a threat. According to Henley & Partners, in 2025, around 16,500 millionaires may leave the UK, while about 150 may leave Norway. The difference in scale is also explained by the significantly larger population of the UK, but it also shows how sharp the reaction to fiscal signals can be.
And finally, clarity is important. The most sustainable tax solutions are those that honestly state their goals and do not create the illusion that complex problems can be solved in one way. Italy is an example of such an approach. Instead of introducing a full progressive wealth tax, it limited itself to raising the fixed annual fee for wealthy foreigners to 300,000 euros. This measure is narrow and not aimed at reducing inequality, but it fulfills its direct function — bringing additional income to the budget and remaining understandable for all those affected.
Europe in 2025 needs not a new, loudly announced tax, but a balanced solution that will allow for budget replenishment without undermining investment activity and creating excessive risks for business. Norway's experience shows that such a balance is possible, but it only works when tax policy is perceived as part of a thoughtful system, not as a one-off political action.
The wealth tax is primarily a political choice. It reflects not only the needs of the budget but also how the state defines its role. Norway builds relationships with citizens as a partnership: the state provides access to services and stability of institutions, while citizens, including the wealthiest, participate in financing this system.
European countries find themselves between two approaches — a model of minimal intervention and broader state participation. And here balance is important: a poorly calibrated tax can weaken entrepreneurial activity, but maintaining the status quo amid growing inequality also creates economic and social risks.
The Norwegian example shows that a balanced model is possible but requires developed institutions, transparent administration, and public trust. There is no universal solution: the model only works in those countries that can integrate it into their own system.
