Tax Justice Network takes down the myth that the super rich will leave if we tax them more

Tax Justice Network has documented that just 0.01% of super rich households relocated after Norway, Sweden, and Denmark introduced increased wealth tax reforms. The evidence challenges corporate media claims that higher taxes on extreme wealth in the UK would lead to an exodus of the super rich.

Only the most fringe, super rich penny pinchers will leave

Tax Justice Network further states:

Research suggests that the majority of wealth holders have strong ties to their countries and a genuine desire to contribute as citizens. Factors such as family and social connections, access to education, and overall economic stability carry more weight than tax levels when it comes to their decision on whether to relocate

It points out:

Our tax proposal ensures that the amount payable by individuals in relation to their net worth remains minimal. For instance, an individual in Spain with a net wealth of 5 million would only pay 34,000 in taxes, which amounts to a mere 0.068 percent of their wealth.

So, the study calls out media claims that most super rich people would leave as “exaggerated and misleading”. When there were marginal increases in the wealth tax in Norway, only 30 out of 236,000 billionaires and millionaires in the country relocated.

Still, the Guardian – reporting on rich people leaving – went with the headline “super-rich abandoning Norway at record rate as wealth tax rises slightly”. One of the people who left Norway was its fourth richest man. But the amount gained from wealth tax increases overwhelmingly dwarfs the amount lost.

Tax Justice Network: solutions and problems

The new study is an in depth look at global inequality and how we can challenge it.

The Tax Justice Network found that globally countries could raise $2.2 trillion annually through following Spain’s wealth tax on the richest 0.5% of households. This is a tax on net wealth above a high threshold. So it’s very modest. It fully preserves peoples’ wealth that does not go over that threshold. Tax Justice Network says that the amount raised would be double what’s needed for developing countries to address climate change.

Such a wealth tax would address runaway economic inequality. Tax Justice Network found that, on average for countries it studied, half the population has just 3% of total wealth. Meanwhile, the richest 0.5% of people own 25.7% of total wealth, a percentage that’s only been increasing.

The organisation notes that a key reason behind this is the disparity between taxes on people working and taxes on people collecting wealth through rent, dividends, and capital gains. While governments tax work-based income progressively, they often apply a flat rate to income collected through owning something. Either that, or it’s not taxed at all.

Such a system results in the super rich in countries such as the UK, the US, Germany, Austria, the Netherlands, and France paying proportionately far less tax than low-middle income households. The progressive wealth tax would help solve this.

Tax Justice Network’s head of communications took the study to the BBC:

‘A 2-3% wealth tax on the richest 0.5% like Spain are doing could raise $2tn a year.’pic.twitter.com/qDwiYe3BRg

— BladeoftheSun (@BladeoftheS) August 19, 2024