Recently, my story as a Norwegian entrepreneur facing an unrealized gains wealth tax bill many times higher than my net income went viral, amassing over 100 million views on X. A few years ago I publicly called out that this tax is both impossible-to-pay and nonsensical, but no politician would listen. So I made the difficult decision to leave my home country. I still don’t know how I was supposed to pay the tax, but I recently found myself plastered on the "Wall of Shame" at the Socialist Left Party's offices.
In this post, I'll delve into why there's an entrepreneurial exodus from Norway, how we got here, and what the future might hold.
Socialist Left leader and me on the “Wall of Shame” (Dagbladet)
Norway: A real life Atlas Shrugged
Ayn Rand's 1957 novel Atlas Shrugged paints a vivid picture of a dystopian society where government overreach and socialist policies kill innovation and demonize entrepreneurs. In Rand's world, working hard and taking risks is not celebrated, but looked at with suspicion. As the government tightens its grip, mandating how businesses should operate, the nation's entrepreneurs begin to vanish and are nowhere to be found. People get poorer while the state keeps growing. Step by step the functioning of society starts to crumble. The trains first go off schedule, then start crashing and eventually stop going all together.
Present-day Norway mirrors this dystopia in unsettling ways. Taking risk with your own money, working hard and then making a profit is frowned upon. While politicians spending the people’s money on non-viable green projects, and delivering dysfunctional public services at high costs has the moral high ground. The government is spending 35 Billion NOK on offshore wind that industry experts think is financially unviable. This is about the same amount as the total wealth tax revenues. Norway spends 45% more than Sweden on health care per capita with approximately the same health outcomes. Norway has 2,5 times bigger share of the working population on sick leave than Denmark. Norway spends ~50% more than Finland on primary and secondary school with worse results.
With unshakeable ideological conviction, socialist politicians are rapidly undermining Norway’s wealth creation. They're imposing taxes that explicitly disadvantage Norwegian business owners, and are often straight up impossible to pay. When confronted with the reality that you can't pay taxes with money you don’t have—or that loss-making businesses can't afford massive dividends just to cover owners' wealth taxes—the response is vague moralism like "Those with the broadest shoulders must bear the heaviest burdens." Any argument against any part of the system is by default invalid because there’s free health care…
Norway's entrepreneurs are now indeed disappearing from society. In the past two years alone, a staggering 100 of Norway's top 400 taxpayers, representing about 50% of that group's wealth, have fled the country to protect their businesses.
Norwegian trains have for a long time been notoriously unreliable - even less reliable then in war time Ukraine! In chilling similarity to Atlas Shrugged there've been two train crashes, including one fatal, in the last month alone.
Tram crashing into a retail store in Oslo 29th of October 2024 (NRK)
The Unrealized Gains Wealth Tax: A Self-Inflicted Wound
Norway imposes a wealth tax that taxes unrealized gains at approximately 1% annually. Calculated on the full market value for publicly traded assets and the book value of private companies. On New Year's Eve, whatever your net worth - including illiquid assets - is subject to this tax. It doesn't matter if you're running a loss-making startup with no cash flow, if your investments have tanked after the valuation date, or even if your company has gone bankrupt—you still owe the tax.
This creates a perverse scenario where business owners must extract dividends or sell shares every year just to cover their tax bill. With dividend and capital gains taxes at around 38%, you need to withdraw approximately 1.6 million NOK to pay a 1 million NOK wealth tax bill. You're essentially paying taxes to pay taxes, draining capital from your business without any personal financial gain.
Moreover, the tax incentivizes Norwegians to take on excessive debt to reduce their taxable wealth, inflating housing prices and making the economy more fragile. While real estate and oil companies can mitigate this through debt financing, tech startups—often equity-financed and loss-making for years—are disproportionately harmed.
The Berlin Wall Exit Tax: Another Tax on Unrealized Gains
After witnessing a mass exodus of top taxpayers, the Norwegian government had a golden opportunity to reassess its policies. The wealth tax contributes less than 2% to the state budget; eliminating it and marginally increasing capital gains, corporate, or dividend taxes could have halted the entrepreneurial bleeding without affecting government budgets.
Instead, the government doubled down on what’s not working, introducing an exit tax on unrealized gains. Now, if you choose to move from Norway, you're immediately liable to pay 38% of the total market value of your assets upon departure. It doesn't matter if you have no liquidity, if your assets are high-risk and could plummet in value, or even if your company does fail after you leave—you still owe the tax. Previously, entrepreneurs could at least relocate if the wealth tax became too burdensome. Now, they're incentivized to leave before they even start their businesses.
The government could have listened to the tornado of negative feedback and adjusted course, but instead, they doubled down on what’s not working. When the Berlin wall was created it was clear which side of the city had the better system… the one that didn’t have to build a wall to retain its citizens. Instead of trying to attract and retrain capital and talent by making Norway a better place for business the Norwegian government chose to build its very own Berlin Tax Wall with yet another tax on unrealized gains. Trapping not only entrepreneurs, but anyone with more than $270k of wealth wanting to move their life abroad for whatever reason…
The first 50 years: Well Managed Oil Wealth
Norway is one of the richest countries in the world. The government does not need to send their entrepreneurs abroad with non-sensical taxes. So you may ask yourself, "Well, how did we get here?".
In fact, the oil wealth has been amazingly well managed by the politicians for almost half a century. In 1969, Norway struck oil—a discovery that could have led to the same resource curse that plagued other nations. Instead, Norwegian politicians made two genius decisions that benefited the entire population.
Genius Move 1: Taxing Oil Profits at 80%
Recognizing the need for foreign expertise but unwilling to let international corporations reap all the benefits, Norway taxed oil company profits at a staggering 80%. This bold move ensured that the wealth generated from the oil benefited the Norwegian people.Genius Move 2: Establishing the Sovereign Wealth Fund
In the 1990s, Norwegian politicians understood that oil is a finite volatile resource and that it would be irresponsible to spend all the oil revenue on a running basis. In an act of rare political austerity and long term thinking they created the Oil Fund, to diversify and invest surplus revenues internationally. Furthermore the "Budgetary Rule" limited annual government spending from the fund to 3%, ensuring the fund in theory goes on forever.
For two decades, politicians across the spectrum adhered to this prudent financial management, displaying an impressive level of restraint and foresight rarely seen in politics.
How Oil Wealth Led to Socialist Ideology over Wealth Creation
But success bred complacency. In theory, everybody agrees that Norway needs new post-oil industries for the long term. In practice, the abundance of oil wealth has led to a detachment from the realities of how wealth and economic growth is created. While the Norwegian politicians impressively managed to restrain themselves for about half a century the current generation are now acting as if tax money grows on trees.
Ultimately that is the paradox that has caused the current situation: because the state has so much money, it is no longer at the mercy of businesses actually being created and staying in Norway. At least as long as the oil wealth lasts.
The 2025 Election: No Fundamental Solution in Sight
It seems likely there will be a new government after the 2025 elections, as the current government is seeing record-low support in the polls. Unfortunately, even seemingly business friendly opposition parties like the Conservative Party (Høyre) and the Liberals (Venstre) are not committed to abolishing the wealth tax entirely. They propose valuing companies zero for wealth tax purposes—a good step in the right direction, but not a fundamental solution to Norway’s ongoing crisis. Unfortunately The Progress Party (Fremskrittspartiet) is the only party that wants to remove the tax completely.
The wealth tax's mere existence continues to create absurd incentives for excessive debt and over-investment in housing, detracting from more productive investments like stocks and startups. Moreover, the possibility of future governments reinstating the wealth tax for companies keeps the harmful uncertainty for businesses very much alive.
Many European countries have recognized the harm caused by taxing unrealized gains and abandoned it. Norway’s neighbor Sweden abolished its wealth tax in 2007. Since then they’ve seen its tech sector flourish. Spotify recently surpassed Norway's state-owned oil company, Equinor, in market capitalization. In the last 15 years Norway has gone from having 7 to now only 2 of the Nordics top 30 most valuable companies.
Norway has produced four "unicorns". Since then we the founders of Dune and Cognite have left due to the unreasonable taxes. Oda operates domestically in Norway. All founders have left the company and are wiped out. The last one Gelato is run by a swede that would likely move if they need to raise more money.
The Extra Long Journey to Post-Oil Wealth and Welfare
In Atlas Shrugged, the entrepreneurs refuse to return to society until the oppressive system collapses entirely. I sincerely hope Norway doesn't have to endure such a downfall before entrepreneurs can return.
Fortunately Norway has a highly educated population and a lot of capital. With oil a high tech industry has been built in Norway before. What’s lacking is the political will to encourage entrepreneurship and big ambitions, not punish it.
Trust is built in millimeters and torn down in meters. In just a few years, the trust in Norway as a viable place to build and invest has been shattered. A whole generation of entrepreneurs has been lost.
The people of Norway currently enjoy and benefit from a host of generous welfare benefits. High income with short work days, free healthcare, free daycare, free education and beyond. For this to continue in the future Norway needs massive new post-oil industries. Due to the politicians' series of unforced errors, the journey to get there will be extra long and painful. A definitive abolishment of all taxes on unrealized capital gains is the obvious first step.
PS. Shout out to you if you caught the Talking Heads reference :)
Wisdom is forgotten... Its not just Norway. Locally (anonymously), I found a light behind the violative taxation; it is the reality of how most modern operations are able to run. Most value-production, whether capital or not, rely on intense violation of lives; humans exploited, animals held in extremely vile circumstances and corruption of cultures, environments and the likes - something with a predictable lashback. An underlying philosophical idea behind the intense taxation is that "if you can create more value, you can invest the time, effort and energy in lowering harm caused to begin with - thus mitigating long-term costs imposed on the local environment - if you won't you pay added taxes". Second, there's a darkness behind the taxation; a consumer of intense increase in tax-load that relies on denial and the blindness arising of above-mentioned exploitation, to hide its senseless imposition of "required tax-consuming" upon societies. I outlined it at quite the depth: https://archive.org/details/pandemic-oppression - please note that the document got a horrible production-line, that makes the conflict between Nordic person and country consumed in highlighting the issues in the article above seem friendly. This actually highlights that the high level of education, due to a detail, may be part of what perpetuates the problem - and I do understand that it is inconvenient to "the desired narrative of how things are".
Jeg er norsk, entreprenør og Ayn Rand ekspert. Du har min sympati!!! Jeg delte din artikkel på FB nå. Prøvde å finne deg på FB for frending, men fant deg ikke. Send meg gjerne noe linjer, så vi får kontakt? Du finner meg lett. Klaus Nordby
What this means is that entrepreneurs should not lever up so much that they can't pay their taxes. I live in America, and relative to their net worth, the wealthy don't pay anything near what the middle class pay on their taxes in percentage terms because unrealized capital gains don't get taxed, and disappear at death. What Norway is doing seems pretty modest. Sell some stock... pay your tax.
How did you write a whole article entitled "Norway Shrugged" without a Ragnar reference? ;)
I have a question. How can a loss making startup be worth so much that you cannot afford to pay a 1% tax on its value? Perhaps the problem is that the stock value of businesses is not connected to reality.
Because it's the straightforward consequence of valuing businesses based on investments. If someone wants to invest $1 million in your new fishing business for 10% of the company, what is the company valued at, despite having 0 revenue? The valuation derived from that investment ($1 million / 10% = $10 million) is rational & based on existing data, even when in reality the full valuation would be lower than that estimate. Problems arise when people think that this value is liquid & stable, when it is never all of them all at once.
There are some fairly standard ways to value a company, e.g. https://www.brex.com/journal/startup-valuation . Your example has a $10M value assigned to the company which would demand that the shareholders collectively come up with $100K for taxes. Is the founder the only other shareholder? If not then the tax does not fall solely on the poor beleagured entrepreneur, as the article describes. Is the company producing revenues that could fund a 1% dividend? If not then how does that fit with any of the valuation models? I'd still argue that the valuation is detached from reality. In accepting the $1M that burdens him with taxes, a founder and sole owner could make the stipulation that $90K of it was going to those taxes. In short, your example of valuation is not persuasive. Just because someone put up $1M doesn't mean that the company is actually worth $10M. Justin Sun just paid $6.2M for a piece of banana "art" which he promptly ate. For some people money is a toy. A small tax on wealth would help to tether the money to reality.
> Your example has a $10M value assigned to the company which would demand that the shareholders collectively come up with $100K for taxes The owner must come up with $90k, the investor with $10k (plus the taxes on the rest of their wealth). >Is the company producing revenues that could fund a 1% dividend? If not then how does that fit with any of the valuation models? First, there are plenty of pre-revenue companies reaching that sort of valuation. There have been pre-revenue companies valued above $40 million. You should consider the hypothesis you have no idea what you're talking about. More importantly, it's insane to force startups to extract cash of the company to pay taxes. A large number of the most successful companies in the world went years without distributing a single cent in dividends and with their founders only extracting subsistence wages. Taxing 90k out of a $1 million investment is destructive. The last thing you want to tax are investments - because they're the engine of economic growth. Anyway, you don't have the slightest idea how businesses are valued and why. Amazon was valued at $30 billion before making a single cent in profit.
I've probably lived throug more dotcom boom/bust than you have, so you might want to keep the "don't know what you're talking about" rudeness to yourself. I can agree that early startups should be exempted from the wealth tax. That would be a nice incentive for investors to favor startups over established companies. After a few years, though, either they make it and the owners could bear the wealth tax, or they are hobby projects that don't benefit society to justify the exemption. For established companies, owners with sufficient net worth can afford a 1% tax. Given the very skewed distribution of wealth, and of the power it conveys, in most wealthy countries, a tax on that wealth would benefit society. "Amazon was valued at $30 billion before making a single cent in profit." Yes, and that was a choice. They had plenty of revenues that they re-invested. In fact, by the time Amazon hit a $30B valuation they had revenues in excess of $25B. They could have made a profit at any time. They could also have returned ~1% of revenues as a 1% dividend without any particular harm to them and maybe some of that money would have gone to the new startups that the article argues are so very important to the nation.
All company valuation is guesswork. And all of the different valuation methods have pros and cons. E.g. discounted cash flow assumes there will be cash flow in the future. Scorecard valuation requires fairly arbitrary weight assignments to different qualities in a startup. Some startup valuation requires comparing the assets of the startup to peer companies. But a perfect comparison is never possible when the startup builds on a truly unique idea. a unique startup. Even valuing established companies is guesswork. Warren Buffett's Berkshire Hathaway bought See's Candy in 1972 for 3x book value, or the price of the company's assets minus liabilities. The surcharge was for what he calls "good will," which is a price assigned to excess return over market rates. I believe he says in a letter to shareholders that he drastically underestimated See's good will, meaning he paid below true value. He can confidently say he underpaid with several decades of hindsight. But in 1972, the good will valuation involved educated guesswork. In "art" auctions, the value of the work is determined by willingness to pay. I don't know why Justin Sun paid $6.2 million for a banana. I suspect it was just a publicity stunt, i.e. the value of the "art" was nothing, but the publicity of buying the art was worth several million. I think it is the wrong kind of case to focus on, because there are a range of possible factors affecting valuation in that case that don't play a role with startups. None of this speaks to the point about how the burden of an unrealized gains tax is distributed among shareholders. My guess is that once the example is fleshed out, many startups would struggle even to find $100k to pay on a $10million valuation. The $10 million doesn't exist in liquid asset form. It is a guess about future valuation. It may be that the imagined startup *now* has less than $1 million in liquid assets, of which it needs to pay 10% now in unrealized gains taxes. Perhaps this could be addressed by switching to some alternative valuation method. But all of the different methods involve guesswork, and carry with them costs and benefits in terms of the incentives they create for startup creation. Offhand, I don't know how things would work out if, say, Norway were to adopt some version of the scorecard valuation method for implementing an unrealized gains tax.
Certainly startups pose a much harder problem than established companies for valuation. There's also much more at stake in taxing them before they get off the ground. Perhaps there should be a grace period for unrealized gains of several years. At the end of it the wealth tax would kick in. If the startup isn't ready to leave the nest by then it's probably not going to. And if investors tried to game the system by selling out just before the grace ended then the gains would become realized and face cap gains tax. I like a wealth tax for two reasons: 1) Much of gov't is devoted to protecting property rights. Why should that be free? Even my index funds charge a percentage of the assets they hold for me. I still keep my money there. 2) Wealth is power. Does the name Musk mean anything to you? Taxing things is thought to discourage them. I'm all for discouraging wealth concentration. Put a floor on taxable wealth to spare the majority who have little and tax the top 10% who own 60% of the wealth in Norway. It's not like existing income and corporate tax codes are a simple flat tax. It's very possible to tune taxes to promote things that benefit the nation.
Seems that my country Uruguay is down to the same tax harrassment to innovation and entrepreneurship. Majority has just elected a socialist governement for the next 5 years.
David Byrne❤️
Insane. This is economic-political analphabetism.
I hope US politicians like Elizabeth Warren read this article. This ain't no foolin' around!
Sovereign wealth funds go brrr—until they don’t. https://paragraph.xyz/@hagaetc/norway-shrugged
H/t to @hagaetc for this https://warpcast.com/hagaetc/0xd43e1de6
We're back with the 24th edition of Paragraph Picks, highlighting a few hand-selected pieces from the past week or so.
@hagaetc writes about the exodus of Norwegian entrepreneurs, driven by an untenable wealth tax on unrealized gains, highlighting the urgent need for Norway to abandon punitive taxation policies and foster innovation to ensure a sustainable post-oil economy. "In the past two years alone, a staggering 100 of Norway’s top 400 taxpayers, representing about 50% of that group’s wealth, have fled the country to protect their businesses." https://paragraph.xyz/@hagaetc/norway-shrugged
@mdean shares how AI art’s true potential lies in its ability to transcend its inherent aesthetic, enabling cross-media experimentation and ambiguity, even as the majority of the space still gravitates toward “truthful” AI art that conforms to its recognizable style. "AI is a marvellous tool which allows for an inherent aesthetic, OR any aesthetic you like. That’s its power." https://paragraph.xyz/@mdean/marcozine-n19
@yb writes about the rise of onchain AI and how it's being driven by open-source experimentation and collaboration between crypto and AI pioneers. "The key point I want all of you to takeaway here is that if you want to understand how this agent meta will play out, your best bet is to follow these AI hackers closely and understand what’s top of mind for them." https://terminallyonchain.xyz/simulator
@n1ftey writes about the urgent need to address exploitative corporate practices in AI development, advocating for ethical frameworks that prioritize transparency, fair compensation, and collaboration to empower creators rather than exploit them. "The problem lies not with the tools but with the corporations that wield them." https://paragraph.xyz/@jldart/the-unseen-cost-of-ai
@ccarella.eth shares an experiment in launching a memecoin in an attempt to better understand the implications of personal tokenization in a world where everything is destined to be tokenized. "If everything is going to be tokenized, that will include your likeness and if anyone can tokenize anything, you should tokenize it first." https://paragraph.xyz/@ccarella/in-the-future-everything-will-be-tokenized-but-maybe-not-by-you
Really appreciate you taking the time to read, and for the shout! 🫡
Thanks for the shoutout Reid
Norway Shrugged 3 upvotes, submitted by @macbudkowski