The teenagey reference to Atlas Shrugged, a book that hails selfishness as the highest human virtue, coupled with the sloppy writing makes me highly suspicious of the competence of the author. Good riddance for Norway I guess.
Let's revisit the very first sentence of the article.
> 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.
There's contributing to society, and there's receiving demands for more wealth than you possess. If you can't make a moral distinction between the two, then, frankly, I don't know how to explain it to you - this is one of those things that you should understand by the age of ten or so.
Is the Norwegian government’s theory that a modern company might never realize their gains, and avoid taxation indefinitely, and thus this is a forcing mechanism to extract some tax revenue?
I don't know how a company could avoid all taxes. They say that Amazon does, but that's only the corporate income tax, surely they are paying billions in payroll, property, energy, and other taxes.
The wealth tax targets millionaires who structure their income so they don't pay income or corporate tax, but can't avoid owning assets like company shares and property. Loss-making startups with unicorn level valuations are a tiny edge case.
That’s an accurate description of the majority of VC investment outcomes. The outlier-success stories aren’t called unicorns because they’re common. So it tracks that Norway would tax valuations to curtail investments that generate no economic value for Norway (such as a typical forever-profitless business in round G with no profits to tax) and promote investments that generate economic value for Norway (such as a typical profitable business with profits to tax) — and if the VC gamblers want to gamble in Norway, their claimed valuations are taken at face value and taxed accordingly, which provides a direct financial incentive against valuation inflation.
That round G company with negative cashflow is probably employing people, buying goods and services, etc all within Norway. To say it's not generating economic value is disingenuous at best.
How narcissistic do you have to be to come up with a title like this about yourself?
It reminds me of that study that found that people in executive roles for prolonged periods of time develop a sort of brain damage where their "mirroring" neural process becomes impaired.
TL;DR: Norway imposes a wealth tax that taxes unrealized gains at approximately 1% annually. "Wealth" here includes the book value of private companies, which presents cash flow problems for founders of startups with high paper valuations (like the author, who founded unicorn Dune Analytics).
I'm still finding it hard to be terribly sympathetic towards the author, and the constant Ayn Rand references don't help. If you're worth 100 million dollars on paper, is it really that hard to come up with 1 million to pay the taxman? Sell 1% of those shares, get a loan secured by those shares, etc.
the author founded dune.com which is a crypto onchain data company. there is a focus on ethereum, solana, tron, stablecoins, prediction markets and the like.
the viral tweets critizing the wealth tax are by elon musk, marc andreessen, paul graham and alex svanevik (also an onchain data founder). certainly what they have in common here is that they would stand to lose some wealth from the wealth tax!
What all these people fail to mention is that at about the same time as the increase in wealth tax, another tax rule was made stricter. Before nov. 29 2022, you could take your unrealized profits abroad for five years to reset your cost basis for the realized gains tax. Meaning you could essentially spend five years to get rid of your tax burden. This tax amount is significantly larger than the wealth tax. And many of these 100 people moved before that.
Magazines all over the world talk about the wealth of business owners as if it is equivalent to the wealth of say sports stars or musicians, who get paid millions to their bank accounts.
Forbes and other finance magazines create top lists and bio stories presented entirely as if the valuations of businesses are the same as actual money. When Amazon shares go up or down a few percent overnight it's reported in the media as if a convoy of trucks has dumped dollar bills at Bezos' mansion. "Bezos made xx millions per minute".
Spreading such misinformation everywhere for decades can't be good, and it seems Norway has fallen victim to it.
> 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.
This sounds like amazing success. Now no one has to worry about those people using their money to command Norway's significant resources to implement their stupid ideas. Money is not a resource. It's IOU from the society to the guy with money. Pushing the rich out of the country is letting someone else pay for those IOUs with their work and resources.
If you think it's a loss because those people might have great ideas because they got some in the past that made them rich, it's usually not the case. To land on the very top you need very significant amount of luck. And luck is something that you get case by case. So they have about as good ideas as next 10000 people that didn't have as much luck. But the blast radius of the stupid ideas of those on the very top is huge because of how much money they accumulated. Pushing them out of the country is a huge benefit.
> all employers in Norway will eventually become foreign companies.
> How is that a benefit?
If they employ people in Norway you can tax them on that. If they sell in Norway products or services you can tax them on that. If they purchase infrastructure you can tax them on that. If they own any infrastructure in Norway you can tax the ownership. If they rent anything, you can tax renting. If they borrow Norwegian money, you can tax that. If they lend to Norwegians you can tax that.
That's a lot of benefit. Pretty much all of the benefit of hosting any company, domestic or foreign in Norway if you don't tax the capital itself.
What you can't tax the companies on is profit because it's trivially concealable.
It's even better if they are foreign as they have lower political capital because they can't cry their tears out to the Norwegians to have lower taxes.
Pushing rich people out of the country and taxing them along the way is the best thing that might happen. And the money collected can be reinvested into infrastructure and consumers so that foreign companies have a reason to do stuff there.
All the things you mention also apply if the company is Norwegian, and then you can also tax the profit. So there is no benefit here, only downsides.
By having this policy, the country not only loses all the money they could get from taxes once the company ACTUALLY makes money, but they also give control of the nation's future to foreign actors.
So this is quite obviously an extremely bad policy that is a net harm to everyone living in Norway. It leaves the nation and the citizens with less money, fewer resources and fewer options than if the policy had not existed. The policy has for sure already cost the nation several hundreds of billions in future taxes.
It is also morally wrong, of course.
Maybe you can understand why if you consider this: The policy is equivalent to taxing the unemployed because they might get employed one day in the future, and then demanding the payment before that happens.
When your application to defer the tax is granted, payment is deferred for three years. Once the three years have passed, you'll receive an invoice stating the amount that you owe, including interest.
> There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.
After looking at the posts here, are you being critical of those like it or those who can't get beyond hating it (and maybe discuss the actual point of the article)?
I guess I'm in the weird position of being a leftist who is generally against wealth taxes. Taxing non-liquid wealth like this requires the government to be able to accurately assess the value of these assets and that's an unrealistic burden IMO. I would rather address the "Buy, Borrow, Die" paradigm from other angles, like restricting the classes of assets one can borrow money against to force liquidation and therefore be subject to a traditional capital gains tax instead. That way the market takes care of the problem of pricing the asset and society can impose a tax on that valuation.
> Taxing non-liquid wealth… I would rather address the "Buy, Borrow, Die" paradigm… like restricting the classes of assets one can borrow money against to force liquidation
The point is that to justify the concentration of capital, the company should be doing well enough to tank the tax. If they can borrow money against the equity then that gives them liquidity, and they can use it to pay a wealth tax; and if they can't repay the loan (presumably because their equity didn't appreciate to a point where they could re-negotiate the loan terms) then there's your forced liquidity.
I see your point, but in this scenario how do you handle the problem of levying an accurate tax? I suppose we could rely on banks to value assets instead of the government, but since the banks are the ones giving out the loans to pay the tax this feels a bit circular
Banks are actually pretty good at valuing assets. They don't want to overvalue because that's their collateral. And lowballing will make the borrower choose another bank.
> The point is that to justify the concentration of capital
Why does that need additional justification, beyond investor confidence? And why does "justification" take the form of paying money? That's not any kind of moral justification, it's just an indulgence.
> the company should be doing well enough to tank the tax.
Saying it should be doing well enough now to tank a tax based on estimated future earnings requires that a lot of otherwise unnecessary assumptions about access to financing and revenue timelines hold.
It's all just throwing a bunch of extra stress at entrepreneurs when they're most vulnerable, instead of waiting for when their labors bear fruit. Since the state is extremely able to endure that wait, it all just comes across as malice.
> Why does that need additional justification, beyond investor confidence?
Because capital that's in one place is not capital moving around the economy.
> And why does "justification" take the form of paying money?
That's not what I said. Justification takes the form of superior return (which makes it possible to pay the tax and remain ahead). The return shows that it's fine to leave the capital in place, because it's empowering a successful venture.
Most modern wealth tax proposals allow individuals to effectively give the taxed percentage of the difficult to value asset to the state to be converted to a tax payment upon a liquidation event.
This is being used as a corner case to thwart wealth taxes that in the vast majority of cases involve well valued, liquid, publicly traded securities.
So what's the point of taxing unrealized gains specifically? Why not wait until the gains are realized, tax them then, and still collect on average the same tax income? This would result in the same yearly tax income for the government, except in the years immediately after implementing or increasing unrealized gains taxes.
Is it just to force entrepreneurs to sell more stock and get more loans, as a gift to the financial sector?
Because many of the wealthiest individuals de facto realize their gains in the form of collateral for loans that allow them to live without ever realizing their gains from the perspective of the tax code. If you do well enough, you never have to pay taxes on stock holdings.
The very first sentence of TFA gives it away:
Recently, my story as a Norwegian entrepreneur facing an unrealized gains wealth tax bill many times higher than my net income went viral
Many who are in the position to control how their compensation is doled out (board members, C-level) will often take it exclusively (or nearly so) in stock, specifically so they never have to pay taxes on it. Famously, several have taken $1/year incomes - e.g., Mark Zuckerberg and Steve Jobs, while Elon Musk didn't even bother with the charade and took $0/year.
* Side bonus: in the US, corporations paying out performance-based compensation like stock get additional tax breaks, so it's not just the executives which win the taxation game while doing this.
> de facto realize their gains in the form of collateral for loans that allow them to live without ever realizing their gains from the perspective of the tax code.
Can you explain how this works? I have my wealth in stocks, I use those stocks as collateral for a loan. To pay back this loan, I have to either get money from somewhere, or hand over the collateral to the bank. Let's say "get money from somewhere" is taxed (to avoid circular reasoning), so that leaves trade loan collateral for loan cash, which is on net no different than selling the stocks.
This is not taxed? And wouldn't it be infinitely easier to close that loophole, than taxing the estimated profit for the next N years, which is what unrealized gains tax amounts to?
2) Aside from that, someone with assets could simply open a line of credit backed by those assets. It accrues interest but does not need to be paid back by a certain date so long as the account retains enough equity. (I can do this today in IBKR with around a 5% interest rate.) If the value of the account remains substantially greater than withdrawals, this can continue indefinitely without any taxes paid. And: the accrued interest can even be written off the borrower’s taxes.
Take out another (slightly larger) loan against the stock. As long as the stock grows faster than the interest rate, you should be able to chain loans together forever. You need to only borrow a portion of the value of the collateral to provide a buffer from volatility, but that should also mean the loan is very safe and thus at a low interest rate.
To close the loophole you would need to be able to tax borrowed money which creates its own set of dangers.
Another way to close the loophole would be to amend the tax code to realize the gains for any stock used as collateral, since the person obtaining the loan is already de facto realizing the gains for the sake of the loan.
Europe is a retirement home rigged to favor old people and old money. The thought that you could save on your own and enjoy compound interest is forbidden.
> They took an investment of 70M at a valuation of 1000M, in a country that has a well-known 1% tax of valuation, but they failed to write payment of that tax into the funding papers and fled the country to dodge a 10M annual tax bill.
The tax bill is 10M only if they control 100% of the shares. Given that they've taken funding from at least 15 investors/VCs, this is clearly not the case.
Here's my solution:
Make being a billionaire illegal.
That's it. It's up to asset-holders to remain under the limit. No one becomes a billionaire ethically...no one produces that level of value, and absolutely no one needs that much money. It's only possible to attain through exploitation. If you are found to hold a billion dollars in assets, you go to prison and forfeit all your wealth, so it's incumbent upon all wealthy people to manage their assets accordingly. Give it away, pay your workers more, distribute it however you want, but you cannot control that much capital, full-stop.
If you flee the country, any assets you leave behind are forfeit and seized. You will not be allowed to retain the wealth you accumulated on the infrastructure built by your home country, on the backs of taxpayers and labourers...it will be redistributed.
For any country that does this, extreme wealth disparity will be eliminated. If there are countries that allow billionaires exploit the working class and public infrastructure, then they can go build their fortunes there. Equitable, civilised countries will outlaw it. Billionaires only exist because we allow them to.
Someone with less than a billion will be just fine, and can enjoy a reasonable, moderated amount of wealth in peace.
The blog author is the founder of a unicorn and thus (assuming they hold a controlling stake) a billionaire on paper. Should your sanctions apply, and how does that work when their only significant asset is the company shares?
It's unethical to make a million by controlling a drug someone needs to survive or bribing politicians. But it's not unethical to make a billion by writing a popular app, website, book, movie or performing songs.
So the amount is irrelevant, it's the actions that matters, when it comes to ethics.
You have no jurisdiction over other countries, so the country allowing billionaires will end up with the largest companies in any industry, and your small companies will not be competitive. Dystopian end to your country follows.
This isn't easy. Billionaires are often the result of the basic wealth creation of society, which we don't want to sabotage. Amazon employed thousands before Bezos became the richest guy in the US.
We want successful companies that employ thousands of people under good conditions. The more such companies the better, even if each of them creates a billionaire or two in the process.
I think we should allow people to become as wealthy as they can, but ensure that it has to happen through ethical methods. No corruption, rackets, cartels or other shenanigans. No matter how much money you have you can't buy any loopholes.
Of course easier said than done but I don't see another way that can possibly work out well.
61 comments
[ 0.20 ms ] story [ 8.8 ms ] threadNot sure it’s good riddance that they’re turning away their own citizens over such a small, likely unnecessary(?), tax.
You are not a fugitive, just because you are expected to contribute to society.
> 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.
There's contributing to society, and there's receiving demands for more wealth than you possess. If you can't make a moral distinction between the two, then, frankly, I don't know how to explain it to you - this is one of those things that you should understand by the age of ten or so.
It reminds me of that study that found that people in executive roles for prolonged periods of time develop a sort of brain damage where their "mirroring" neural process becomes impaired.
https://www.theatlantic.com/magazine/archive/2017/07/power-c...
I'm still finding it hard to be terribly sympathetic towards the author, and the constant Ayn Rand references don't help. If you're worth 100 million dollars on paper, is it really that hard to come up with 1 million to pay the taxman? Sell 1% of those shares, get a loan secured by those shares, etc.
the viral tweets critizing the wealth tax are by elon musk, marc andreessen, paul graham and alex svanevik (also an onchain data founder). certainly what they have in common here is that they would stand to lose some wealth from the wealth tax!
…Perhaps by realizing a portion of the gains and handing over the resulting wealth?
Forbes and other finance magazines create top lists and bio stories presented entirely as if the valuations of businesses are the same as actual money. When Amazon shares go up or down a few percent overnight it's reported in the media as if a convoy of trucks has dumped dollar bills at Bezos' mansion. "Bezos made xx millions per minute".
Spreading such misinformation everywhere for decades can't be good, and it seems Norway has fallen victim to it.
This sounds like amazing success. Now no one has to worry about those people using their money to command Norway's significant resources to implement their stupid ideas. Money is not a resource. It's IOU from the society to the guy with money. Pushing the rich out of the country is letting someone else pay for those IOUs with their work and resources.
If you think it's a loss because those people might have great ideas because they got some in the past that made them rich, it's usually not the case. To land on the very top you need very significant amount of luck. And luck is something that you get case by case. So they have about as good ideas as next 10000 people that didn't have as much luck. But the blast radius of the stupid ideas of those on the very top is huge because of how much money they accumulated. Pushing them out of the country is a huge benefit.
It doesn't though. It only prevents people who actually live in Norway from implementing "stupid" ideas.
Foreign companies are not taxed on valuations, so the effect of this is just that all employers in Norway will eventually become foreign companies.
How is that a benefit?
If they employ people in Norway you can tax them on that. If they sell in Norway products or services you can tax them on that. If they purchase infrastructure you can tax them on that. If they own any infrastructure in Norway you can tax the ownership. If they rent anything, you can tax renting. If they borrow Norwegian money, you can tax that. If they lend to Norwegians you can tax that.
That's a lot of benefit. Pretty much all of the benefit of hosting any company, domestic or foreign in Norway if you don't tax the capital itself.
What you can't tax the companies on is profit because it's trivially concealable.
It's even better if they are foreign as they have lower political capital because they can't cry their tears out to the Norwegians to have lower taxes.
Pushing rich people out of the country and taxing them along the way is the best thing that might happen. And the money collected can be reinvested into infrastructure and consumers so that foreign companies have a reason to do stuff there.
By having this policy, the country not only loses all the money they could get from taxes once the company ACTUALLY makes money, but they also give control of the nation's future to foreign actors.
So this is quite obviously an extremely bad policy that is a net harm to everyone living in Norway. It leaves the nation and the citizens with less money, fewer resources and fewer options than if the policy had not existed. The policy has for sure already cost the nation several hundreds of billions in future taxes.
It is also morally wrong, of course.
Maybe you can understand why if you consider this: The policy is equivalent to taxing the unemployed because they might get employed one day in the future, and then demanding the payment before that happens.
> High income with short work days, free healthcare, free daycare, free education and beyond.
If the author doesn't value these for the people around them then perhaps he should move somewhere else.
1: https://www.skatteetaten.no/en/person/taxes/tax-deduction-ca...
> There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.
-- John Rogers
Everytime it's the same.
The point is that to justify the concentration of capital, the company should be doing well enough to tank the tax. If they can borrow money against the equity then that gives them liquidity, and they can use it to pay a wealth tax; and if they can't repay the loan (presumably because their equity didn't appreciate to a point where they could re-negotiate the loan terms) then there's your forced liquidity.
Why does that need additional justification, beyond investor confidence? And why does "justification" take the form of paying money? That's not any kind of moral justification, it's just an indulgence.
> the company should be doing well enough to tank the tax.
Saying it should be doing well enough now to tank a tax based on estimated future earnings requires that a lot of otherwise unnecessary assumptions about access to financing and revenue timelines hold.
It's all just throwing a bunch of extra stress at entrepreneurs when they're most vulnerable, instead of waiting for when their labors bear fruit. Since the state is extremely able to endure that wait, it all just comes across as malice.
Because capital that's in one place is not capital moving around the economy.
> And why does "justification" take the form of paying money?
That's not what I said. Justification takes the form of superior return (which makes it possible to pay the tax and remain ahead). The return shows that it's fine to leave the capital in place, because it's empowering a successful venture.
This is being used as a corner case to thwart wealth taxes that in the vast majority of cases involve well valued, liquid, publicly traded securities.
Is it just to force entrepreneurs to sell more stock and get more loans, as a gift to the financial sector?
The very first sentence of TFA gives it away: Recently, my story as a Norwegian entrepreneur facing an unrealized gains wealth tax bill many times higher than my net income went viral
Many who are in the position to control how their compensation is doled out (board members, C-level) will often take it exclusively (or nearly so) in stock, specifically so they never have to pay taxes on it. Famously, several have taken $1/year incomes - e.g., Mark Zuckerberg and Steve Jobs, while Elon Musk didn't even bother with the charade and took $0/year.
* Side bonus: in the US, corporations paying out performance-based compensation like stock get additional tax breaks, so it's not just the executives which win the taxation game while doing this.
Can you explain how this works? I have my wealth in stocks, I use those stocks as collateral for a loan. To pay back this loan, I have to either get money from somewhere, or hand over the collateral to the bank. Let's say "get money from somewhere" is taxed (to avoid circular reasoning), so that leaves trade loan collateral for loan cash, which is on net no different than selling the stocks.
This is not taxed? And wouldn't it be infinitely easier to close that loophole, than taxing the estimated profit for the next N years, which is what unrealized gains tax amounts to?
2) Aside from that, someone with assets could simply open a line of credit backed by those assets. It accrues interest but does not need to be paid back by a certain date so long as the account retains enough equity. (I can do this today in IBKR with around a 5% interest rate.) If the value of the account remains substantially greater than withdrawals, this can continue indefinitely without any taxes paid. And: the accrued interest can even be written off the borrower’s taxes.
Take out another (slightly larger) loan against the stock. As long as the stock grows faster than the interest rate, you should be able to chain loans together forever. You need to only borrow a portion of the value of the collateral to provide a buffer from volatility, but that should also mean the loan is very safe and thus at a low interest rate.
To close the loophole you would need to be able to tax borrowed money which creates its own set of dangers.
The tax bill is 10M only if they control 100% of the shares. Given that they've taken funding from at least 15 investors/VCs, this is clearly not the case.
https://tracxn.com/d/companies/dune-analytics/__XskUZos4lkfE...
Read "Buy, Borrow, Die" scheme.
That's it. It's up to asset-holders to remain under the limit. No one becomes a billionaire ethically...no one produces that level of value, and absolutely no one needs that much money. It's only possible to attain through exploitation. If you are found to hold a billion dollars in assets, you go to prison and forfeit all your wealth, so it's incumbent upon all wealthy people to manage their assets accordingly. Give it away, pay your workers more, distribute it however you want, but you cannot control that much capital, full-stop.
If you flee the country, any assets you leave behind are forfeit and seized. You will not be allowed to retain the wealth you accumulated on the infrastructure built by your home country, on the backs of taxpayers and labourers...it will be redistributed.
For any country that does this, extreme wealth disparity will be eliminated. If there are countries that allow billionaires exploit the working class and public infrastructure, then they can go build their fortunes there. Equitable, civilised countries will outlaw it. Billionaires only exist because we allow them to.
Someone with less than a billion will be just fine, and can enjoy a reasonable, moderated amount of wealth in peace.
So the amount is irrelevant, it's the actions that matters, when it comes to ethics.
You have no jurisdiction over other countries, so the country allowing billionaires will end up with the largest companies in any industry, and your small companies will not be competitive. Dystopian end to your country follows.
This isn't easy. Billionaires are often the result of the basic wealth creation of society, which we don't want to sabotage. Amazon employed thousands before Bezos became the richest guy in the US.
We want successful companies that employ thousands of people under good conditions. The more such companies the better, even if each of them creates a billionaire or two in the process.
I think we should allow people to become as wealthy as they can, but ensure that it has to happen through ethical methods. No corruption, rackets, cartels or other shenanigans. No matter how much money you have you can't buy any loopholes.
Of course easier said than done but I don't see another way that can possibly work out well.