As governments raise taxes on the wealthy to shore up strained finances and fund welfare programs, the super-rich are looking abroad. The resulting outflows are raising doubts about whether such tax increases work as intended.
Billionaires Pack Up as Taxes Rise
According to a recent report by the British daily The Telegraph, more than 120 billion pounds (about 212 trillion won) is estimated to have left Britain through departures of billionaires since the Labour government took office.
One prominent case is Lakshmi Mittal, the Indian-born steel magnate. He changed his tax residency from Britain to Switzerland last year, and more than 30 billion pounds (about 53 trillion won) in net assets is estimated to have left Britain in the process. Chris Rokos, a hedge fund manager and one of Britain's largest taxpayers, has also moved to Greece.
The exodus has been attributed to Britain's overhaul of its tax rules. In April last year, the country abolished the "non-dom" regime, a tax exemption for non-domiciled residents that had been in place for more than 200 years. Non-doms lived in Britain but kept their tax domicile or permanent home abroad, and while they paid tax on income earned in Britain, they could avoid taxation on overseas earnings as long as they did not bring that money into the country.
Under the new rules, newcomers to Britain are exempt from tax on foreign income for their first four years, after which their worldwide income becomes taxable.
France and Norway Have Seen the Same Exodus
Conflicts over tax increases have played out elsewhere as well. In France, after then-President Francois Hollande announced plans in 2012 for a wealth tax with a top rate of 75%, the actor Gerard Depardieu took Russian citizenship. Bernard Arnault, chairman of LVMH and France's richest person, applied for Belgian citizenship but dropped the plan amid a public backlash.
In Norway, wealthy residents began moving abroad after a center-left government raised the wealth tax rate in November 2022. Britain's The Guardian reported that more than 30 Norwegian billionaires and millionaires moved overseas in 2022 alone. That exceeded the number of ultra-high-net-worth individuals who had left the country over the previous 13 years combined.
Some argue that higher taxes do not necessarily translate into higher revenue. France's wealth tax, introduced over objections from the wealthy, drew criticism for failing to raise as much revenue as expected and was scrapped in 2015. Analysts say that even when rates are raised to bolster public finances, the policy's impact can be limited if more of those targeted leave.
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