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Message: [QUOTE="Bombastus, post: 91847, member: 2178"] A forthcoming American Economic Review study finds that higher wealth taxes do push some wealthy Scandinavians abroad, but the overall migration response stays small. The useful part is the scale, because individual billionaire departures attract attention far out of proportion to how often wealthy taxpayers actually move. Swedish administrative records show that about 0.2 percent of people in the top 2 percent of the wealth distribution left the country each year while the wealth tax operated. Their taxable wealth represented only about 0.09 percent of Sweden’s total taxable wealth, and inflows of wealthy residents were roughly similar in size. The evidence therefore gives more context to [B][URL='https://goldmidi.com/community/threads/spotifys-lorentzon-says-hed-leave-sweden-over-the-wealth-tax.77256/']Lorentzon’s warning about Sweden’s wealth tax[/URL][/B]. His threat is economically plausible, but one famous founder saying he would move does not tell you how thousands of other wealthy residents would respond. [HEADING=2]Higher wealth taxes do change where some people live[/HEADING] Researchers used wealth, migration and business records from Sweden and Denmark to isolate what happened when wealth-tax rules changed. Their [B][URL='https://www.aeaweb.org/articles?id=10.1257%2Faer.20241596']Scandinavian tax-migration study[/URL][/B] estimates that a one percentage-point increase in the top wealth-tax rate reduces the long-run stock of wealthy taxpayers by about 2 percent. Sweden’s 2007 repeal produced an especially useful test because the tax change affected wealthy people differently depending on their exposure before abolition. Researchers found the repeal cut the propensity of affected wealthy residents to leave by roughly 30 percent relative to comparable people who were not exposed to the same tax shock. People clearly respond to tax incentives. A 30 percent fall in a tiny migration rate is still a tiny migration rate. The distinction is easy to miss when a newspaper can name three departing billionaires but cannot put photographs beside the thousands who remain. Public debate naturally counts visible departures better than invisible non-moves. Movement also is not always permanent. Among wealthy people who left Sweden, around 90 percent were still abroad one year later, but the share fell to about 60 percent after five years and 50 percent after ten. Tax-induced relocation can therefore remove a taxpayer for years without guaranteeing a lifetime exit. [HEADING=2]Business owners matter more than the raw headcount[/HEADING] A wealthy founder leaving can matter more than an equally wealthy passive investor leaving. Around 19 percent of Swedes in the top 2 percent owned a business, compared with less than 3 percent in the bottom half, and privately held firms controlled by the wealthy accounted for substantial employment and economic activity. Researchers found negative effects on firms when wealthy owners moved abroad. Investment, employment, and value added can weaken around an owner’s departure, which gives governments a reason to care about who leaves rather than simply how many tax returns disappear. Even here, the economy-wide numbers are much smaller than the individual stories suggest. A one percentage-point increase in the top wealth-tax rate was estimated to reduce aggregate employment by about 0.02 percent, investment by 0.07 percent, and value added by 0.10 percent through the migration channel. Those are real costs, but they are not evidence of a broad economic evacuation. The composition of movers matters as well. Business owners were more likely to leave than wealthy people without firms, so a tax can lose relatively few residents while still losing unusually important owners. Counting departures alone can understate the economic exposure, while treating every departing millionaire as equally important can overstate it. [HEADING=2]Leaving the tax roll is not the same as leaving Sweden[/HEADING] Migration is only one response available to someone facing a wealth tax. People can alter ownership structures, change the timing of distributions, dispute valuations, borrow differently, move assets, or simply report taxable wealth differently when administrative rules allow room for it. Sweden’s old system gives a striking example. When filing rules changed in the 1990s so only people above the wealth threshold had to report wealth, the total number of wealth taxpayers fell by about 20 percent. When pre-populated wealth information later returned, the number rose by roughly 20 percent, even though the underlying fortunes had not suddenly migrated in and out of Sweden. Those administrative swings are larger than the measured international migration response and expose a common mistake in wealth-tax debates. A shrinking tax base can reflect physical departure, legal avoidance, valuation changes, reporting behavior, or several of them at once, so revenue forecasts cannot safely treat every missing taxable krona as a person boarding a plane. Recent Scandinavian evidence supports both sides of the argument in a narrower form. Wealth taxes can make some rich residents leave, especially business owners, while the observed international flows remain small enough that claims of a mass exodus need much stronger evidence than a handful of prominent departures. [/QUOTE]

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