OSLO, Norway: From a villa overlooking Lake Lucerne, Borger Borgenhaug enjoys Swiss calm, but not the trade-off that took him away from Norway.

The former carpenter turned property tycoon says he left home to escape a rising wealth tax that has pushed hundreds of affluent Norwegians to relocate, even as it remains a cornerstone of one of the world's most equal societies.

"The political climate in Norway has become increasingly hostile to business owners," said Borgenhaug, who moved in 2022.

Norway has taxed personal wealth since 1892, and its long tradition of financial transparency, where citizens can view each other's tax returns, gives it more experience than most countries considering similar policies. The broad lesson, economists say: some wealthy people will leave, but a sufficiently broad base can keep revenues strong.

A growing exodus

The wealth tax became a flashpoint in September's election, which returned the Labour Party to power after it raised the levy and tightened rules on leaving the country during its previous term. Individuals pay one percent on net wealth between 1.76 million and 20.7 million crowns, and 1.1 percent above that. About 671,639 people, 12 percent of the population, paid it last year.

Homes are taxed at a reduced assessed value, and debt is deductible. Assets abroad are included. And since 2022, anyone who leaves Norway faces a 37.8 percent exit tax on unrealised capital gains above 3 million crowns. Loopholes allowing people to defer payment indefinitely were closed in 2024.

Those changes accelerated departures. Think-tank Civita counted 261 wealthy Norwegians living in 2022 and 254 in 2023, more than double pre-hike levels. Business magazine Kapital says 105 of Norway's 400 richest people now live abroad or have transferred wealth to relatives.

The case for keeping the tax

Supporters argue the levy helps offset Norway's lack of inheritance tax and sustains a highly redistributive system. With all oil and gas revenue parked in a sovereign wealth fund with annual withdrawals capped at 3 percent, the tax is a significant source of revenue.

"The wealth tax makes the overall personal tax system more progressive than income tax alone," said Deputy Finance Minister Ellen Reitan.

Despite the exodus, revenues now amount to 0.6 percent of GDP, roughly the scale of savings Britain's Labour government is seeking elsewhere. Statistics Norway says entrepreneurs typically have the liquidity to pay, and that the burden largely falls on the richest. Research also suggests it may encourage investment in human capital.

Polls show 39 percent of Norwegians want the tax maintained or raised, while Labour plans a broad tax reform that keeps the wealth tax.

The case against

Critics say the policy drains capital, pushes founders overseas, and weakens Norway's startup ecosystem. Roughly 40 percent of emigrants are business owners, according to Princeton researcher Christine Blandhol, who estimates the recent changes will cut long-term output by 1.3 percent.

For founders, the levy can bite long before any profits materialise. Others cite low venture capital levels and fear losing control of family firms during downturns.

A model few countries copy

While France, Britain, and Italy have debated wealth taxes, none have replicated Norway's approach. Meanwhile, wealthy residents are still leaving. Norway expects another 150 departures this year in a population of 5.6 million.

Economists say the model works because Norway accepts the trade-off.

"Not having a wealth tax leads to greater inequality; having one means less capital for startups," said NTNU professor Robert Lacono. "Politics needs to strike a balance."