Why does the left boasts to be ‘progressive’ in life, while its economic policies reek of regressiveness? Why is there such an antagonistic relationship between economic progress and the leftist and socialist policies?
Could it be because the leftists despise capitalism as they repeatedly label it exploitative, alienating, unstable, unsustainable, and leads to enormous financial inequality, all of which are obviously not without fault, or that they simply have a unique tendency to not only have no answers but even formulate problems to solutions to make life difficult for others?
It could be easily explained by providing many glaring instances. The recent one, from Norway, where an entrepreneur had to leave the country in order to escape the not-so-liberal, in fact quite restrictive tax policies of the leftist government.
It is the story of Fredrik Haga who is the CEO and co-founder of Dune, a crypto data platform, which was founded in 2018 and is the world’s leading crypto data community. Adding insult to injury, the Socialist Party in Norway even created a “Wall of Shame” in its office that lists wealthy individuals who left the country and had a picture of Haga displayed on it among others.
Maybe it was a coping mechanism or deflecting responsibility away from the nation’s policies as though they were not to be blamed for the outcome.
However, on 16th November this year, Haga countered the brazen action of the ruling political party in Norway on social media, and narrated his side of the story. He highlighted how he had no support while he built his company, raised venture capital for one of Norway’s first unicorns and had to foot an unrealized gains wealth tax bill that was many times his yearly net salary while the company was losing money and all of the investors owned preference shares due to which he was unable to withdraw any funds.
Haga brought out the absurdity of the law and stated that taxation should occur when a business starts to make money. However, no politician or lawmaker bothered to address his concerns.
He added, “I still don’t get any tangible and sensible answers to my criticism of unrealized gains tax, but I do get put up on the ‘Wall of Shame’ at the Socialist Party’s offices. I’m Norwegian and I love Norway but the socialist politicians are taking the country down a dark path. It’s a real life Atlas Shrugged (referring to Ayn Rand’s 1957 novel).”
So I tried to build a tech company from Norway and here’s what happened:
— hagaetc.eth (@hagaetc) November 16, 2024
1. Two years of building without almost any money/funding, better part of a year without salary
2. Raise VC and become one of Norway’s first unicorns
3. Face unrealized gains wealth tax bill of many x my… https://t.co/59cRJMBxXn
Additionally, in an intriguing turn of events, Haga’s response received millions of views, including from Elon Musk, American businessman Marc Andreessen, along with entrepreneur and investor Paul Graham, after which on 28th November, Haga wrote a piece detailing his encounter with the wrong socialist policies implemented by Norway which only served as a barrier for entrepreneurs and creators like him.
Norway is real life Atlas Shrugged
Haga stated, “A few years ago I publicly called out that this tax (unrealized gains wealth tax bill) 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.”
He compared the present situation of his country to Atlas Shrugged and charged, “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.”
He pointed out that this dystopia has disturbing parallels in Norway where it is not acceptable to risk your own money, to devote a lot of effort, and then turn a profit. “While politicians spending the people’s money on non-viable green projects, and delivering dysfunctional public services at high costs have the moral high ground,” he mentioned and stated that industry analysts believed that the government’s 35 billion NOK (Norwegian Krone) investment in offshore wind is not financially feasible. Notably, this amount is almost equivalent to the entire amount collected from wealth taxes in Norway.
“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,” Haga underlined.
He charged that socialist politicians are rapidly damaging Norway’s wealth generation because of their unwavering ideological belief. They are enforcing taxes that are frequently unaffordable and that specifically disadvantage Norwegian business owners.
“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,” Haga stated.
He then confirmed, “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.” Haga also demonstrated how the infrastructure suffers owing to the leftist and socialist policies even in a developed part of the West. “Norwegian trains have for a long time been notoriously unreliable, even less reliable than in war time Ukraine. In chilling similarity to Atlas Shrugged, there’ve been two train crashes, including one fatal, in the last month alone.”
The Unrealized Gains Wealth Tax: A self-inflicted wound
Haga stated that unrealized gains are subject to an annual wealth tax of about 1% in Norway. These are based on the book value of private enterprises and the full market value of assets that are publicly traded. He disclosed, “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.”
He added, “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.”
Furthermore, the tax encourages Norwegians to take on excessive debt in order to lower their taxable worth, which raises house prices and weakens the economy. Tech startups, which are frequently equity-financed and have been losing money for years, are disproportionately affected, whereas real estate and oil corporations can reduce this through “debt financing.”
The Berlin Wall Exit Tax: Another tax on Unrealized Gains
The Norwegian government had a great chance to review its policies after seeing a large-scale departure of high-ranking taxpayers. Eliminating the wealth tax and slightly raising capital gains, corporation, or dividend taxes might have stopped the entrepreneurial hemorrhage without having an impact on government budgets, given the tax only makes up 2% of the state budget.
“Instead, the government doubled down on what was 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,” he stated.
The administration might have changed its direction after hearing the deluge of criticism, but instead, “they doubled down on what’s not working”, Haga then drew an analogy with the Berlin Wall to further stress how socialist policies have been shown to be oppressive and detrimental throughout history and mentioned, “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.”
Haga accused, “Instead of trying to attract and retain 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 among the richest countries in the world and the government should not force its businessmen elsewhere due to absurd levies, however, behind it, is a poorly maintained secret of oil wealth as Haga explained, “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.”
Norway taxed oil firm earnings at an astounding 80% because it acknowledged the need for foreign expertise but was unwilling to allow multinational corporations reap all the benefits. This daring action meant that the Norwegian people would profit from the oil’s wealth.
“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,” he informed.
Haga stated that politicians of all stripes followed this wise financial management over twenty years, exhibiting a remarkable degree of self-control and forethought that is uncommon in the political sphere.
How oil wealth led to socialist ideology over wealth creation
“But success bred complacency,” Haga declared and added, “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 are 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.”
Haga stated, “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.”
It’s interesting to note that socialist ideas have always worked in wealthy countries but never in those that are poor and underdeveloped. Perhaps it’s because socialism depends on the capital socialist claim detest. More significantly, socialist policies are sufficient to cause economic downfall in any nation but never advance any economy.
The 2025 election: No fundamental solution in sight
Haga has little hope for the future. He stated, “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 very existence still provides ridiculous incentives for excessive debt and housing investment, taking money away from more profitable ventures like startups and stocks. Moreover, the risk of future governments reintroducing the corporate wealth tax keeps the adverse uncertainty for firms very much alive.
Numerous European nations have stopped taxing unrealized earnings after understanding the negative impact it causes. Sweden, Norway’s neighbor, did away with its wealth tax in 2007. Its tech sector has flourished since then. In terms of market capitalization, Spotify recently overtook Equinor, the state-owned oil firm in Norway. Norway, today, only has two of the top 30 most valuable corporations in the Nordic region, down from seven in the previous fifteen years.
“Norway has produced four ‘unicorns.’ Since then the founders of Dune and Cognite have left due to the unreasonable taxes. Oda operates domestically in Norway but 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,” he stated.
“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,” Haga stated while enumerating how Norwegian society can overcome the current ordeal.
“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,” Haga concluded.
Conclusion
A sobering lesson to all other nations, including India, where the opposition has repeatedly engaged in silimar socialist policies that have left their states bankrupt, should be provided by the aforementioned situation and Congress-ruled Karnataka is one of the most prominent examples. Likewise, the Supreme Court refusal to grant left-ruled Kerala temporary respite, noting that the state’s financial problems were due to its own financial mismanagement. The state’s request to borrow more money was denied by the court.
Furthermore, the I.N.D.I. Alliance and its ecosystem are constantly demonizing industrialists and entrepreneurs with their regular Adani-Ambani jibes, even going so far as to back anti-India forces like George Soros, who is determined to destroy India’s economy by targetting its businesses in order to unseat nationalist Prime Minister Narendra Modi.
Wealth creators are the backbone of any economy, especially a developing one like India and the opposition is determined to undermine the nation’s interests because of their animosity toward the Bharatiya Janata Party and PM Modi in particular. Harassing entrepreneurs, whether through ridiculous taxes or other means, is only destructive to the nation.
