From hagaet the substack of Fredrik Haga, co-founder of Dune

Norway Shrugged 

Recently, my story as a Norwegian entrepreneur facing an unrealized gains wealth tax bill many ties higher than my net income went viral, amassing over 100 million views on X. A few years ago I publicly called out that this tax 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.

In this post, I’ll delve into why there’s an entrepreneurial exodus from Norway, how we got here, and what the future might hold.

Socialist Left leader and me on the “Wall of Shame” (Dagbladet)

Norway: A real life Atlas Shrugged 

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.

Present-day Norway mirrors this dystopia in unsettling ways. Taking risk with your own money, working hard and then making a profit is frowned upon. While politicians spending the people’s money on non-viable green projects, and delivering dysfunctional public services at high costs has the moral high ground. The government is spending 35 Billion NOK on offshore wind that industry experts think is financially unviable. This is about the same amount as the total wealth tax revenues. 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.

With unshakeable ideological conviction, socialist politicians are rapidly undermining Norway’s wealth creation. They’re imposing taxes that explicitly disadvantage Norwegian business owners, and are often straight up impossible to pay. 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…

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.

Norwegian trains have for a long time been notoriously unreliable – even less reliable then in war time Ukraine! In chilling similarity to Atlas Shrugged there’ve been two train crashes, including one fatal, in the last month alone.

Tram crashing into a retail store in Oslo 29th of October 2024 (NRK)

The Unrealized Gains Wealth Tax: A Self-Inflicted Wound

Norway imposes a wealth tax that taxes unrealized gains at approximately 1% annually. Calculated on the full market value for publicly traded assets and the book value of private companies. 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.

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.

Moreover, the tax incentivizes Norwegians to take on excessive debt to reduce their taxable wealth, inflating housing prices and making the economy more fragile. While real estate and oil companies can mitigate this through debt financing, tech startups—often equity-financed and loss-making for years—are disproportionately harmed.

The Berlin Wall Exit Tax: Another Tax on Unrealized Gains

After witnessing a mass exodus of top taxpayers, the Norwegian government had a golden opportunity to reassess its policies. The wealth tax contributes less than 2% to the state budget; eliminating it and marginally increasing capital gains, corporate, or dividend taxes could have halted the entrepreneurial bleeding without affecting government budgets.

Instead, the government doubled down on what’s 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.

The government could have listened to the tornado of negative feedback and adjusted course, but instead, they doubled down on what’s not working. 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. Instead of trying to attract and retrain 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 one of the richest countries in the world. The government does not need to send their entrepreneurs abroad with non-sensical taxes. So you may ask yourself, “Well, how did we get here?”.

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. Instead, Norwegian politicians made two genius decisions that benefited the entire population.

1. Genius Move 1: Taxing Oil Profits at 80%Recognizing the need for foreign expertise but unwilling to let international corporations reap all the benefits, Norway taxed oil company profits at a staggering 80%. This bold move ensured that the wealth generated from the oil benefited the Norwegian people.
2. Genius Move 2: Establishing the Sovereign Wealth FundIn 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.

For two decades, politicians across the spectrum adhered to this prudent financial management, displaying an impressive level of restraint and foresight rarely seen in politics.

How Oil Wealth Led to Socialist Ideology over Wealth Creation

But success bred complacency. 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 is 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.

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.

The 2025 Election: No Fundamental Solution in Sight

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 mere existence continues to create absurd incentives for excessive debt and over-investment in housing, detracting from more productive investments like stocks and startups. Moreover, the possibility of future governments reinstating the wealth tax for companies keeps the harmful uncertainty for businesses very much alive.

Many European countries have recognized the harm caused by taxing unrealized gains and abandoned it. Norway’s neighbor Sweden abolished its wealth tax in 2007. Since then they’ve seen its tech sector flourish. Spotify recently surpassed Norway’s state-owned oil company, Equinor, in market capitalization. In the last 15 years Norway has gone from having 7 to now only 2 of the Nordics top 30 most valuable companies.

Norway has produced four “unicorns”. Since then we the founders of Dune and Cognite have left due to the unreasonable taxes. Oda operates domestically in Norway. 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.

The Extra Long Journey to Post-Oil Wealth and Welfare

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.

Fortunately Norway has a highly educated population and a lot of capital. With oil a high tech industry has been built in Norway before. What’s lacking is the political will to encourage entrepreneurship and big ambitions, not punish it.

Trust is built in millimeters and torn down in meters. In just a few years, the trust in Norway as a viable place to build and invest has been shattered. A whole generation of entrepreneurs has been lost.

The people of Norway currently enjoy and benefit from a host of generous welfare benefits. High income with short work days, free healthcare, free daycare, free education and beyond. For this to continue in the future Norway needs massive new post-oil industries. 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.