The wealth tax has been making headlines in recent years. While few countries still have a wealth tax, there have been lively debates around the possible introduction of wealth taxes in several countries, for example the U.K., the U.S or at an international level. Historically, most countries abolished wealth taxes in the 1990s and early 2000s, although Spain has recently effectively reintroduced it at the national level. Norway is one of few developed nations that still has it.
The Norwegian wealth tax is a tax on an individual’s net wealth*. In 2018, the revenue raised from the wealth tax made up 1.1% of total Norwegian tax revenue and 0.6% of GDP. The proportion was higher only in Luxembourg (7.2% of total tax revenue and 2.9% of GDP in 2018) and in Switzerland (4.8% of total tax revenue and 1.3% of GDP in 2018). The total amount of wealth tax was relatively stable during the 2005-2022 period at between 15 and 18 billion kroner, and it increased to around 34 billion kroner in 2024.
*The tax base for the Norwegian wealth tax consists of an individual’s assets (real estate, bank savings, and securities including both listed and nonlisted shares) less the household’s debt. The value of net assets above the standard deduction (1,760,000 kroner for 2025) is taxed at 1 or 1.1% (0.525% represents income for municipalities, and 0.475% - 0.575% for net wealth above 20,700,000 kroner - goes to the central government). There were 654,947 wealth tax payers in 2023, paying on average 44,000 kroner each - but the distribution is highly skewed.
In total, property taxes (including the wealth tax, but also other taxes such as taxes on residential and commercial real estate) as a share of GDP are lower in Norway (1.2% in 2023, less than 3% of budget revenues) compared to the OECD average (around 5% of budget revenues). What is controversial is that firms are part of the tax base for the wealth tax.
By including the firm in the tax base, the wealth tax creates a complex link between personal and corporate finance that is both interesting and challenging to research. We present statistics on the wealth tax paid by business owners, personal and corporate finance below.
The main results include the following:
A common argument in favor of a wealth tax is that it reduces inequality by increasing the tax contributions of the wealthiest individuals in society. Similar to the other Scandinavian countries, Norway has very low income inequality, but relatively high wealth inequality. Compared to other taxes, the wealth tax is also less likely to distort economic incentives for value creation. It may also encourage the more productive use of assets. Finally, it may shift the balance from taxing labour to taxing capital.
An argument against the wealth tax is that most of the assets subject to the tax—such as shares in nonlisted companies—are illiquid. Business owners must pay the wealth tax in a given year whether the company generates positive cash flow or not. For small firms without easy access to external funding, the tax may restrict the resources they have available for investment. This is a reason why recent proposals about the introduction of a wealth tax in the US or internationally start from a high threshold. In comparison, the Norwegian wealth tax starts from a low threshold, although the standard deduction has gradually increased in recent years: from 120,000 in 2000 to 1,760,000 in 2025.
A wealth tax could also discourage the investment in startups that take several years to become profitable. It can also distort the choice between saving and consuming (although the direction may not be obvious), and can result in a negative return on savings. The effective tax rate decreases as returns increase, which may be seen as unfair, especially given that wealthier people tend to have higher rates of return on wealth. The valuation of assets, in particular business assets, can be problematic: using market values is not possible for the majority of firms, and using book values is less sensitive to the business cycle and creates a stronger leverage effect. Differences in valuation across assets can create distortions, and tax avoidance and evasion by people with the means to do so is a significant concern.
There are theoretical arguments on both sides of the debate. Depending on the assumptions, one can go from the conclusion that the wealth tax is innocuous to the conclusion that the optimal taxation of capital is zero. It is therefore important to start from a clear empirical picture. We present some key statistics on the wealth tax paid by business owners in the next sections.
CCGR researchers have analyzed how Norwegian family-owned companies are affected by the wealth tax. (Family-owned companies are here defined as firms where members of one family together own at least 50 percent of the equity).
The data shows that around half of Norwegian family firms have owners that do not pay the wealth tax at all. For those that do pay wealth tax, Figure 1 shows the distribution of the amount in the year of 2015. For a given firm, the figure calculates the average of its owners’ tax payments. Firms’ averages are then allocated into 10,000kr.-size buckets ranging from 10,000 kr. and below to 290,000kr. and above. For example, the first column shows that in almost 7000 firms, owners pay between 0 and 10,000 kr. in wealth tax on average.
Overall, the distribution is highly skewed: in the majority of firms, owners pay less than 50,000 in wealth tax. However, 2,500 firms (shown as one column) have owners that pay in excess of 290,000 kr. on average.
Even a relatively low tax payment of 50,000 kr. may be large for an owner with little cash on hand – especially given that the tax will be repeated every year. To assess the effect of a wealth tax on companies, the relevant issue is the size of the tax relative to owners’ liquid assets. If owners do no hold cash or other liquid assets that can be used to pay the tax, they may have to withdraw resources from their firms.
The figure below illustrates the size of the wealth tax relative to business owners’ liquid net assets over time for different firms in the distribution (median, 75th, 90th, and 95th percentiles). For example, in 2000, wealth tax constituted less than 1.7% of liquid assets for half of firm owners, but more than that for the other half. 10% of firm owners had a wealth tax payment of at least 18% of their liquid assets, and 5% paid in excess of 40% of their liquid assets.
After 2000, the wealth tax has remained negligible relative to owners’ liquid assets for the median firm. However, in around 10% of firms the tax represents at least 15% of the owner’s liquid assets, and in around 5 percent of firms, it is at least 40%.
Another relevant measure is the wealth tax compared to the revenue generated by the firm. When revenues are large, firms are more likely to have positive profits that owners can distribute as dividends in order to pay the tax.
The figure below compares the wealth tax to firms’ revenues. For 75% of firms, the tax payment makes up up to 2% of annual revenues. For 10% of firms, however, the tax constitutes at least 8-18% of revenues, and for 5% it is above 23-59% of revenues.
Although the relationship is noisy, wealthier business owners have wealth tax payments that are on average larger compared to their personal liquidity. The graph below presents business owners ranked into percentiles by their gross wealth (x-axis) and the ratio between the wealth tax payment and the owner's personal liquid assets (y-axis). The data is for 2021.
At the same time, there are also high ratios of wealth tax payments to personal liquidity for business owners with lower wealth. The graph below presents the relationship between the gross wealth in million kroner (x-axis) and the ratio between the wealth tax payment and the owner's personal liquid assets (y-axis). The graph includes family business owners with gross wealth of at most 10 million kroner in 2021.
The above figures show that the wealth tax can be substantial relative to owners’ liquid wealth and relative to the revenues generated in the firm. This in itself, however, does not imply that the tax has detrimental effects on firms’ performance and growth. While the tax for some firms and owners seems quite large, it may not effectively constrain those firms’ operations. To establish such causality, a statistical link from the tax paid by a particular owner to the performance of the firm needs to be established.
Studying changes in the taxation of residential real estate, CCGR research has established such a causal link. In a sample of family firms, it is shown that higher taxation of business owners’ personal wealth lead them to take out more dividends and higher salaries from their firms. Affected companies experience lower investment and growth. The effect is largest for owners whose liquid assets are low relative to the tax increase.
These results are illustrated below. Figure 4 shows that the likelihood that a firm pays dividends is higher when the owners are wealth tax payers than when they are not. When owners do not pay wealth tax, only 15% of firms pay dividends. When owners do pay wealth tax, almost 30% of firms pay dividends. When one considers owners that have the highest mismatch between the wealth tax they pay and their personal liquid assets, the ratio of firms that pay dividends exceeds 30%. The mismatch is computed here as the 5% of owners with the highest ratio of tax to liquid assets.
If owners indeed take out cash from their firms for reasons related to their personal financial circumstances, rather than the firm’s commercial circumstances, we would expect firms to pay dividends even in years with negative profits. This is exactly what the data shows.
Figure 5 plots the fraction of firms that pay dividends to their owners in a year where they also report negative earnings. The figure shows that the fraction of firms that pay dividends despite making losses is substantially when their owners pay wealth tax. When owners do not pay wealth tax, less than 1% of firms pay dividends and report losses. When owners do pay wealth tax, 2% of loss-making firms pay dividends but increases to 5% of firms when we consider those firms whose owners have the largest mismatch between tax and liquid assets. The proportion of dividend-paying firms approximately doubles for each column in the figure.
The positive correlation between dividend policy and owners’ wealth tax-position can also be illustrated by considering how much of firms’ annual earnings that are paid out as dividends. Figure 6 plots the dividend-payout ratio for profitable firms. The fraction is higher the more wealth tax the firms’ owners pay relative to their personal liquid assets.
If a firm cannot easily raise capital to fund its business plans, the reduction in its liquidity can result in lower investment and lower growth. Figures 7 and 8 illustrate that firms whose owners are wealth tax payers do indeed appear to have lower revenue and asset growth. The average growth rate of firms whose owners pay wealth tax is considerably lower than the average growth rate of firms whose owners do not pay wealth tax.
It is important to emphasize that the above graphs are an illustration of the finding that firms with wealth tax-paying owners disburse more cash to owners and grow more slowly. In their own right, the graphs do not constitute sufficient evidence that the wealth tax is the source of negative effects on the firm because the firm itself is part of the tax base. The graphs hide the possibility that firms may be systematically different across columns. For example, wealth tax-paying owners could have firms that are on average larger, more mature, and therefore more likely to pay dividends and grow at slower rates. If so, the lower growth would result from the firms’ characteristics rather than the wealth tax imposed on their owners.
To establish a causal effect from the wealth tax to the growth of firms, one needs to conduct a statistical study that carefully controls for firm characteristics and consider only tax payments that are strictly linked to the owner’s personal assets rather than the firm. The full CCGR research study can be found here and a summary of the study here.
The fact that the tax base for the wealth tax includes firms creates a close connection between firms and the tax position of their owners, especially in the case of family firms.
In this section we describe the evolution of wealth taxation for business owners over time, and the characteristics of firms with different tax liabilities. To address the issue of skewness, we group family firms in 8 broad bands based on the net (taxable) wealth of their controlling owners.
We form the following groups of family businesses based on the net wealth of the controlling family:
- Group 0: negative net wealth;
- Group 1: net wealth between 0 and 500,000 kroner (adjusted for inflation, in 2023 kroner);
- Group 2: net wealth between 500,000 and 1,000,000 kroner;
- Group 3: net wealth between 1,000,000 and 5,000,000 kroner;
- Group 4: net wealth between 5,000,000 and 10,000,000 kroner;
- Group 5: net wealth between 10,000,000 and 50,000,000 kroner;
- Group 6: net wealth between 50,000,000 and 100,000,000 kroner;
- Group 7: net wealth above 100,000,000 kroner.
The proportion of firms in each group has been relatively stable over time during the 2000-2021 period:
For business owners that pay larger amounts of wealth tax, that amount is also relatively high compared to their personal liquid assets:
Owners that pay more in the wealth tax have larger - but also older firms on average:
The highest growth rates can be found among firms whose owners pay the largest and lowest amounts of wealth tax - which largely overlaps with the largest and the smallest firms:
Firms in the higher wealth tax group are more capital intensive, which is also reflected in a lower ratio between salaries and sales:
Smaller firms whose owners pay no or little wealth tax have lower returns on assets. The largest and smallest tax payers have more cyclical firms. Large firms with owners paying more wealth tax have lower returns on equity, which is consistent with their lower leverage.
Dividend payouts are higher in firms with owners paying more in the wealth tax:
The cash reserves relative to total assets are lower in firms where the owners pay more in wealth tax, and net leverage is relatively high:
The wealth tax has to be paid regardless of the owner's liquidity. As shown above, for the top wealth tax payers the wealth tax is also larger relative to the owner's liquid assets. That means that some of the wealth tax liability needs to be covered with dividends paid from the firm. The probability that the firm pays dividends even in years where it makes a loss is also higher for high wealth tax payers, as shown in the graph below.
A similar pattern can be seen if we divide wealth tax payers into 10 deciles based on how large the wealth tax payment is relative to their liquid assets. The graph below shows the likelihood that loss-making firms with owners in a given decile pay dividends. The statistics are for 2021.
While in the lowest decile just 1.1% of loss-making firms pay dividends, in the top decile the proportion is 5.3%.
As shown in the section of the information hub dedicated to family firms, family firms are more prevalent in less central areas. There is significant variation in the wealth and wealth taxation of the owning families. In this section we present statistics on family firms with different levels of owner taxable wealth across various regions. The numbers are for 2021.
Paying the wealth tax is more likely to be a problem if the wealth is invested in illiquid investments, such as nonlisted family firms in less central areas.
We group firms in three brackets based on the largest owner:
- family firms, where a Norwegian family or individual has a majority stake,
- foreign owned firms – where foreign entities or individuals have a majority stake,
- state owned firms – where the state is the largest owners,
- other nonfamily firms, where no family or individual has a majority of the shares. We call this group “nonfamily” in the graphs below.
We further divide the family firms into eight wealth brackets (brackets 0-7, 7 is the wealthiest), where the largest family wealth is aggregated across all active family members (owners, board members, CEO).
- Group 0: negative net wealth;
- Group 1: net wealth between 0 and 500,000 kroner (adjusted for inflation, in 2023 kroner);
- Group 2: net wealth between 500,000 and 1,000,000 kroner;
- Group 3: net wealth between 1,000,000 and 5,000,000 kroner;
- Group 4: net wealth between 5,000,000 and 10,000,000 kroner;
- Group 5: net wealth between 10,000,000 and 50,000,000 kroner;
- Group 6: net wealth between 50,000,000 and 100,000,000 kroner;
- Group 7: net wealth above 100,000,000 kroner.
We also group firms into regions with different degrees of centrality based on the municipality where they are headquartered. The centrality measure we use is the SSB centrality index, where each firm headquarter is assigned a centrality score from the most rural area (6, for example Frøya) to the most central areas (1, the Oslo region).
We report statistics for the number of firms in each group, total assets, sales, employment, and value added (sum of company earning and labor expenses, that is the total income generated by the firm for labor and capital).
Looking at the number of firms, the proportions of each group of tax payers are not very different across regions. The most noticeable pattern is that the proportion of foreign firms is very small outside the large cities. A small number of firms are state-owned, but they tend to be relatively large - for instance Equinor or Telenor. The largest group of family firms is small firms where the owners do not pay the wealth tax - but tax payers are also well represented.
In terms of revenues and value added, the proportion of family firms increases with lower centrality, and most of the owners are wealth tax payers. Firms owned by families or individuals that do not pay the wealth tax are small, and as a result they represent a small proportion in all geographies. Firms owned by families and individuals that pay the wealth tax represent a large proportion of revenues and value added outside Oslo. Foreign ownership is most significant in central areas, especially in Oslo, but it represents a small proportion in outlying regions.
A similar pattern emerges for total assets, where – not surprisingly – higher owner net wealth is associated with higher firm assets, but of course also with higher tax payments.
Looking at employment in Norway, family firms with wealth yax paying owners are the dominant employer outside the large cities.
Controlling families that pay higher amounts in wealth tax are also wealthier. At the same time, however, the tax payment represents a larger portion of their liquid assets. That pattern does not change much with the geographical location.
The firms owned by families with larger wealth tax payments are more likely to pay dividends, and they pay out a larger share of their earnings. That can mean that, in the absence of sufficient personal liquidity, the family uses dividends from the family firm to cover the tax payment, triggering the dividend tax as well as the wealth tax.
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