Sweden’s far left political faction is heading into its election next week promising to roll out a destructive idea that already failed once before in their country.
The Left Party (the former communists) wants a wealth tax on billionaires… it’s Bernie Sanders’ dream come true. They’ve also floated a new property tax on expensive homes, plus an exit tax on any billionaire who tries to leave.
Then there’s the Green Party, which has its own ideas about how the top 1% should contribute more. They back the billionaire wealth tax too… but they differ with the communists on how it should be spent (climate change versus redistribution).
Obviously it’s not a done deal yet— the Greens and the Communists still have to win… and then hammer out the details. But Sweden’s wealthiest citizens aren’t waiting around to find out what happens next.
Bloomberg reports that Swedish tax lawyers are already busy; clients are setting up foreign structures, rewriting their succession plans, and asking whether their companies should keep their headquarters in Sweden at all.
Klas Tikkanen, a senior executive at the private equity firm Nordic Capital, told Bloomberg: “I think it could turn into a real exodus, especially if they announce an exit tax.”
Notice the word “if.” Nothing has passed, and nobody has even voted yet. The mere threat is a tangible enough risk that anyone in the cross hairs is planning to move.
It’s not hard to understand why; wealthy people are, by far, the most mobile social class… and there are lots of nice places in the world that don’t come with six harsh months of winter.
It’s interesting that this experiment has already run twice, and both times the rich people left.
Norway’s center-left government raised the wealth tax in 2022, and for business owners the bill roughly doubled in a single year, by one estimate.
By the end of 2022, more wealthy Norwegians had left the country than in the previous thirteen years combined. Kjell Inge Røkke, who had been Norway’s richest man, paid about $20 million in tax in 2021 and moved to Lugano the next year.
But even Sweden itself already ran this wealth tax experiment once. And it was an abject failure.
Sweden introduced a wealth tax in 1911 and kept it for the next 96 years. By the end it was taking 1.5% a year on net worth above roughly $200,000 for a single person— not exactly billionaire territory. Roughly 280,000 Swedes were paying it.
People were leaving in droves to avoid paying the oppressive levy.
Ingvar Kamprad, the founder of IKEA, left Sweden in 1973 and eventually settled in Switzerland. He had plenty of companionship: by the 2000s the Swedish tax authority estimated that some $70 billion had been parked abroad for tax reasons.
When H&M’s main owner, Stefan Persson, threatened to leave in the 1990s, the Social Democrats simply exempted him— from 1997, controlling owners of listed companies paid no wealth tax on their shares.
As always, a tax that was originally meant for ‘the wealthy’ increasingly fell on middle class homeowners whose assessed values kept rising.
And what did the tax collect for all that trouble? By the end it was bringing in about $800 million a year, around 0.3% of Sweden’s tax revenue— a rounding error.
So in 2007, Sweden gave up on taxing wealth entirely, i.e. even one of the most socialist nations on earth had figured out that a wealth tax doesn’t work.
Less than twenty years later, the Communists have completely forgotten this lesson and think that they can do it better.
It’s amazing when you think about it— Sweden’s nearly century-long wealth tax experiment failed miserably…. but the Communists are apparently so smart that their wealth tax will be successful.
The arrogance is extraordinary. But all too common.
Across the pond in the Land of the Free, America’s communists think that their wealth tax ideas are also brilliant and original.
California voters will decide in November on a supposedly “one-time” 5% wealth tax on billionaires. Yet even Emmanuel Saez, the Berkeley economist who co-wrote the proposal, acknowledges that it’s not really a one-time tax: “I’m not there to pretend that it’s one, once, and never again.”
Meanwhile New York’s state legislature has a bill to tax billionaires’ unrealized gains… every year.
And Senator Elizabeth Warren isn’t satisfied with billionaires; her ultra-millionaire tax proposal bundles a wealth tax on centimillionaires, plus an additional 40% exit tax on anyone who renounces US citizenship.
When the place you live starts treating productive people and their money as enemies to punish, rather than partners to welcome, the rational move is to think about your own Plan B.
Notice that wealthy Swedes haven’t actually left. But they are making plans, setting up the structures etc., now, while they still can. This way, if the tax passes, they already have somewhere to go. If they are lucky, most of them will never use it.
That’s the entire logic of a Plan B.
You don’t have to go anywhere. The point is to make sure you have an option in case you ever need to use it.
P.S. The hardest part is knowing where to start.
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