After 'Taxing the Rich,' UK Loses KRW 212 Trillion... A Look at Global Cases

Tax hikes accelerate the exodus of the wealthy
Wealth taxes do not always lead to higher revenues

As countries increasingly raise taxes on high-income earners to ease fiscal pressures and secure funding for welfare programs, more super-rich individuals are moving their residences or assets to avoid the tax burden.

According to the British daily The Telegraph on Oct. 23, more than £120 billion (approximately KRW 212 trillion) has flowed out of the UK since the Labour government took office, as billionaires have left the country. One prominent example is Lakshmi Mittal, the Indian-born steel magnate. Last year, he moved his tax residence from the UK to Switzerland. More than £30 billion (approximately KRW 53 trillion) in net worth is estimated to have left the UK as a result. Chris Rokos, a hedge fund manager and one of the UK's largest taxpayers, is also reported to have moved to Greece.

A series of tax increases by the Labour government is cited as a reason for the departure of the super-rich. In April last year, the UK government enacted a sweeping tax overhaul, abolishing the non-dom tax regime, a tax break for non-domiciled residents that had been in place for more than 200 years. Non-doms are individuals who live in the UK but have a tax domicile or permanent residence overseas. Under the previous system, they paid tax on income earned in the UK but could avoid tax on foreign income as long as they did not remit it to the UK. Under the revised rules, however, people newly arriving in the UK can receive a tax exemption on foreign income for only their first four years; after that, they are taxed on income earned worldwide.

The UK is not the only country where tensions between governments and the wealthy over tax increases have led to people moving abroad. In France, after then-President François Hollande announced plans in 2012 to introduce a wealth tax with a top rate of 75%, French national actor Gérard Depardieu acquired Russian citizenship, among other developments. Bernard Arnault, chairman of LVMH and France's richest man, also applied for Belgian citizenship but withdrew his application after facing fierce criticism.

In Norway, high-net-worth individuals also began leaving after the center-left government raised wealth tax rates in November 2022. The British newspaper The Guardian reported that "more than 30 Norwegian billionaires and millionaires moved abroad in 2022 alone." This was more than the number of ultra-high-net-worth individuals who left the country in the previous 13 years.

Washington state is set to hold a vote on a bill introducing a new income tax for high earners. According to the Washington State Department of Revenue, the new tax would apply a 9.9% rate to the portion of annual taxable income exceeding $1 million (approximately KRW 1.3364 billion). Chicago Mayor Brandon Johnson also unveiled a fiscal 2027 budget proposal centered on raising taxes on the wealthy, but critics warned that the burden of the tax increases could also fall on ordinary residents and small businesses.

There have also been cases in which wealth taxes failed to generate as much additional revenue as expected. France introduced a wealth tax despite opposition from the wealthy, but repealed it in 2015 after continued criticism that its impact on revenue collection was limited.

This content was produced with the assistance of AI translation services.