Hello everyone, I was reading something about Ultra Hight Net Worth Individuals and rich people in general.
I saw that although the US is home to +51% of UHNWIs, is not on the top 5 per capita.
Countries like Canada and Sweden that have really high tax rates are in the top 5 of UHNWIs per million habitants, New Zeland, Denmark and Norway are also on the list. How is that possible if Tax rates are super high? Wouldn’t it make sense to be that way in countries with low tax rate?
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When people reference taxes in the context of Canada, Scandinavia and NZ, they usually are only talking about income taxes. And income taxes generally are only a slice of the overall taxation pie.
In those countries many of these UHNWIs arnt “high net worth” because of their income (though they do have high incomes) but because of the ASSETS and control over other entities that they possess. When they say X person is worth $Ybillion, it’s not cos they EARN that amount of currency or have that amount in their bank accounts, but because that’s the value of everything they have a finger, hand or toe in.
Now understanding this, you can see why a billionaire won’t pay a lot on income tax comparative to the supposed billions in wealth. Another element is that these countries likely have either a lot of tax loopholes allowing wealth to be obfuscated beyond clear taxation collection or they may have relatively low capital-based taxation collection especially on entities that are considered to be high on their own sovereign stock exchange.
Also, these countries may be nice to live in for those in the higher wealth brackets and it might simply be worth the slightly higher associated costs for that standard of living.
Least this is how I’ve come to understand such phenomena, as it applies to my own country as well (Australia). I welcome any critical corrections in this opinion though.
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