Denmark's wealthy rebel against the wealth tax

CopenhagenDenmark's wealthiest businesspeople are up in arms and have fully entered the election campaign for the general election to be held in the Nordic country on March 24. The reason for their discontent is the campaign promise of Social Democratic Prime Minister Mette Frederiksen to reintroduce a 5% annual wealth tax as a measure to reduce growing inequality in the country. The new tax, which has become one of the hottest topics of the election campaign, would affect some 22,000 people (in a country with 5.9 million inhabitants), who would pay an average of 300,000 kroner per year (40,000 euros). Frederiksen detailed this in the business daily. BørsenThe state would collect around 6 billion kroner annually (803 million euros), which would be used to finance the ambitious public school reform presented by the Social Democrats before the elections. Just days before the polls open, surveys show that the wealth tax is viewed favorably by a majority of voters, as Frederiksen's party is the most likely to win the election. However, there is virtually a tie between the progressive parties, which have supported the Social Democrats' proposal, and the conservative parties, which completely reject the idea. Executives from some of the country's leading companies have also publicly voiced their strong opposition, making unusual media appearances during the campaign. The CEO of shipping giant Maersk, Robert Maersk Uggla, has stated that the tax "would have very bad consequences for Denmark." Uggla, who heads the largest company in the Nordic country (with a turnover of €52 billion in 2024), expressed his fear that Danish companies will have even more difficulty hiring and retaining top executives due to the tax, as Denmark already applies one of the highest income tax rates in the world at 60.5% on salaries exceeding €348,000 annually. Meanwhile, businessman Henrik Andersen, CEO of Vestas (a world leader in wind turbine manufacturing), has threatened to pack his bags and move the company abroad if the Social Democrats fulfill their election promise. "If it comes to fruition; I can be more clear," he said in an interview with the newspaper. Berlingske

Business associations and employers' organizations have emphasized that the wealth tax was abolished in Denmark in 1997 by a Social Democratic government, arguing that it aimed to encourage investment in Danish family businesses and simplify the tax system. Former Conservative minister and current president of the Copenhagen Chamber of Commerce, Brian Mikkelsen, added that reintroducing the tax would be a "huge own goal," as it "will impoverish Denmark and risks pushing out some Danes who are the driving force of the country's economic growth." Mikkelsen believes this is simply an expression of "envy" directed at the wealthiest.

Fight against inequality

In the previous legislature, Prime Minister Frederiksen was accused of pursuing overly right-wing economic policies while leading a coalition government formed by the Moderate Party and the Liberals. But now it seems the Social Democrats want to regain lost ground among more left-leaning voters by making the fight against social inequality one of the main pillars of their campaign. Frederiksen justified the need to reintroduce the wealth tax by arguing that "when the richest 1% of the population owns approximately a quarter of all Danish wealth, the situation has become too unequal." The Social Democratic leader referred to a report by the think tank The progressive Danish Business Council of the Labour Movement (AE) points out that the wealth of the richest 1% of Danes increased by 31% between 2020 and 2024, while the average wealth of the population grew by 3.3%. The AE report also notes that, on average, the wealthiest 1% of Danes have a net worth of €7.7 million, compared to the average Dane's net worth of €124,000. Furthermore, one of the consequences most frequently cited by critics of the tax is the case of Norway and the repercussions it has had on capital flight from the country. In 2022, the Labour government decided to increase the wealth tax to 1% for assets exceeding €145,000 and to 1.1% for those exceeding €1.76 million, a measure affecting between 12% and 15% of taxpayers. According to critics of this decision, the tax has led 105 of the 400 wealthiest individuals in Norway to relocate abroad, most of them to Switzerland, resulting in a loss of revenue for the economy. One of the most high-profile cases was that of industrial magnate Kjell Inge Røkke, who announced his move to the Alpine city of Lugano to avoid paying the tax. Since then, the Oslo government has implemented measures to make the flight of wealth more costly, currently applying a 37.8% tax on capital gains exceeding €253,000.