When 100% Taxation is Acceptable

Empathy is a rare quality, so it's a mistake to rely on it in others. We mustn't position ourselves in such a way that empathy becomes important. This doesn't only apply to beggars who live off of pity rather than empathy, but to rich and poor alike. We mustn't delude ourselves into thinking that anyone cares about our particular problems. They don't, and to be fair, they shouldn't. A free and just world doesn't depend on empathy beyond the most private of circles. Rather, it relies on force and the potential for violence. If we're not prepared to fight for our own interest, don't expect anyone else to do this for us.

This insight came to me in a flash back in the days when I was being taxed close to 100% on my income. I bemoaned this fact to my colleagues after I learned that the HR department had no tax bracket above 50%, even though people are routinely taxed above this rate in Norway. It's as if this problem doesn't even exist, I said, expecting my colleagues to be shocked to learn the ugly truth. However, apart from one so called right-winger, there was no empathy to be found. The tax rate was fair. This was nothing to complain about. After all, to fall into such a tax bracket simply implies that the means to pay the taxes are available.

And just like that, I realized that politics will never fix this problem. The majority of people are taxed at a reasonable rate, and will therefore continue to vote for the system. The fact that some are taxed at or above 100% doesn't matter. I also realized that there would be no let-up in the spiralling rate of taxation. I would have to find ways out of this on my own, and what followed was a relentless search for ways to reduce my biggest single expense, namely taxation.

When I mentioned this approach to taxation to my colleagues some months later, the response was similarly telling. The same colleagues who had learned that my tax rate was above 50% told me that my efforts were misguided. I would be much better off by focusing on work and let taxation be taxation. To do otherwise was nothing but a waste of time and a potential source of anger and frustration. Life is best lived happily and free of cares within the framework of social democracy.

While my colleagues were right about the anger and frustration, I'm more than a little happy that I took the axe to the tax as early as I did. I figured this whole tax thing out before it became a more widespread problem. I got out of the social democratic trap before it snapped shut. I even broke the law right in front of the tax man without any more trouble than a few angry phone calls from him.

Much of what I did is now close to impossible. Even getting out of Norway is now problematic, and that was a central part of my solution. Had I broken the law in Norway, the taxman would probably have reacted differently. However, the overall solution to the problem can still be achieved by anyone stuck in the sort of situation that I was.

Key to lowering taxes is to keep wealth in a form that cannot be taxed, and to only report wealth and income that cannot be denied. This is why my wife and I own but a single piece of real-estate, namely the apartment we live in. It's also the reason we own metals rather than registered paper wealth. What paper wealth I used to own has been passed on to my three children in Norway.

The net effect of this has been a dramatic improvement in the overall family cash flow. Taxes and fees related to secondary real-estate have been reduced to zero. Taxes related to paper wealth have been greatly reduced. My three children pay collectively less in takes on their paper wealth than I would have if I had held onto the papers myself. This is because progressive tax rates work to our advantage when applied in reverse. Each of my children pay far less than one third of what I would have paid.

The fact that my wife's apartment is relatively modest further strengthens our financial position. We live in an area with poor and middle income people, hardly a target for massive taxation. Bureaucrats can't very well raise taxes on apartments in our area without causing great harm to many of the less advantaged living in this area, so we can be pretty sure that real-estate related taxes and fees will remain low in our area.

The solution to being taxed as a rich person is simple. Stop being a registered rich person and start being an affluent person with little to no official income or wealth. It's not very hard to do, and the effect can be dramatic, especially when tax rates start creeping above 50%.

Affluent but not rich