Supporters of a wealth tax or higher inheritance taxes often argue that it is a myth that rich people leave the country in response. So, what really happens when taxes on the wealthy are sharply increased?

The example of Sweden

In the 1970s, Sweden embarked on an experiment in “democratic socialism” that led frustrated entrepreneurs to leave the country. One prominent example was Ingvar Kamprad, the founder of the Swedish furniture company IKEA. For wealthy people like him, Sweden’s top marginal tax rate at the time was 85%. On top of that came a wealth tax that entrepreneurs had to pay out of their personal assets.