“The threat of new taxes is already damaging Sweden”

The mere prospect of a new billionaire tax is already harming Sweden, according to Johan Fall, tax policy director at the Confederation of Swedish Enterprise. In a reply to Gabriel Zucman and the Green Party, Fall argues that their proposal ignores the most basic principle of tax economics: people change their behavior when tax rules change.

He says entrepreneurs, long-term investors and people considering moving to Sweden look not only at today's taxes, but also at what they might face in five or 10 years. Renewed debate about taxing ownership itself therefore creates a political risk that can frighten away investors and business founders before any tax takes effect.

Fall points to Sweden's former wealth tax as a warning. He says it drove capital and business owners out of the country, encouraged extensive tax planning and required an increasing number of exemptions because of problems in the system. Sweden eventually abolished the tax in 2007.

He argues that wealth taxes also influence how capital is used. If some assets face heavier taxation than others, owners have an incentive to move money away from productive investments and toward assets that receive exemptions or favorable tax treatment. Capital that could fund companies, innovation and jobs may instead flow to wherever the tax is lowest.

Fall also rejects the idea that successful business owners represent a problem. He defends company structures and holding companies, saying they allow money to remain in businesses and be reinvested rather than withdrawn for private consumption. Profits are already taxed in companies, he writes, while dividends and share sales are taxed as well. He says successful entrepreneurs reinvest money and expertise in new businesses, contributing to Sweden's startup and unicorn ecosystem. He also disputes the claim that the proposed tax would raise 50 billion kronor annually, saying that calculation fails to account for the behavioral response to taxation.