– The challenge is not to get companies started, but to get them to grow, says MIT professor of management and technology, Scott Stern. He researches what it takes to create innovation and successful businesses, and was invited by Sparebank1 to the Næringsdriv conference in Trondheim this week. The backdrop is that Norway is looking for new growth engines that can transform the economy from the profitable oil and gas industry. But like the rest of Europe, Norway is struggling to bring up large, new companies that can compete with the IT giants in the USA. Pointing to the wealth tax, Stern believes that Norway has failed to manage the transition to an innovation economy, but not because the country lacks entrepreneurs with brilliant ideas. The lack of money puts a damper on the wheels of companies that could have grown quickly. – You need a strategy, so you can speed up the system. First, you have to focus on getting companies to grow. Then you also have to have a more advantageous tax system, says Stern. MIT professor Scott Stern gave advice to Norway on restructuring to improve innovation. Photo: Per Ingvar Rognes / news Stern does not believe there is an easy solution to Norway’s challenge, and also points out that entrepreneurial companies should gather in large clusters to attract investment. But in the tax system, he sees wealth tax as a problem. The companies in Norway tax their profits. Companies that grow to become large companies do not normally make a profit at the start. But the owners risk paying wealth tax if the companies nevertheless become valuable along the way. – I am not an expert on tax, but one thing I can say about start-up companies: Taxing unrealized profits is a deterrent for the founders and their investors, he says and adds: – The main challenge with the wealth tax is that it creates a problem for the ability to invest. You pay tax when a company is still young, before the company has turned a profit, before the potential has been realised. LO: – A campaign is underway In Norway, wealth tax is one of the issues that most sharply divides the right from the left in Norwegian politics. Several business leaders have advocated that the tax must be removed in order to make businesses stronger. Business Minister Cecilie Myrseth (Ap) is part of the Støre government, which has increased the wealth tax since 2021. – The fact that people disagree about the wealth tax in Norway is nothing new. It was also there when Erna Solberg ruled for eight years, and it was not removed then. But it is also important in Norway to have small differences, she says to news. Like the government, LO is concerned that the wealth tax can reduce inequality, and hits people with high assets hardest. – We register that there is a campaign going on every day from strong capital interests and the right to remove the wealth tax. Entrepreneurs and other groups are then used to strengthen that argument, says LO leader Peggy Hessen Følsvik to news. The powerful LO leader Peggy Hessen Følsvik and Prime Minister Jonas Gahr Støre (Ap). Photo: Terje Bendiksby / NTB Believes risk appetite is dampened But Sterk has no doubt that the wealth tax will create a higher threshold for Norwegians who want to invest as entrepreneurs. – If you come across something that says “don’t go this way”, then young entrepreneurs often won’t dare to do it. Rather, they take a job in a traditional company, or move abroad. The wealth tax creates a barrier between entrepreneurs and their ambitions, says Stern. Published 14.11.2024, at 22.22
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American professor believes wealth tax is a brake on growth – news Norway – Overview of news from various parts of the country
