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Norweigan oil fund

nbim.no

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Re: Norweigan oil fund

#311

Post by marvin »

andness wrote: post #303
Kjeldahl wrote: post #277

Surprised nobody mentioned that the whole fund and its future returns have been promised away already as future pension for the people working for the government (far too many). This is due to politicians and a too large part of the population that mistake "feeling good" as "being smart", and failure to recognize that the economic model that has worked for as long as the oil revenues kept flowing in, will stop workin…

The "About the fund" page has a section called "The fund's purpose and history" which seems to completely contradict what you're saying.

It's a contentious political question, and it's impossible to make predictions about how the fund might eventually be emptied. We could easily end up on a track that would empty the fund in 50 years, but of course you'd hope the electorate is wise enough not to let this happen.

Re: Norweigan oil fund

#312

Post by marvin »

BluffFace wrote: post #3
cheeky78 wrote: post #2

Isn't this contributing to climate change? The economy everyone uses as an example to replace the current system in the US...

Perhaps this is why they can afford many government programs that the US simply cannot. Without a prolific income stream comparable to Norwegian oil, the only way to provide more social services is to tax individuals and businesses harder. Tax any group too heavily and you create brain drain, which hurts in the long run.

Withdrawals from the oil fund amounted to 17.4% of the total state budget of Norway in 2018. (This is in the neighborhood of 3% of the fund size). This is the only "oil money" that is used on the government budget -- incomes from taxation of petroleum companies are put into the fund, never used directly.

Taxation in general is very high, at approximately 55% of the gross domestic product. We could fund plenty of social welfare programs on tax revenue alone.

The electorate in the US would not accept a tax burden that is close to that of the Scandinavian countries.

Re: Norweigan oil fund

#313

Post by marvin »

skj wrote: post #6
BluffFace wrote: post #3

Earlier quoted context omitted.

Perhaps this is why they can afford many government programs that the US simply cannot. Without a prolific income stream comparable to Norwegian oil, the only way to provide more social services is to tax individuals and businesses harder. Tax any group too heavily and you create brain drain, which hurts in the long run.

Without advocating taxing any group too heavily, is there any evidence that this practice has ever created a brain drain?

That would be a very interesting study. Anecdotally, only one person in my group of ambitious acquaintances has left Norway due to better opportunities elsewhere. Some super-wealthy (>$20 million net worth) have left to avoid paying the annual wealth tax of 0.85% of the market value of all taxes.

Re: Norweigan oil fund

#314

Post by marvin »

thatguyagain wrote: post #8
BluffFace wrote: post #3

Earlier quoted context omitted.

Perhaps this is why they can afford many government programs that the US simply cannot. Without a prolific income stream comparable to Norwegian oil, the only way to provide more social services is to tax individuals and businesses harder. Tax any group too heavily and you create brain drain, which hurts in the long run.

Their income tax is 22% if I'm not mistaken.

Income tax comparisons will dramatically underestimate the tax burden for Norwegian citizens, but even then I believe you are only quoting the capital gains rate for non-securities investments. Summarizing from a comment I posted elsewhere:

* 25% VAT on everything except food, which is 12%. Electric vehicles currently exempt

* 40% income tax on average including 8% public pension contribution. Highest marginal tax on income is 47%, which applies to incomes greater than $116k.

* Employer has to pay 14% of your salary as employment tax. Company profits are taxed at 24% (this is separate from the capital gains tax). Stock-based compensation is taxed as income, so no possibility of weaseling around the employment tax. You won't get stock-based compensation unless you're in a startup or a C-class executive at a (big) private company. The wealth tax does weird things to the valuation of stock options; they'll almost always be worthless unless your company is sold or goes public.

* Net assets above ~$175k are taxed at 0.85% p.a, primary residence contributes only 25% of its market value to net assets

* 29% capital gains tax, primary residence is exempt as is most tax income from renting out primary residence. Sell your home with $1 million profit? No tax.

* 22% tax on capital gains or "general" incomes that are not linked to securities ownership. Relatively small amounts are collected through this bracket.

* On average ~$10k tax on all new motor vehicles, electric vehicles currently exempt

* A tax of approximately 30% (~5 NOK per liter) is applied to gasoline, in addition to the 25% VAT. Annual tax of ~$1000 on all motor vehicles, increasing with how good the vehicle is. Electric vehicles currently exempt.

* Various taxes on alcohol, tobacco, air travel. Some municipalities have a property tax on the order of ~$500 p.a. for an average residence.

I've eyeballed most of the currency conversions.

Re: Norweigan oil fund

#315

Post by nojvek »

The thing that's the most powerful to me is that they actively decide which companies aren't following ethical practices and decide to invest away from them.

https://www.nbim.no/en/the-fund/news-list/2019/decision-to-r...

When the companies behave properly and decide to follow ethical behavior, they put them back again on the investment list.

I also wonder how the Softbank 100B vision fund is going to fare compared to the Norway investment fund. Although 5% growth rate sounds meager, they have done well since 1998, and it seems that the fund is generally betting on low risk returns.

Massive kudos to Norway for showing the world how not to fuck up your country like Venezuela when you're sitting on a money mountain.

Re: Norweigan oil fund

#316

Post by _5uxp »

lr4444lr wrote: post #34

The Norwegian success is the single biggest piece of evidence as to why the Venezuelan catastrophe was largely avoidable, and the fault of irresponsible leadership.

I agree and here is a different perspective from history,. Venezuela had 4th highest GDP per capita in 1950. It's incredible how bad they managed since then. Source http://money.visualcapitalist.com/richer-poorer-venezuela-ec...

Re: Norweigan oil fund

#317

Post by vasco »

buboard wrote: post #94
getup8 wrote: post #76

Earlier quoted context omitted.

"Since 1998 the fund has generated an annual return of 5.8 percent, or 4,404 billion kroner."

Still, for a family of 4 that's ~ 45.000$ of free money. If southern european countries were smart , they would give incentives to norwegians to move there and have a permanent vacation in the sun.

The fund is not distributing to citizens like that.

Re: Norweigan oil fund

#318

Post by A2017U1 »

southerndrift wrote: post #292
a_bonobo wrote: post #153

Earlier quoted context omitted.

Same thing in Australia, the wealth coming from the resources boom has been and is being given to a few rich people, not the general public (who are having social services slashed regularly)

Compare Australian wages to the rest of the world. If you go on vacation to other places you see that Australians make more than people from other industrialized nations. You don't see it because your plumber wants to participate, too.

How is that relevant? Australian wages are high because of a long period of unionised action demanding better wages and working conditions in the 20th century. It's tangential to having a lot of natural resources.

Norwegian wages are good too, Venezuelan and Saudi wages are terrible.

We squandered all our mineral wealth on nonsense, have huge respect for what the Norwegians have achieved with their fund.

Re: Norweigan oil fund

#319

Post by SOLAR_FIELDS »

fulafel wrote: post #248
lnsru wrote: post #28

Wow! These people must be extraordinary to use oil money this way! Not kidding! Never been in Norway, but in countries I have ever been this would be barely possible due to corruption and the needs of the politician’s buddies. Like yachts, private jets, Bentleys and Vertu phones. This $186k/person isn’t far from what average German poses: https://www.bundesbank.de/resource/blob/617492/cd59713c156ad...

I wonder which model is better for phasing out oil/gas extraction, which is a precondition to stopping climate change. It might be bad for the voting public to be invested in oil.

Time will tell it seems. Norway is very invested in at least appearing to get out of the oil business and into renewables. Couple pretty significant moves include renaming Statoil to Equinor and rebranding all of their gas stations (many in Scandinavia are branded as Circle K now). Norway very much wants to get out of the perception of being rich because of oil.

Re: Norweigan oil fund

#320

Post by dang »

cheeky78 wrote: post #110
cheeky78 wrote: post #95

Earlier quoted context omitted.

Yes, but it's based on oil, which is contributing to climate change..and not 100% is not used for renewable energy, so it's a net negative. It's strange to me that people aren't protesting and complaining about this fund, when it's a big issue for future.

So because Norway is a bastion of liberal policies, they get a free pass when it comes to climate change? This is why I know it has nothing to do with science or actually solving the problem.

Would you please stop using HN primarily for ideological battle? We ban accounts that do that, regardless of which flavor they favor.

https://news.ycombinator.com/newsguidelines.html

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