Last week, nearly every elite men’s tennis player skipped one of London’s marquee tournaments. Only one of the world’s top 10 competed at Queen’s Club—the traditional Wimbledon warmup—while stars including Alexander Zverev, Daniil Medvedev, Taylor Fritz and Ben Shelton were playing in Halle, Germany.
A culprit was Britain’s tax code, which taxes prize money earned on British soil and a slice of global endorsement income, prorated by the number of days spent in the UK each year.
If players fail to advance far enough at the tournament, their tax bill on sponsorship deals can exceed their payout.
The players who choose where they compete are now opting elsewhere.
“(It’s) not about the money for playing,” retired superstar Rafael Nadal once explained. “They take from the sponsors… This is very difficult. I am playing in the UK and losing money.”
This phenomenon—where people dodge taxes by relocating—is well documented long before California billionaires began high-profile moves to Nevada and Florida ahead of a proposed wealth tax on the November ballot.
In 2022, when Norway raised its top wealth-tax rate by just one percentage point, economist Christine Blandhol documented a wave of business owners leaving for Switzerland, aided by a treaty that precluded double taxation during the move. Norway lost revenue while firms left behind saw declining output.
Switzerland’s cantons—26 subdivisions with wealth taxes dating back to the 1800s at rates ranging from about 0.1% to 0.9%—offer a natural experiment: wealthy individuals steadily migrate from high-rate Bern to low-rate Lucerne.
The people advocating for California’s wealth tax know this. Gabriel Zucman of the University of California, Berkeley—a frequent coauthor with French economist Emmanuel Saez, whose revenue estimates underpin the campaign—has spent years engineering around it.
Zucman advocates a coordinated global minimum tax on billionaire wealth, designed explicitly to eliminate mobility as an escape route. He admits that his international coordination plan aims to defeat the mobility problem.
If wealth taxes were global, the reasoning goes, they would work as intended.
But not so fast. While it’s easy to tally lost revenue after taxpayers move away, there is also a less visible but significant behavioral shift among those who stay.
This effect emerged in Denmark, where decades of tax records—covering individuals who remained during wealth-tax implementation—showed dwindling wealth accumulation when more was taxed.
The change didn’t require leaving the country; the incentive to save and build wealth simply shrank.
Inside wealthy businesses, an avoidance channel requires no moving van. When a wealth-tax bill comes due, owners of closely held companies often pull out larger dividends to cover it. Once that money leaves the company, it doesn’t return to payroll or business expansion.
Make no mistake: non-wealthy individuals suffer too. As wealth taxes reduce saving and reinvestment, the capital stock workers rely on for tools, equipment, and business growth slows.
Wages rise when more capital is available per worker, so slower buildup eventually means smaller paychecks for those who never pay a wealth tax.
This effect compounds over decades, turning a modest annual drag into a substantial gap by the time it’s noticed in data.
The same dynamic applies even without a wealth tax. When California raised its top income-tax rate by three points in 2012, Stanford economist Joshua Rauh found that those who stayed shifted income away from the higher-rate year through deferred bonuses, retimed asset sales and restructuring payments.
Within two years, these adjustments erased most of the expected revenue gain.
Income and wealth taxes differ, but the lesson remains: raising the price of an activity reduces its practice, encourages restructured reporting or prompts relocation.
These responses evade even a global wealth tax because mobility was never the sole issue.
The result? Less tax revenue than pro-tax advocates project and less economic activity. Ultimately, everyone— not just the rich—is poorer for it.
