THE FOG IS MORE EXPENSIVE THAN THE TAX

Why wealthy families optimize for rules, not rates

My friend John took a job in London. It was his first overseas stint, having worked only in Singapore after graduation for 15 years. He works in the finance industry. It was a good opportunity, and he signed up quickly.

After his first paycheck arrived, he noticed there was a big gap between what was on his offer letter and his pay slip.

There were many deductions. Income tax. National insurance. Pension contributions. All deducted before he got his pay.

What remained went to rent on a flat in Zone 2. Then council tax. Then VAT on everything he bought. The train fare. The £7 pint after work. A drink with colleagues cost what lunch cost back in Singapore.

He complained. He calculated what he would keep somewhere else. The math looked compelling. He opened property listings in Dubai. He browsed job boards back home.

After some venting with a friend over WhatsApp, he put his phone aside and went back to work.

John is not unusual. Most people who do this calculation do the same thing, including many high net worth individuals.

The myth of the moving millionaire

Cristobal Young is a sociologist at Cornell who spent years studying whether wealthy Americans move when taxes rise. He analyzed 45 million US tax records over 13 years. Only 2.4 percent of millionaires move across state lines annually. The general population moves at 2.9 percent. Half of those who do move go to states with equal or higher taxes.

People hate losses more than they love gains. They stick with what they know even when the math says move. They prefer a familiar pain to an unfamiliar one. Behavioral economists call these patterns loss aversion, status quo bias and ambiguity aversion.

Most people stay put. The ones who complain loudest about tax stay too.

The headlines tell a different story.

Peter Thiel, co-founder of PayPal and early Facebook investor, moved from California to Florida. Elon Musk, founder of Tesla and SpaceX, moved Tesla’s headquarters to Texas. Sergey Brin, co-founder of Google, set up a family office branch in Singapore.

They moved ahead of a California billionaire tax that has not even passed yet. Swiss billionaires threatened exodus before the inheritance tax referendum. UK wealth managers report surges in enquiries about Portugal, Dubai and Singapore after the British Labor government’s non-dom tax changes.

The mistake is assuming the headlines describe the majority.

The embeddedness hypothesis

Young calls it the embeddedness hypothesis. Wealthy people build lives that are difficult to move. Personal and working relationships are tightly integrated and location specific. These are built over a long period of time.

It is the golf club membership that took five years to get. That allowed the businessman to network and have a space to build long term business relationships. Family can also go to the club to relax and have a good time.

Another example is the board seat that requires physical presence. Face to face meetings with board members and members of the management committee helped to build specific localized knowledge.

When an emergency comes about and when one needs suppliers to step up with inventory, it is the supplier who helps with 20 years of close working relationship.

Wealth is not just a number in a bank account. It is a web of relationships tied to a specific place to get things done.

Among millionaires, the 2.4 percent who move are usually relationship-light, have liquid wealth or children that have grown up. They have income that follows them anywhere.

The remaining 97.6 percent are relationship heavy. The cost of moving is not just the moving van or the labor costs. Relationships are rooted in a place. There is a big cost to sever these relationships built in a specific area.

The tax savings are visible on day one. The cost of trust, access and informal influence only shows up years later.

Stefan Legge, an economist at the University of St. Gallen who researched the Swiss referendum, suggested that the super wealthy are like queens on a chessboard. Their income is portable and their lives are not operationally tied to place.

But Young’s data says most are not queens. Most wealthy families are embedded in a geographic area.

The fog, not the rate

The ones who do enquire are not fleeing a rate. They are fleeing uncertainty.

Bloomberg reported in June 2025 that UK wealth managers were fielding anxious calls. But the anxiety was not about the 45 percent tax rate. It was about what the rate might become in 2027. According to advisers interviewed by the Financial Times, clients are not asking what the rules are. They are asking whether the rules will change.

Daniel Ellsberg was a Harvard economist who ran experiments in 1961 showing that people do not just dislike risk. They dislike not knowing the odds. In his experiments, people preferred a bet with clearly stated odds over a bet with unknown odds, even when the expected value was identical. Economists call this ambiguity aversion.

In tax policy, the 45 percent rate is a known cost. The 2027 reform is not.

Uncertainty creates a planning penalty. It is not only emotional anxiety. It is operational cost. Lawyers, structures, trusts, school plans, business continuity, succession. Every rule change forces a rework of structures that were built to last decades. The fog is more expensive than the tax.

Where they go

Singapore illustrates the pattern clearly. In April 2023, the government raised the Additional Buyer’s Stamp Duty for foreigners to 60 percent. Foreign buying of private homes slumped to the low single digits, with some estimates putting foreigners at around 2 percent of purchases.

Yet over the same period, the number of Single Family Offices (SFOs) in Singapore grew from roughly 400 around 2020 to over 2,000 by end-2024. Public statements from officials and industry data indicate a roughly fivefold increase in four years.

Why the divergence? Because the 60 percent stamp duty was a known cost. It fits in a spreadsheet. But when it comes to where a family’s capital and governance structures live, thousands of families have chosen Singapore because the regime is predictable and stated upfront.

Lawrence Wong, then Deputy Prime Minister and Finance Minister, explained the philosophy in 2023. Ideally, Singapore would tax individuals’ net wealth directly. But financial wealth is highly mobile and hard to track. Property is not.

Singapore taxes property instead. A residential property cannot move to Dubai or another location.

This is not tax competition. This is certainty competition. Singapore competes on rules where changes are legible, signaled clearly and rarely retroactive.

Other locations tell the same story from different angles.

Dubai offers zero personal income tax and has become a magnet for crypto entrepreneurs, influencers and the digitally mobile. It attracted an estimated 6,700 millionaires in 2024, according to migration consultancy Henley and Partners. It is the largest inflow in the world.

For families planning over generations rather than a single career, questions remain about whether the wider ecosystem of governance, succession structures and family services is as established as in more traditional wealth hubs.

Hong Kong offers low taxes, deep capital markets and unmatched proximity to mainland China. On paper, it should dominate. But since 2019, a steady stream of family offices and wealth management operations has flowed to Singapore.

By the early 2020s, major rankings and industry surveys were consistently placing Singapore ahead of Hong Kong as Asia’s leading financial centre. The tax differential between the two cities is negligible. The certainty differential is not.

Hong Kong is easier on paper. Singapore is easier to stay.

The contrarian case

There is a contrarian case. For some, tax really is the driver.

Henrik Kleven is a Princeton economist who studies how taxes affect where people live. He and his colleagues tracked football players across European leagues and found that superstars with portable skills showed strong migration response to tax rates. When someone can earn the same income anywhere, tax becomes the tiebreaker.

Harvey Law Corporation, a firm that helps wealthy families relocate, says tax optimization is often the primary factor for their clients. A Bloomberg analyst put it bluntly. When the savings hit eight figures, the fog clears.

Some wealthy families have portable income and their lives are not operationally tied to place. For them, Harvey Law is right.

But they sit inside a small 2.4 percent minority who move at all each year. Young’s data captures that thin slice. His remaining 97.6 percent are the wealthy who grumble, make their calculations and then stay.

Knight Frank, a global property consultancy, surveys ultra-high-net-worth individuals annually. Safety, security and education consistently rank above taxation.

When families consider moving, the conversation at the dinner table is not about tax rates. Parents ask if the place is safe, if the children will be happy and if they can get into the right schools.

The tax rate does not appear in this conversation until much later in a spreadsheet prepared for reassurance rather than decision-making.

The families who move are not just moving money. They are moving lives.

Beyond the numbers

The Swiss vote tells us something important about how populations think about wealth taxes.

In November 2025, Switzerland held a referendum on a 50 percent inheritance tax targeting only estates over 50 million francs. It would have affected 0.04 percent of the population. Only the richest would have been affected.

79 percent voted against it.

Not because they expected to inherit 50 million francs. Because they believed the threat. For most voters, the question was not will I pay this tax but will this be the first of many changes. The fear was not today’s rate but tomorrow’s precedent.

Politicians see the 2.4 percent who leave loudly. They do not see the 97.6 percent who stay quietly. Swiss voters saw the same headlines and rejected the tax 79 percent against.

The spreadsheet shows the tax savings. It does not show the cost of leaving.

Most people stay quietly. The ones who leave loudly make the news.

Singapore charges 60 percent stamp duty on foreign property. Family offices still came. They came for the safety, the schools, the infrastructure and rules that do not change overnight.

The fog is more expensive than the tax.