How Monaco earned the score
Population 38,423 residents (IMSEE 2024 census).
Situation A tiny nation-state with no money, no natural resources, and no space, left with just 0.81 square miles to reign after two towns rebelled around 1860.
Action Built a wealth-creating environment around a casino for Paris, abolished income tax, and managed image through motorsport.
Result Homes in Monaco go for about $6,000 a square foot, making it the most expensive city in the world, with roughly one in three residents a millionaire.
Let’s meet Monaco
The situation could not have looked worse: a tiny nation-state with no money, no natural resources, and no space. Around 1860 the royal family was reinstated by France. The two towns Monaco had control over rebelled and declared independence, leaving the royal family just 0.81 square miles to reign. They turned it into one of the wealthiest and most luxurious places in the world to live.
The action was to create a wealth-creating environment, build a casino for Paris, and eliminate income taxes. The result: millionaires and the wealthier flock there to keep their fortunes from their respective governments and spend it on luxuries in Monaco.
A third of Monaco’s population is millionaires or wealthier
According to the CIA, Monaco is the third richest country by GDP. It attracts the ultrawealthy because of its lack of income tax, unusual amenities, and luxurious lifestyle.
The casino idea
Charles III ruled at the time. It is said his mother, Princess Caroline, came up with the idea. They would build a casino to bring in tax revenues, something that was illegal in surrounding France. This is not unlike Las Vegas.
The first casino they created failed. They did not give up. They created a second casino, the famed Monte Carlo Casino. The casino was immediately successful and became increasingly so with Monaco’s rail connection to Paris. Railroads are always involved, and here it helped the proud nation-state of Monaco prosper. They had so much revenue from the casino that they abolished income tax in 1869. This grabbed the attention of the wealthy.
Locals cannot gamble
The Monte Carlo Casino was so successful that the nationals and locals are not allowed to set foot inside a casino unless they work there. Foreign nationals, the wealthy who moved there, are still able to, of course. You cannot exclude the millionaires. This makes up about 80% of the population.
Who owns the engine
The Monte Carlo Casino, the Hotel de Paris in Monte Carlo, the Opera de Monte-Carlo, and 55 other properties are owned by the Societe des Bains de Mer, or SBM. The people, government, and royal family (House of Grimaldi) each own about a third of SBM. This company is the number one reason why the country is so rich, and why the rich continue to not have to pay taxes, which in turn keeps bringing in more money.
How the tax-free draw works
A third of Monaco’s population are millionaires or richer, but how do you do this? Zero income tax, music to the ultra wealthy ears. This allows them to spend their money on things they want to own or experience rather than have it taxed from them. Monaco makes this easy: one million euro watches sitting in display windows, Bugatti Veyrons sitting in showrooms, and of course, homes.
Homes in Monaco go for about $6,000 a square foot. This makes it the most expensive city in the world. To many millionaires this is worth it because of the future savings on income taxes. Any realtor would know, ultra wealthy competing for homes on a 0.81 square mile piece of land leads to high home prices.
Just to put this into perspective, a 1 million dollar home in Monaco is about 111 square feet.
How rich is Monaco? Well, this is where the 1% live. 210 of the richest residents have a combined 25 billion dollar net wealth. 4 individuals account for about 7.1 billion dollar net worth. Monaco’s GDP, for example, is about 6 billion.
Monaco’s GDP per capita is $185,000, which makes it the third richest in the world. This can be seen in the cars sold in Monaco. The average car was a smart car for practicality’s sake. After that the top sellers are the Porsche Macan, the Range Rover Sport, and the Bentley Continental GT.
Formula One and the street race
Almost no conversation on Monaco is complete without talking about Formula One racing. The Monaco Grand Prix is widely considered one of the most prestigious races in the world. The track is narrow with aggressive turns and elevation changes, making it one of the toughest Formula One tracks in the world. Formula One driver Nelson Piquet compared the track to riding a bicycle around your living room.
Not many countries or towns would even consider this, but it has helped secure Monaco as a desirable place to visit along with, you know, the ultra luxurious lifestyle. It also helps secure two other races, Formula E and a lower class race also to be held on the streets of Monaco.
This could be a profitable creative city development concept for a town in the midwest, somewhere naturally flat, like Alexandria, Minnesota. They already have a race track with racing culture, but if they held a rally car race that went through part of the downtown, it would truly become a site to behold and people from miles around would come to visit. I am pointing at you, Alexandria, Minnesota. I want it to be close enough for me to enjoy too.
Why other towns should follow Monaco’s lead
The nation-state did not have much to work with in terms of resources. It had no natural resources, very little wealth, and almost no land. Monaco used what it had: differences in laws, tourism from the neighboring major city of Paris, and a pleasant climate to its advantage. Today, the independent nation-state of Monaco has enriched its 0.81 square miles beyond belief with a casino, shrewd tax politics, and creative city developments. From its outrageous luxury to its shrewd political background, it is truly a town to emulate if at all possible.