Arab Press

بالشعب و للشعب
Saturday, May 31, 2025

Wealth taxes are not the answer to our financial woes

Wealth taxes are not the answer to our financial woes

Today the Wealth Tax Commission, an initiative involving the LSE, has recommended a ‘one-off’ 5 per cent levy on the assets of Britain’s wealthy residents to pay for the costs of the pandemic. Two immediate problems jump out of the proposal.
First, to raise the money it would not be a one-off levy, but rather a 1 per cent tax for five years on the total wealth — property, savings, you name it — on households worth more than £1 million (the tax is estimated to hit one in six adults).

Second, this five year period is estimated to raise £260 billion — close to the £280 billion the Office for Budget Responsibility says can be ‘directly attributable to the package of support’ announced since March to tackle Covid-19. But total borrowing this year is estimated to be £394 billion. This would still leave quite a significant hole in the public finances, making the wealth tax a far less convincing 'saviour policy'.

It’s no real surprise that this proposal isn’t what it says on the packaging. As I say in today’s Daily Telegraph, wealth taxes don’t work and are perhaps one of the worst possible ways of raising revenue.

Britain’s neighbour learned this the hard way: France’s Emmanuel Macron repealed the country’s own version of a wealth tax two years ago after the policy had led to brain-drain and tens of thousands of wealthy residents fleeing the country.

From Sweden to Austria, European countries have done their fair share of flirtation with some form of wealth tax. Over time, the majority repealed them, as they failed to raise the desired revenue and caused more problems than they solved.

The most obvious problem with the tax is how it destroys wealth over time, eroding a country’s tax base that is crucial for producing revenue in the future. Those who are asset-rich but cash-poor are forced to sell what they own, which the government then takes and uses on a spending spree. This week Argentina has announced a one-off levy on those with assets worth more than £1.8 million, also in the name of paying for Covid.

The money will be used, among other things, to pay for PPE and provide relief for struggling industries. The intentions may be good, but in practice this transfer of wealth will also reduce wealth itself, leading to longer-term implications and an inevitably poorer society.

Today’s report from the commission claims a one-off (five year) tax won't distort behaviour, ‘since it is based on wealth at a (past) point in time.’ It would certainly make it hard for people to avoid it, as it is targeting wealth that already exists.

But this speaks to the moral problems with the tax: a wealth-grab like this breaks the social contract between taxpayers and government. People pay their taxes on the understanding that their money, property and assets belong to them, not the government.

To blindside taxpayers with a new principle — that the state can come and collect your wealth anytime it sees fit — would certainly distort future behaviour, as confidence and trust in the system are undermined overnight.

The report itself acknowledges this: that wealth taxes rely ‘on people not being able to respond before the tax is introduced’ — or put another way, it requires the state to undermine personal autonomy over one’s finances.

Wealth taxes are a form of double-taxation that penalise taxpayers and, in the long run, governments, which find themselves with fewer wealthy residents and an eroded tax base. No amount of theorising (or commissions) can turn wealth taxes into a good idea. What the UK needs right now are creative ideas for its Covid bounce back — not ones that put up even more barriers on our road to recovery.
Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
Head of Gaza Aid Group Resigns Amid Humanitarian Concerns
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Netanyahu Accuses Starmer of Siding with Hamas
Calls Grow to Resume Syrian Asylum Claims in UK
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Denmark Increases Retirement Age to 70, Setting a European Precedent
Iranian Director Jafar Panahi Wins Palme d'Or at Cannes
Israeli Airstrike Kills Nine Children of Gaza Doctor
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
Mount Lewotobi Laki-Laki Erupts Again, Spewing Ash Cloud over Flores Island
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
Senate Democrats Move to Censure Trump Over Qatar Jet Gift
Hamas Releases Last Living US Hostage from Gaza Amid Ongoing Conflict
×