Prime Minister Andy Burnham has been advised to implement a minimum 2% charge on household wealth, a move that could generate £10bn each year from the UK's wealthiest individuals. The recommendation comes from a study by Gabriel Zucman, professor of economics at the Paris School of Economics and the University of California, Berkeley, and Ben Tippet, lecturer in economics and wealth inequality at King's College London.
Wealth Tax Proposal Targets Super-Rich
The proposed tax would affect fewer than 1,000 of the richest UK households, ensuring it is not a broad-based levy but a focused measure on extreme wealth. The report states: "The objective is not to create a broad-based wealth tax affecting millions of households but rather a focused tax on extreme wealth that can make billionaires pay the same tax rates as the rest, raise meaningful revenues and dampen runaway inequality."
Zucman, known as "the architect of the global wealth-tax movement," said: "Given the small numbers of households that would be taxed, the UK government could implement this quickly." Tippet added: "The report shows that a well-designed minimum tax on the very wealthiest households is a realistic, targeted reform that would make the UK's tax system fairer while raising substantial revenues."
Political Support and Context
Burnham has previously faced calls for a wealth tax from the Green Party, including leader Zack Polanski, and from economist Gary Stevenson, who recently presented a Channel 4 documentary on the topic. The new study provides detailed analysis supporting the feasibility of such a tax.
Lessons from Historical Wealth Taxes
The report addresses criticisms that European wealth taxes have declined since the 1990s. It argues: "Critics often point to the decline in the number of European wealth taxes since the 1990s as proof that wealth taxes do not work. However, most historical wealth taxes were fundamentally different from the proposal outlined here. They typically had relatively low thresholds, covered large sections of the population, and/or contained extensive exemptions for particular assets, in particular private business assets. These exemptions created avoidance opportunities, reduced revenues and generated political opposition from taxpayers who felt unfairly treated. The lessons from these experiences are clear. Wealth taxes work best when they focus on the very wealthiest households, apply to a broad asset base and are supported by strong administrative enforcement."
