Beautiful Virgin Islands

Monday, Jul 13, 2026

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Britain’s neighbour learned this the hard way: France’s Emmanuel Macron repealed the country’s own version of a wealth tax two years ago after the policy had led to brain-drain and tens of thousands of wealthy residents fleeing the country.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 Over time, the majority repealed them, as they failed to raise the desired revenue and caused more problems than they solved.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

Beautiful Virgin Islands
0:00
0:00
Close
World Cup Visitors Turn American Big-Box Stores Into Souvenir Stops
Netflix Weighs Always-On Channels, Bundles and Short-Form Video
Passenger Is Pulled Partly Outside Ryanair Jet After Window Fails Mid-Flight
The AI Invoice Shock: Layoffs Didn't Save Managers Money — They Cost Them More
Concern: Sexually Transmitted Bacterium Among Men Develops Antibiotic Resistance
Following Massive Investor Demand: SK Hynix Raises 26.5 Billion Dollars on Nasdaq
Passenger Partially Pulled Out of Ryanair Jet After Cabin Window Fails Mid-Flight
After Four Years, and Under a Heavy Veil of Secrecy: King Charles Meets His Grandchildren, Harry and Meghan's Children
Severe Heatwave Drives Dangerous Ground-Level Ozone Pollution Across Two Thirds of European Union
Westminster in Freefall as Farage's By-Election Gamble Triggers Broader Systemic Crises
Institutional Fractures and Political Volatility Reshape Britain's Domestic Landscape
Deadly Fire, Health Emergencies and Political Upheaval Shape a Volatile Global News Cycle
Flight Instructor Jumped to His Death — Student Landed the Plane: "You Know What You Need to Do"
The Physical and Electronic Barriers Disrupting Domestic Wireless Networks
France and Morocco Open World Cup Quarter-Finals as Collina Defends Refereeing
Prince Harry Suffers Major Court Defeat in Legal Battle Against Daily Mail Publisher
Bonnie Tyler, Welsh Singer Behind Total Eclipse of the Heart, Dies at 75
Tech Pulse: The Future of AI and Screen Culture
Global News Briefing: Escalating Geopolitical Tensions and Corporate Shakeups
Global News Brief: Escalating Conflicts, Public Health Crises, and World Cup Drama
Federal Financial Framework Shifts as Treasury Launches Universal Savings Program for Minors
French Court Allows Le Pen to Run for Presidency, but with an Electronic Tag: "I Will Appeal, and I Will Run"
$1.4 Trillion: The Lawsuit That Could Crush Meta
Europe's Growing Struggle with Extreme Heat and Air Conditioning
UK Daily Briefing: Legal Developments and Social Issues
Political Turmoil and Rising Costs
Anthropic Reengineers Agentic Architecture to Shift Autonomous Workplace Automation to the Cloud
Logic Flaw in Windows 11 Permission Architecture Silently Consumes Hundreds of Gigabytes of Local Storage
Apple Advances Late-Stage Operating Systems with Fourth Beta Deployments
Global Crisis Alert: Escalating Middle East Tensions and UK Political Upheaval
Deep Purple Has Released Its Best Album in Decades
Microsoft Lays Off 4,800 Employees and Xbox Suffers the Hardest Blow
Morocco and France Advance as 2026 FIFA World Cup Enters Quarterfinals.
Historic 2026 Tour de France Opens in Barcelona With Revamped Team Time Trial.
Global Mergers and Acquisitions Approach $4 Trillion Defying Geopolitical Tumult.
Negotiators Advance 20-Point Framework for Gaza Ceasefire and Demilitarization.
OECD Warns Middle East Conflict Will Depress Global Economic Growth.
Ukrainian Drones Strike Major Oil Terminal in St. Petersburg.
World Meteorological Organization Issues Urgent Alert Over Rapidly Intensifying El Niño.
United States Commemorates 250th Anniversary With Diplomatic Summits and Global Flotilla.
Iran Begins Days-Long Funeral for Supreme Leader Khamenei Amid Strait of Hormuz Standoff.
Technology giant reports surging carbon emissions driven by artificial intelligence infrastructure demands.
Artificial intelligence adoption accelerates workforce reductions across the technology and financial sectors.
Global technology and financial conglomerates collaborate to launch a new stablecoin standard.
United States regulators lift export restrictions on a major frontier artificial intelligence model.
Luxury bags take over the World Cup: style, status symbol, or just showing off?
×