Britain mulls a wealth tax again – can it ever work?

A Covid-19-ravaged government needs to raise more revenue and some propose that a wealth tax could fit the bill. It’s unlikely to happen, but one way or another the rich face a squeeze, says Simon Wilson

Denis Healey
Denis Healey couldn’t make a wealth tax work... and it’s unlikely anyone can
(Image credit: © Robert Rider/AP/Shutterstock)

Why is this issue back in the news?

In a word, Covid-19. The pandemic has blasted a £400bn hole in the UK public finances and has hit the poor far harder than the rich. The best way of addressing these dual imbalances – according, that is, to a group of academics and think-tankers calling themselves the Wealth Tax Commission (WTC) – is a 5% levy on personal net wealth above £500,000, spread out over five years. Many countries are re-examining wealth taxes in the wake of the fiscal havoc wrought by Covid-19, but the only biggish economy to have rushed one onto the statute book is Argentina. Earlier this month the left-populist government announced a one-off “millionaires tax” on people with assets of more than 200m pesos (£1.8m). Under the scheme, which has been approved by Congress, wealthy citizens will pay a one-off levy of between 1% and 3% on net assets, with the aim of raising £2.7bn to help fund Covid-19 measures. In the UK by contrast, the WTC thinks the government could raise almost 100 times that – £260bn over five years.

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Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published Customers.com, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.