Why are some people so opposed to a Wealth Tax?
Let’s face it. England needs a lot of money, and fast. Whether you are pacifist or not, the UK government is going to be spending billions on defence. So that leaves a massive shortfall and apart from making poorer people suffer even more (most are not lounging around watching satellite TV and eating fast food), there needs to be some kind of way to pay for all the investment needed.
Actually, not penalising poor people with stigma for being on benefits would help. Many don’t claim benefits they are entitled to. Yet this would have them be able to cook their own food, live in safe places and buy clothing and transport to find jobs.
Likewise if older people (pensioners are the main recipients of benefits) claimed what they needed, they would also cost the NHS less money as they would eat better, and likely spend more money in local economies like tea rooms and public transport. The anti-benefits argument is upside-down.
But back to the Wealth Tax. Now with a new government, this is being proposed again. It’s not even clear if it will come in. But what is known as the Conservatives, Reform UK and Restore Britain are all mightily against it, as is all of the right wing press.
In this post, we look at what a Wealth Tax, how it could help, and the mystery of why so many millionaires and billionaires (and MPs) are against it.
Radio presenter James O’Brien recently worked out that the rate of wealth tax suggested by Tax Justice UK (a 2% levy on people with over £10 million), would work out at around £20,000 each. And if you have £10 million in the bank (unless it’s all in assets), you would be earning £300K to £400 in interest alone. So that’s a small chunk, considering your wealth to ‘help out’.
Another very interesting point he made was this. Someone who becomes a self-made wealthy millionaire (or if wealthy beforehand) often says it’s not his or her job to give away this ‘small potatoes’ for all the hard work done to make themselves rich.
But here’s the thing. If you run a big company, you likely have lots of staff. And they come to work and make you rich. And if they come to work, it’s because they are healthy. And if they are healthy, it’s likely due to often receiving some kind of free care on the NHS.
So basically the millionaire only gets super-rich due to the NHS (or say free public transport) or any other public investment that is needed. So why not just give £20K back, to say thank you? It would not greatly affect you. But it massively affect everyone else. And the money has to come from somewhere. Rather than squeezing people already living on the breadline.
How much would a Wealth Tax raise?
Based on current estimates, Tax Justice UK says that the 2% levy would raise a whopping £24 billion year. And if national insurance was applied to investment income, that would raise another £10 billion. Every year!
People who get income from stocks and shares also pay less tax. So reforming that law would raise another £16 billion a year.
Plus hundreds of billions of pounds of tax go unclaimed due to people living in tax havens (far more than benefits cheats, which could easily be stopped by switching to a basic income instead – this would help carers, volunteers, parents and part-time workers do good in communities, without losing out.
Do other countries have a wealth tax?
Yes. Norway has one levied at 1%. But what is really interesting here is to look at Switzlernand. It has replaced capital gains tax with a wealth tax (applied to not just money but stocks, estate and crypto!!) It deducts mortgages and personal loans.
Why this is interesting is because it’s not collected nationally. But instead by canton. So in line with Andy Burnham’s plan to give more power to local mayors and councils, this would be a good model to base on. It seems to work very well too.
It’s been going for over 100 years. And rather than drive people away (you tax me and I’m going to emigrate!), the low base rate tax rate keeps things stable, and people don’t mind funding their beautiful country for the benefit of all.
And because each canton competes with the other to keep levels low, no canton ends up creating a huge tax monopoly. Otherwise said Swiss millinonaire would up sticks and move to another alpine chalet!
Tax Justice UK says that their calculations would raise around £60 billion a year. This is supported by Patriotic Millionaires, 80% of which are happy to pay a 2% wealth tax to help their country.
This is a network of over 100 UK millionaires, who want to help. From city traders to successful lawyers, it supports Tax Justice’s 10 policy change recommendations:
- Apply a 2% wealth tax on assets over £10 million (£24 billion)
- Reform capital gains tax (£14 billion)
- Apply National Insurance to investment income (£10.2 billion)
- Close inheritance tax loopholes (£1.4 billion)
- Close loopholes for non-doms (up to £1 billion)
- A 4% tax on share buybacks (£2 billion)
- End fossil fuel subsidies (£2.2 billion)
- Close the windfall tax loopholes for oil and gas £2 billion)
- Tax private jets (£700 million)
- End tax reliefs that benefit big corporations (at present ther are almost 2000 tax relief rules
What could £60 billion pay for?
- The entire annual daily spending for state-funded schools
- Almost the entire annual Ministry of Defence expenditure
- The annual expenditure on Universal Credit (designed to help, not encourage dossers) for low-income and unemployed households
- Salaries for 1.2 million police offiers
- Salaries for 1.2 million nurses or social care workers
- Buidl 1500 eco-friendly brand new secondary schools
- Build 1000 modern 500-bed NHS hospitals (with healing gardens!)
- Repair 1 billion potholes
Now let’s go local!
England has 48 councils (probably!) So if we did like Switzerland and the taxes would collected locally, that means dividing £60 billion by 48 = £1.25 billion per council. Not exact maths (some places would get more or less). But you get the idea.
So what could your local council do with £1.5 billion each year?
This is where (sorry!) AI comes in useful:
It actually divides up what could be done, so it’s not all spent on one thing. The income would be around the same as Birmingham City Council (who could also then pay their binmen?)
Here is a good example with the numbers broken down:
Mandatory ‘heavy hitters’
- Adult social care (£550 to £600 million) to fund long-term residential care homes and supporting living and daily home care visits for thousands of elderly residents and adults with learning disabilities
- Children’s services and safeguarding (£250 to 300 million) – managing foster care placements, operating children’s homes and funding child protection social workers)
- Special educational needs and disabilities (£150 million). Financial help for education, health and care plans, plus dedicated transport for students with complex needs.
Everyday neighbourhood services
- Waste and recycling (£60 million) – running weekly bin collections, operating local household recycling centres and paying landfill tax
- Highways and street lighting (£50 million) – maintaining local roads, fixing potholes, running winter gritting fleets and powering thousands of wildlife-friendly street lights.
- Homelessness and housing (£40 million) providing crisis support and temporaary accommodation for displaced families
- Parks and green spaces (£25 to £30 million). Organic lawn care, maintaining public playgrounds and managing local nature reserves
Culture, leisure and discretionary funding
- Libraries and hubs (£30 million) – keeping libriares open, heating buildings and upgrading community IT
- Leisure centres (£25 million) – affordable local swim pools, indoor sports halls and community health initiatives
- Buses and local transit (£20 million) – finance for low-use or evening bus routes that commercial operators would otherwise cancel
Corporate operations and costs £100 million)
Back office costs (running the council – IT, legal teams, collecting council/business tax, and customer service salaries
Conclusion = wealth tax is good!
Could you imagine your local council if it had this one payment (which most millionaires are happy to pay) to spend on your local area. And this would be every year. So once initial investment was done, money could be used on even more improvements.
Party political policies on wealth tax
So why on earth are the media and right-wing parties against it? Here’s what all the parties say:
- Greens want a wealth tax of 1% (on assets above £10 million and 2% on assets above £1 billion, along with aligning capital gains tax with income tax rates.
- Lib Dems want to equalise capital gains tax with income tax and ‘explore taxes’ on extreme wealth (so like most things, don’t really have a set policy)
- Labour sometimes debate capital gains and non-dom tax rules, but dismiss a formal annual wealth tax due to admin hurdles and ‘flight risks’ – scared people will take wealth elsewhere – see above for how Swiss people don’t do this, due to local wealth taxes).
- Conservatives directly oppose, saying it discourages investment and economic growth.
- Reform UK has the ame policy, thought its potential voters support a one-off wealth tax. It wants to raise inheritance tax to £2 million, scrap stamp duy (under £750K) and increase income tax allowance to £20K. Only after ‘cutting waste and regulations’.
- Restore Britain wants to get rid of inheritance tax altogether. And abolish stamp duty and insurance premium tax, and reduce corporation tax.
