The world’s richest 1% saw their wealth increase by a staggering £1 trillion in 2017. Britain’s richest 1% currently own more than twenty times as much wealth as the poorest 20% of the country. All of this is part of a trend of widening wealth inequality in the UK, with such inequality among the worst in the West. To top that, rising inequality is having negative effects on growth, social mobility, child well-being and quality of life. This injustice is more glaring than ever, yet our current government has offered next to nothing to remedy the situation.
To begin to tackle this increasingly Dickensian state of affairs, we need to intervene and ultimately to tax wealth at the top. With growth ever more skewed away from the majority, the case for checking accumulation of huge amounts of wealth is stronger than ever.
So it is heartening to see Richard Leonard, the new leader of the Scottish Labour Party setting out his stall and making the case for a wealth tax. This is no Venezuelan-style politics, the cluster of European nations who levy such a tax includes Norway, Switzerland, the Netherlands and France, most of which are renowned for their high quality of life.
Unfortunately as much of Europe has shifted toward a more market-focused, New Right approach to their economies, many countries have dropped this form of tax. Denmark, Sweden, Finland and Austria have all abandoned wealth taxes since 1995, a failure which may have played a part in the surprisingly large wealth gaps in these countries renowned for their lower levels of wage inequality.
Despite the perceptions from its critics that a wealth tax would be a messy, economically dangerous policy, a tax on the wealth of the very richest would challenge the idea that high inequality ought to be the norm and promote more productive use of the rich’s assets.
A wealth tax could be levied on the minority of very rich people whose net personal wealth, which does not include debts, exceeds £750,000. This is approximately the richest 3%-4% of the population (it’s particularly difficult to find detailed and definitive data on wealth, rather than income). This would not include money owed, including mortgages, nor would it include a home owned by a couple. It could also be tailored to exclude most or all business assets and …