There is a tendency, at least among some leftists, to regard wealth taxes almost as a panacea for our social ills: among the most famous expositors of this view is Gary Stevenson, the former trader who has now assumed the honourable occupation of campaigning against inequality. Economic growth, he observes, is low; but since the wealth of the millionaires and billionaires continues to increase at compound interest, and since they must invest their returns in assets, they have been able to outbid the working and middle classes, and even the state, for control of society’s resources. The consequence is that classes that were once able to acquire wealth, especially housing, can no longer do so; and the growing wealth of the few therefore corresponds to the impoverishment of the many and of government. I see nothing to dispute in Stevenson’s broad description of our economic problems; my quarrel is rather with his proposed remedy: the wealth tax.
Much has been said about the practicability of a wealth tax; like most reasonable people, I hope that wealth taxes can succeed, although I am not yet convinced. But let us put all practical concerns aside, and suppose that a wealth tax, framed on the common lines, was introduced. It is generally proposed that it will be a small annual tax on wealth above a certain threshold: Gabriel Zucman, the French economist, suggests an annual tax of two per cent on those with over £100 million of wealth. That is a minimum: he is open to higher rates, but that is where he begins. In a similar vein, the Green Party proposes an annual tax of 1 per cent on assets worth over £10 million, and of 2 per cent on assets worth over £1 billion.
There are two problems with these proposals. The first is that, relative to the UK government budget, they would not raise very much money: on lower estimates, a wealth tax might raise £10-15 billion; on higher estimates, up to £24 billion. These are significant sums, and could no doubt be applied to good purposes, but they are not such sums as would permit the regeneration of social democracy. Total government expenditure exceeded £1.2 trillion in 2024-2025: at most, a wealth tax would increase the budget by 2 per cent. That is something, but it is not a solution to our manifold social afflictions. It is estimated that just the abolition of tuition fees in England would cost £10 billion annually.
Second, a wealth tax of 2 per cent will not prevent the fortunes of the richest from increasing: at best, it will slow down the progress of inequality—it will not stop it. Zucman admits this: the 2 per cent minimum tax would only make the effective tax rates of the super-wealthy equal to the rest of the population; it would not prevent billionaire wealth from continuing to grow.
In view of these problems, the socialist movement should take a critical attitude toward the wealth taxes proposed. Traditional socialist expropriation ought to be our chief demand. A tax which, for all the good it may do, leaves the power and wealth of the capitalist class intact, should only be regarded as a provisional measure, on the way to a socialist future.
