Wealth tax would prove taxing for the Tories

A think tank of policy wonks and policy makers, the Wealth Tax Commission (WTC), has recently published its report/proposals into how the UK should implement a wealth tax – to fund the enormous sums HM Government has been spending to try to mitigate the covid-19 pandemic. This report has received a lot of well-deserved media comment. It is well written, fair minded, and full of useful research.

I’m sure most readers of my blog have seen some of the media stories, and you will certainly have views. As somebody who is close to the target’s bulls-eye, here are my views – as they stand in December 2020.

The key proposals are summarised in the table ES.1 below.

Table ES.1: Revenue estimates for one-off taxes, based on current wealth distribution

These data look a bit suspect to me. Apparently by 2030, one in four homes in London will be worth at least £1m; this is about 1m homes, so at the lower end of the table the figures look plausible. But at the top end, these figures look undercooked. The Sunday Times Rich List has 1000 people in it with assets of £120m+, and anecdotally it misses more people than it overestimates, so the idea that there are only 22,000 people with assets of £10m+ does not fit the power curve. My guess is that there are already at least 50k people in the UK worth £10m+. Whether they are all taxpayers or not is, I suppose, a question one should consider – but I am going to treat as off scope for this piece – as the idea that I should have assets confiscated so that other multimillionaires can avoid tax altogether feels absurd.

Anyway, for the purposes of this piece I am one of the wealthiest 22,000 taxpayers in the UK. I’m in the UK’s top 0.03%. I.e. Close to one percent of the one percent. Which is a shame, really, for the other 99.97%, but that is yet another topic. As the report itself says, “the available data for upper echelons of wealth (greater than £10 million per individual) is too thin to draw reliable conclusions”. I am not bragging, I am just processing the numbers.

As it happens the UK readers of my blog would also, mostly, be caught by these proposals. Around 50% of my UK readers already have investments, excluding home and pension, of over £500k (let alone the £250k used as a possible threshold). When you add in home and pension, my guess is that nearly all my readers are, or expect to be fairly soon, ‘wealthy’ as defined by this report – with around £500k-£1m+ of assets including home and pension.

I should also declare, by way of background, my income situation.

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