Architect of global wealth tax movement says levy could be implemented quickly by UK

A wealth tax targeting the UK's super-rich could raise as much as £10bn a year, according to academics who have urged Andy Burnham to include the measure in his plans to "make tax fairer" and fund improved public services, as the prime minister prepares to lay out his fiscal vision later on Tuesday. The proposal, developed by Gabriel Zucman, a professor of economics at the Paris School of Economics and the University of California, Berkeley, who is widely regarded as "the architect of the global wealth-tax movement", and Ben Tippet, a lecturer in economics and wealth inequality at King's College London, would impose a 2 per cent minimum charge on households with more than £100m in wealth and would affect fewer than 1,000 of the wealthiest UK households. The study comes as Burnham, who has hinted that a wealth tax could form part of his 10-year plan for the country, has been weighing various options to raise revenue, with his close advisers understood to have focused on a rise in the capital gains tax threshold to match income tax as a more immediately attainable measure.

The new prime minister, who will set out his tax and spending plans later today, said recently that he wanted to avoid creating fresh divisions in society but would consider how to tax people "in a fair way", a sentiment he elaborated upon in a conversation with the footballer-turned-podcaster Gary Lineker last week, stating: "I do believe we need a greater sense of fairness and people feeling things are being done in the right way, but at the same time I don't want to be perceived as someone who is coming in with grudges and agendas and demonise one group." The academics' proposal would require HMRC to calculate the accumulated wealth of the UK's richest families, encompassing property, private businesses, pension wealth, art, land and charitable assets over which they exercise control, with the report emphasising that "the objective is not to create a broad-based wealth tax affecting millions of households but rather a focused tax on extreme wealth that can make billionaires pay the same tax rates as the rest, raise meaningful revenues and dampen runaway inequality".

Zucman, whose research has demonstrated that households with assets of £100m or more possess the means to avoid most current taxes on wealth through holding companies, charitable trusts and transfers between family members, said that "given the small numbers of households that would be taxed, the UK government could implement this quickly". Tippet, who used calculations from the Sunday Times rich list as a guide for the study, said the report showed that "a well-designed minimum tax on the very wealthiest households is a realistic, targeted reform that would make the UK's tax system fairer while raising substantial revenues", adding that because the tax was targeted at a small group, "the familiar criticisms of wealth taxes – administrative complexity, asset valuation, liquidity constraints and impacts on entrepreneurs – do not hold". Under the plan, HMRC would calculate the wealth of rich families by piecing together their collective holdings to prevent large-scale tax avoidance, while a rule would compel wealthy families to pay the tax for at least 10 years after leaving the UK, denying them the ability to relocate to avoid the levy.

Growing global wealth inequality has pushed ideas for higher or additional taxes up the political agenda across the world, with the New York City mayor, Zohran Mamdani, having imposed a tax on second homes and called for a broader wealth tax, while in 2024 countries including Germany and Brazil proposed that the world's 3,000 billionaires should pay a minimum 2 per cent tax on their fast-growing wealth to raise £250bn a year for the global fight against poverty. At the last G20 meeting of leading nations in South Africa, President Cyril Ramaphosa said intervention was needed after a report showed more than $70tn (£52tn) of inherited wealth would pass down the generations across the world over the next decade, widening inequality. Tippet said the collection of the necessary data by HMRC was already under way and that the tax would not be costly to administer, countering arguments that the administrative burden would outweigh the benefits.

The report addressed historical criticisms head-on, noting that "critics often point to the decline in the number of European wealth taxes since the 1990s as proof that wealth taxes do not work" but arguing that "most historical wealth taxes were fundamentally different from the proposal outlined here". Those earlier taxes, the report explained, "typically had relatively low thresholds, covered large sections of the population, and/or contained extensive exemptions for particular assets, in particular private business assets", which "created avoidance opportunities, reduced revenues and generated political opposition from taxpayers who felt unfairly treated". The report concluded that "the lessons from these experiences are clear" and that "wealth taxes work best when they focus on the very wealthiest households, apply to a broad asset base and are supported by strong administrative enforcement", a finding that will likely inform the debate as Burnham weighs whether to embrace a measure that would target the ultra-rich in pursuit of his fairness agenda.