Academics urge UK PM to adopt targeted 2% wealth tax
Economists have urged new UK Prime Minister Andy Burnham to implement a 2% wealth tax on the ultra-rich, a move designed to raise £10bn annually and offer a blueprint that avoids the pitfalls of past European wealth taxes.
Economists Gabriel Zucman and Ben Tippet have proposed a 2% minimum charge on UK households holding more than £100m in wealth. The plan, presented to new Prime Minister Andy Burnham ahead of his tax and spending announcement on Tuesday, would affect fewer than 1,000 families and generate £10bn a year.
Unlike traditional levies, this proposal tasks HMRC with calculating total family wealth—encompassing property, private businesses, art, and charitable assets—to neutralise avoidance strategies. A strict 10-year exit rule would also prevent targeted individuals from simply relocating to escape the levy.
The proposal directly addresses the reasons European wealth taxes collapsed in the 1990s. The report notes that historical models failed because they cast too wide a net and exempted private business assets, creating loopholes and political backlash.
Zucman, a professor at the Paris School of Economics known as the architect of the global wealth-tax movement, argues this narrow scope makes implementation swift. His previous research demonstrated that ultra-wealthy households use holding companies and family transfers to bypass standard taxation. The push aligns with a broader international movement; in 2024, Germany and Brazil advocated for a global 2% minimum tax on billionaires to raise £250bn annually.
Burnham has signalled a desire to “make tax fairer” but remains cautious about the political ramifications. Speaking to Gary Lineker, he emphasised his belief in fairness but stressed he does not want to be perceived as someone who holds grudges or demonises specific groups. His close advisers are currently prioritising a rise in the threshold of capital gains tax to match income tax rates.
For European policymakers watching London, the proposal serves as a closely monitored test case. At the recent G20 summit in South Africa, President Cyril Ramaphosa highlighted that more than $70tn in inherited wealth will transfer across generations over the next decade. If adopted in the UK, Zucman's model could validate the theory that ultra-targeted wealth taxes can dampen runaway inequality without triggering the capital flight that doomed earlier continental experiments.
