Why are wealth taxes relevant in 2026?
Billionaire wealth in the UK has skyrocketed since 1990. It represented 4% of GDP back then, growing to 22% of GDP in 2026. The trends of rising wealth accumulation for the super-rich and worsening living standards for working families is stark. Consecutive governments have pointed at GDP as proof of economic success and neglected the decline in living standards for the majority. Where families could once live off a single income, families can now struggle with two. Growing anger at the cost-of-living crisis is fuelled by the perception that government is not addressing the root cause – we are not seeing the action that we need. With no political consensus on the root cause and inequality continuing to grow, it is becoming increasingly evident that this Labour government are not equipped to manage this worsening trend.
Where wealth continues to ebb away from families and fall into the pockets of the super-rich, we are almost certainly going to see this inequality trend continue to worsen. The Green Party have gained popularity through the promotion of wealth taxes and we are now seeing Labour leadership hopefuls adopting similar policy ideas to gain support in preparation for their race to Number 10. Wes Streeting’s support for a “wealth tax that works” simply reforms capital gains tax rather than addressing the underlying wealth itself. Regardless of the merits of these specific policies, wealth taxes are now becoming part of the debate; the Liberal Democrats have an opportunity to start owning the narrative with thoughtful economic policy that better promotes fairness in our society.
What could be done?
Where the super-rich choose to accumulate assets over declaring a more realistic personal income, the tax system has become outdated, allowing them to avoid income taxes and benefit from low (or no) rates of tax on their wealth. As a result, they contribute a smaller percentage of their net worth than ordinary working people. A thoughtful wealth tax is an opportunity to close this loophole without ripping up established tax policies. By focusing on both wealth and income, we increase transparency in wealth reporting and reduce the incentives for the super-rich to report their income as wealth. Employed effectively, a wealth tax would share the burden of taxation more fairly across society. The critical message for the electorate is that a more transparent and fairer tax system can address worsening inequality. In the short term, this could provide cost-of-living improvements. In the longer term, it reverses the trend of worsening inequality in our communities that is degrading living standards for so many.
A wealth tax that is values led would close loopholes and would not tolerate the opt-out culture that we have today. The proposed Zucman Tax in France is a shining example whereby the super-rich must pay a minimum 2% rate on their stock of wealth. No ifs, no buts, that is the tax bill that they owe the government. It directly addresses the super-rich by only targeting those with net assets above €100 million. Attempts to move wealth overseas would meet a Wealth Exit Tax. Loopholes are closed with little option but to pay their fair share. Where Streeting can draw criticism from business owners and entrepreneurs who could face higher capital gains tax, the Zucman tax cannot. Positioned effectively, it generates tax revenue from the super wealthy with robust incentives to retain wealth in the UK. The proposition of taxing the super-rich to directly address the cost-of-living crisis is a coherent message that the electorate can throw their support behind.
Why are thoughtful wealth taxes a good fit for the Liberal Democrats?
As a values driven party that promotes equality and liberty, thoughtful wealth taxes are an excellent fit. It’s a coherent message that connects our values to our policy and would almost certainly resonate with the electorate. It directly addresses short term concerns about cost-of-living and promotes a fairer society that demonstrates that the Liberal Democrats can be the trusted party for government. The Green Party lack the coherence in their values to be trusted in this policy area and Labour are offering too little too late. The Liberal Democrats have the opportunity now to own this policy area and represent a wealth tax that offers a fairer future for Britain.
* Tom Walker is a party member from Chippenham. Now working in business, his career has been spent as a leader in the British Army with an education in both Economics and Business.
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10 Comments
Well said
Hear hear! It is common sense politics that we need to get behind.
“…and worsening living standards for working families is stark”
I support taxing extreme levels of wealth as described in this article, but it is not true that working families have been experiencing worsening living standards. The argument in favour of wealth taxes stands on it own so there is no advantage in making this claim in any case.
There is no point about talking about wealth taxes unless we also tackle trusts. Someone like the Duke of Westminster has little wealth of his own but is a beneficiary, along with his siblings, of a trust that by now must be worth over £10 billion. Yet HMRC charges only a pitiful 6% every 10 years on the value of the trust. Until we bring taxation of trusts into line with income tax rates, the super-rich will continue to rely on this loophole.
To add details to my previous comment,
increase in RPI from Jan 1990 to Jan 2026 = +240%
Increase in median incomes Jan 1990 to Jan 2026 = +360%
(£10600 to £39000)
Therefore median incomes rising faster than inflation = rising living standards
(NB, rate of increase of incomes higher for the lowest paid due to the introduction of the National Minimum Wage in 1999)
The French system certainly looks interesting and it’s being tested so most problems will have would be wary of just calling a new system ‘wealth tax’ because it implies that the party opposes enterprise. It needs to be clearly a tax only on the extremely rich. There’s a major weakness still needing to be addressed, which is that the wealthiest play the system by ensuring that many of their businesses are in permanent debt which is traded and shuffled between their own companies and offshore businesses. This wipes out local taxation while substantial assets stay safely hidden abroad. Does the French system catch them too?
Good and thoughtful article. I would also link tax to citizenship as the US does and make paying tax a condition of retaining it. It could be phased in gradually – starting with taxes on wealth and “unearned” income and be subject to double taxation treaties which the UK has with some 130 countries around the world.
If we are going to discuss wealth taxes we need to begin by discussing our part as Liberal Democrats in the acceleration of wealth accumulation post the 2008 financial crash. Quantitative Easing and the resultung asset inflation is the reason why 2010 not 1990 is when we should measure the resulting wealth disparity versus wage stagnation.
We need to ask the question what are we really trying to achieve. I believe capital should be productive not passive. In out high debt era let’s incentivise investment in Charity,Culture,Heritage and Grassroots sport. I think modern wealth us musunderstood.
Smart wealthy people don’t sell assets they borrow against them. We should tax that borrowing. Encourage entrerpreneurs to create jobs and vestable capital and yes get rich and reinvest their profits. Penalise passive capital. Time for a grown up debate
Good piece, Tom. I would just split it into two things
1/ The principle: someone living off their assets should not pay less tax than someone living off a wage. That is simply fair, and we should stand for it.
2/ The actual tax. Thats where I would be careful. I have no problem with people getting rich by building something real. My problem is with money that just sits there, inherited and growing by itself, paying a smaller share than a nurse does on her salary.
This is where I think we can be different from Labour and the Greens. A flat 2% wealth tax is an eye-catching number, but it is a slogan more than a solution. When the wealth at the very top grows around 8% a year, 2% does not close the gap, and the people it targets are the best in the world at restructuring to avoid it. Our pitch should be competence, not headlines: go after where the dodging actually happens: borrowing against assets so you never take a taxable income (John!), and trusts (Laurence!).
Let’s lead on fairness, with answers that hold up.
Wealth Taxes are definitely needed and can work. We look at what works in other Countries. It would probably be easier to tax MultI-National Companies if we were IN THE E.U. Taxes on Mansions and very expensive properties can also be effective through the use of extra Council Tax Bands.