Since the founding of the Liberal Party, we have held that taxation must do more than fund the state: it must correct the injustice of extreme wealth. As John Stuart Mill wrote in his Principles of Political Economy, “The State should use taxation as a means to mitigate the inequalities of wealth.”
Across the UK today, campaigners, economists, and MPs from several parties are calling for a modern Wealth Tax. The current proposal is a 2% annual tax on all wealth above £10 million, affecting only a tiny fraction of the population but raising billions to support public services, reduce inequality, and strengthen the foundations of our society.
Many worry that taxing wealth could reduce incentives to invest or innovate. This small Wealth Tax is intended as a starting point—it allows individuals to retain vast sums before taxes apply, and in the future, there may be more required to ensure fairness and shared prosperity.
Inequality in the UK has grown sharply. Over the last thirty years, the top 10% have increased their wealth, while the bottom 50% have grown poorer in real terms. For most of the twentieth century, however, inequality fell. The turning point began with the 1909 People’s Budget—introduced by Liberal Chancellor David Lloyd George—which first used taxation to narrow the gap between the wealthiest and the poorest.
Research from the IFS Deaton Review highlights that between 1910 and 1990 — the so-called “short twentieth century” — Britain experienced unprecedented progress in reducing inequality: “truly was an era of wealth equalisation on a scale never before seen.”
Lloyd George did not hide what was at stake. Defending his reforms, he declared:
This is the commencement of a long and implacable war against privilege and poverty.
That historic Liberal fight—against privilege hoarded at the top and poverty imposed at the bottom—must be taken up again.
The method then, as now, was not simply to give the poor more money; it was to ensure that those with the greatest wealth contributed fairly to the common good. Public investment in housing, education, and health reduced inequality for decades. But beginning in the 1980s, inequality rose again. The Conservatives under Margaret Thatcher sold off social housing, weakening one of the great equalising forces in our society.
Some people in our country seem to want to take us back to the 1800s, prioritising wealth and privilege over progress and fairness. Liberals, by contrast, stand for progress: fair taxation, opportunity for all, and shared prosperity.
Today, Reform UK goes further still, raising the idea of an insurance-based model for hospitals. This would potentially create a system where those able to pay secure better healthcare, while everyone else receives the minimum. Such a shift would risk fracturing the principle of universalism on which the NHS stands.
At the same time, Britain has become increasingly soft on tax evasion and aggressive tax avoidance. As I argued in Tribune in 2021, the Swiss leaks revealed how deeply embedded these practices are—and how slow successive governments have been to confront them. Those who commit benefit fraud are prosecuted vigorously; those who hide millions offshore are too often ignored. A Wealth Tax must therefore be part of a wider shift: a political will to close loopholes, investigate evasion, and refuse to tolerate the quiet draining of public wealth into private havens.
Globalisation has allowed some of the wealthiest individuals to simply move their assets—and themselves—when asked to contribute. If the UK is to take this reform seriously, we must consider aligning with practices already used by other democracies. The United States, for instance, taxes citizens by nationality, not merely residency. If someone holds a US passport, they contribute tax regardless of where they live—unless they renounce that citizenship. Indeed, you don’t find many Americans living in our Crown Dependencies, showing that nationality-based taxation can be effective and does not necessarily drive people to relocate.
If the UK applied a similar principle, those who benefit from a British passport, British legal protections, British markets, and British stability would contribute back to the society that enabled their wealth. Anyone unwilling to contribute could, of course, renounce their passport—but renunciation should carry a clear consequence: they should not expect automatic return or re-entry. A passport is not only a document of convenience; it is a bond of mutual obligation between a citizen and their country. And while much attention is given to stopping people from entering on a boat, we should equally ensure that those who hide wealth offshore cannot simply return to the UK on their own boat either.
A modern Wealth Tax is not radical. It is responsible. It follows the liberal tradition that wealth comes with stewardship; that private fortunes grow through public infrastructure, stable institutions, and shared civic life. And when inequality becomes as extreme as it is today, fairness demands action.
If we are to rebuild the NHS, renew public services, and strengthen our communities, the wealthiest must contribute their fair share. And we must challenge those who seek to avoid responsibility—whether by hiding wealth offshore, exploiting loopholes, or attempting to walk away from obligations to the country that made their prosperity possible.
The task is not merely fiscal. It is moral. The long struggle against privilege and poverty continues—and it is time for Liberals to lead it.
* George Turner earned his master’s degree from the Johns Hopkins School of Advanced International Studies (SAIS) in Washington, D.C., before working in Parliament for Simon Hughes. He went on to build a career as an investigative journalist focusing on financial misconduct and founded the charity TaxWatch, which he led for three years. Following a life-changing accident that left him in a coma, George made a remarkable recovery, launched his own business - fermented reality - and has now returned to freelance journalism.
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17 Comments
“ Over the last thirty years, ……… the bottom 50% have grown poorer in real terms”
Don’t you mean ‘in relative terms’?
If you mean ‘in real terms’, please cite an appropriate source or reference as I’m afraid I am sceptical of that claim.
While I salute your ambition to reduce inequality, we should be honest about practically implementing a policy that has defeated several European partners who tried to accomplish the same thing.
Council Tax is based on 1990s housing costs because successive governments lack the political will to revalue our housing stock. A practical measure with new bands to tax visible wealth. Regarding the rise of legal tax avoidance, let’s be clear tax loopholes exist due to political design.
HMRC is woefully underpowered when it comes to negotiating with the City’s leading tax barristers,solicitors, accountants and wealth managers. If we are serious about taxing wealth we would recruit to HMRC leading Partners from tax avoidance specialists from across the professions, pay them a minimum of what the Prime Minister earns and allow them to earn bonuses based on how much money they retrieve.
We need a more simple and transparent tax and benefit system that rewards work and entrepreneurialism, taxes passive wealth and supports those in need. Without considerable reform and investment in HMRC ,your ambition is unachievable.
Dan Niedle ( a Labour Party member) has explained the case against a wealth tax here. In summary ” Our analysis finds the opposite: the revenue is highly uncertain, and would arrive only after years of complex implementation. Most importantly, the tax would lower long‑run growth and employment, thanks to a decline in foreign and domestic investment. It would make UK businesses more fragile and less competitive, and create strong incentives for capital reallocation and migration. There are better solutions to the many problems with our tax system.” https://taxpolicy.org.uk/2025/07/22/uk-wealth-tax-anti-growth/
It’s probably not that hard to make out a plausible case against the introduction of a wealth tax as Dan Niedle has indeed done. “…. revenue is highly uncertain….years of complex implementation ….would lower long‑run growth and employment etc etc” In other words ‘it won’t work’ is the take home message.
That’s a more palatable sales pitch than saying the existing power structures in our society should be preserved and that current levels of inequality should remain as they are.
Of course, if the opposition to a wealth tax was purely technical, opponents could offer their own alternatives and suggest other ways that might work better in reducing levels of inequality. I’d be interested to know what these might be – if they exist .
Until then we do have to accept that it’s going to be difficult, but we will have to find a way of making wealth taxes work if we want to win “the war against inequality”.
@Peter Martin The alternatives to a wealth tax would include:
Inheritence tax. The building of wealth across generations is the most damaging and death duties were the most successful element in the reduction of wealth inequality in the short 20th century.
Tax investment income at least as highly as earned income. Obviously.
Capital Gains Tax. It’s too low and there are far too many exemptions.
Remove Income Tax exemptions. There are still loads and they are mainly used by the rich.
I have long favoured a wealth tax for the reasons George has set out. Recently I have been worried that several other European countries have tried and then changed their minds because of wealth flight. I therefore felt we should consider adopting the US approach of taxing by nationality and am very heartened by the strong case that George makes for doing just that. I have known many Americans living in this country who would never give up their US citizenship and routinely file tax returns in the UK and the USA. It’s a fact of life they take for granted. Under the double taxation treaty they can offset the tax paid in the UK against any obligations in the USA, so they don’t for instance pay income tax twice.
As others have said, Dan Neidle is the expert, and nothing I read here convinces me that he is wrong. If we care about wealth inequality all we have to do is give permission for a LOT more houses to be built, particularly in the South East. Then prices will fall (at least in real terms), more people will be able to buy their own home, and wealth inequality will fall.
@ Peter
The measures you suggest would be useful, the most effective being to get serious about inheritance tax. This is already a form of wealth tax.
The others are about income taxes. Capital gains are a form of income. Much of the wealth of the super rich has been accumulated without ever paying much tax on it though. if you are serious about reducing wealth inequality you’ll need to tax wealth directly.
LVT is another wealth tax to be considered. Imposing taxes on expensive
property, at a national level, in the same way that local councils do is another.
@Peter Martin Investment income (including capital gains) and wealth are inextricably linked. Investment income causes wealth. Wealth causes investment income. If you tax those with large investment income, you are taxing the wealthy. It’s just much easier to tax wealth when it’s being received than when it’s static.
LVT is a great tax but it’s a resource tax not a wealth tax. Land may be owned by public companies with lots of small investors or even charities.
Size of house does not relate directly to wealth. The people holding the highest proportion of their capital in houses are mortgaged owner occupiers (who can have 2000% of their net wealth in property) and big landlords (who may own hundreds of small properties and only one big one).
Instead of seeking ways to prove wealth is difficult to tax, surely we should be seeking better ways to redistribute income.
The vehicle, pre Thatcher, was income tax. It was highly progressive and taxed those with higher incomes very severely. (Up to 98% on that part of income liable for supertax). For over 30 years post WW2 under both Labour and the Tories income tax was a fair and progressive tax and income inequalities were reduced. Thatcher and her government sold us the myth that income taxes are dreadful and reduce incentives and they started to dismantle the very vehicle of redistributing income and hence wealth. Sadly this was followed by both Labour and the LibDems with the resulting dramatic reversal of equality. The myth is so pervasive that people who will never pay higher rates of tax believe that a more progressive income tax system will affect them adversely.
A wealth tax is highly desirable, but taxing by nationality is a more immediate way of preventing people hiding their money overseas. Income tax should be the vehicle of redistribution and all income, including capital gains should be liable and exemptions should be pared back to a bare minimum
Income tax at a margin rate of 98% is absurd except possibly for the ultra ultra wealthy. They were rightly opposed by the Liberal party in the late 1970s, and should be left in the junk basket of taxation policy history along with most of rest of democratic socialsit economic policy.
@ Peter
We perhaps need a definition of what we mean by a wealth tax. Thinking about it, I’d use the principle of stocks and flows. At present we tax mainly on flows. VAT, excise duty etc when we buy anything. Income tax, CGT, even Corporation tax when we earn anything.
There are some taxes on stocks such as when we pay local council taxes on property which themselves are a form of progressive wealth tax. I’d class all of these as wealth taxes or , like LVT, as a potential wealth tax.
Inheritance taxes could, I suppose, be either. I’d still class it as a wealth tax because, technically, it is levied before the wealth becomes an income to whoever it is transferred to. Although, I wouldn’t object if it was taxed as income to the recipient.
The details of how these taxes will, or should be, levied are a matter of debate. Just how much should we be allowed tax free on one primary residence etc. This is to your point about landlords and the number of properties owned. We don’t want these to end up as effective taxes on renters for example but we may want them to be a tax on second homes.
Agreed 👍 Need to start small and increase wealth taxes gradually.
Council tax may be dressed up as a property tax but it is payed by people who don’t own any property. It is certainly not progressive. I’m not particularly worried by the definition of what is and what is not a wealth tax. I judge taxes by who pays them and what if anything they discourage.
Simon Mcgrath and Dan Niedle are right. The problem is that one cannot distinguish easily between productive wealth and excess wealth. Productive business assets make up a huge proportion and often return on capital is much less than 2%. The result is that all incentive for investment evaporates, as well as businesses suffering penal tax rates. In the worst case scenario businesses are forced to sell off assets to pay the tax. This results in stagnation and lower employment and reduced tax receipts from profits. Over a 10-20 year period experience has shown that wealth taxes reduce growth and reduce the resources available to the exchequer, creating a downward spiral.
Mick Taylor is on the right track with ensuring income tax remains progressive.
It’s worth taking a look at the history of taxation in the UK. Some of the ideas of our forebears, such as the Window Tax, weren’t too smart but others still have a relevance today.
The original Schedule A tax was abolished in 1963 but I can’t really see what was wrong with it. No doubt others will disagree!
No one will like paying extra taxes but maybe there is a case for reintroducing Schedule A tax, and inventing some new ones -like a LVT, if it means we pay less in the way of existing taxes.
https://en.wikipedia.org/wiki/History_of_taxation_in_the_United_Kingdom
“Agreed 👍 Need to start small and increase wealth taxes gradually” [David Garlick]
One of the omissions that surprised me was no changes were made to the non-dom annual “subscription” or to the (non property) investment threshold for rich foreign nationals. Likewise an increase in the airport duties paid by private jets. Yes it is only small amounts, but they are relatively easy to collect as mechanisms are already in place.