The last few months have seen increasing calls for a wealth tax in Britain. A petition organised by Leeds East MP Richard Burgon calling for such a tax obtained more than 50,000 signatures. Burgon argued that a two percent wealth tax on assets over £10m would raise up to £24bn per year. Twenty eight MPs and two peers recently wrote to Rachel Reeves supporting a tax on this basis; the signatories included Jeremy Corbyn, John McDonnell and a dozen Labour MPs, as well as independents, Green Party and Plaid Cymru members. Why has wealth taxation become a central issue? What would be the impact of taxing wealth?
The demand for a wealth tax arises from two main sources. Firstly, there is the need to fight austerity budgets and support public spending. It remains important for socialists to defend the role of government borrowing and to criticise mistaken arguments for ‘debt brakes’ and rigid limits on public sector debt. But it is hard to argue that the economic devastation caused by forty years of neo-liberalism can be repaired or that we can address the ecological crisis without an increase in progressive taxation. A wealth tax would be an important part of this.
In addition, however, wealth taxation is needed to respond to the dramatic increases in inequality which have taken place in recent decades. The World Inequality Report (WIR) for 2022 states that “the poorest half of the global population barely owns any wealth at all, possessing just 2% of the total. In contrast, the richest 10% of the global population own 76% of all wealth”. In the UK in 2021, the bottom 50% of the population owned 5% of total household wealth and the top 10% owned 57% of it.
The WIR and many other publications show the same cross-country trends in wealth inequality. Inequality levels were very high at the start of the 20th century. In the early 1900s in the UK the top 10% owned over 90% of the wealth. Levels then fell from the First World War through to the early 1980s and have risen continually since then.
The reason for this has been set out by the French economist, Thomas Piketty in his highly influential 2014 book Capital in the Twenty-First Century. Piketty argues that income in a capitalist society can be divided into two parts: income gained through labour and income earned from assets (mainly land and financial assets). Wages tend to rise or fall in step with economic growth. Asset income is increasingly unrelated to such growth. A long period of slow growth such as we have seen since the mid-1980s means that asset income will outpace wages. Since asset income mainly goes to the rich, this will boost wealth inequality.
Piketty argues that the tendency for asset income to rise faster than wages is the normal condition for capitalist societies. The period from the 1910s to the 1980s when wealth inequality decreased was an exception, caused by the two world wars, the intervening great depression and social democratic limits on earnings from capital coupled with high growth after World War 2. But what we can expect from the future, unless there is active government intervention to tax wealth, is a continuing rise in wealth inequality, up to the levels of the late nineteenth century.
Even The Economist magazine now recognises developments of this kind. Its March 1 2025 edition carried an article entitled ‘The Bequest Boom’ focusing on the impact of increasing wealth on inheritance. According to their figures, “inheritances in Britain are twice as important, relative to earnings for those born in the 1980s as for the generation before”.
Piketty’s work, coupled with that of colleagues such as Emmanuel Saez, who has analysed the inequities of the US tax system, and Gabriel Zucman, who has worked on tax havens, has revolutionised the academic study of wealth inequality. It shows the urgent necessity for arguing for wealth taxation. This is especially important for eco-socialists, since if Piketty is right in saying that slow growth in an unregulated capitalist economy inevitably leads to greater wealth inequality, those arguing for de-growth also have to support active redistribution of resources. This work has also provided us with valuable tools to support such campaigns, such as analyses of the impact of tax initiatives.
But research and analysis can only go so far. We need an active ecosocialist campaign on the ground in support of taxing wealth. Critics of wealth taxation often claim that the rich will simply move their assets abroad. That may well be true if taxes are introduced in a passive way, purely as a parliamentary measure. For such taxation to be effective it needs to be rooted in determined campaigning, breaking down the walls of financial secrecy, strengthening tax enforcement agencies such as HMRC and those who work there, attacking the power of the City of London as a haven for international money-laundering and building international links and solidarities.
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