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Governments are increasingly looking at new ways to tax the super rich
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But what's behind the trend and will it work? In the last few months, we've seen a spate of Western governments look to rise taxes on their wealthiest citizens
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Here in the UK, with Rachel Reeves scrambling to fill a 22 billion pound black hole in the public finances
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the new government has pledged to scrap the non-dom tax status and is weighing up bringing capital gains tax
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a tax predominantly paid by the rich, in line with income tax
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We've seen Italy double their equivalence to the UK's Nondom scheme and France elect a party that has endorsed a 90% marginal rate of tax on top earners
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And in the US, Kamala Harris wants to introduce a billionaire tax should she be elected
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Even Switzerland, a country known for welcoming ultra-high net worths in open arms
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is floating the idea of raising its inheritance tax to 50%. and at the upcoming G20, countries could even commit to applying an annual wealth tax on billionaires
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In the past, many governments have sought to attract the wealthy individuals in the hope they will bring investment and spending
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But what's behind the change in tone? Since the financial crash, ultra-low interest rates and quantitative easing means that the price of assets, things like property and shares
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have risen much faster than wages and GDP. Since 2009 the median wage in the UK has risen by 20 in nominal terms and is actually down when you take into account the effects of inflation Meanwhile house prices are up 75
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and the FTSE 100 has more than trebled. This, economists say, has led to two main things happening
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One, inequality has got worse because the people who tend to own these appreciating assets
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tend to be wealthy. And two, the stagnant growth that many Western countries
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and country struggled with over the past 15 years has meant that government's traditional
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tax avenues, income taxes and consumption taxes are not as lucrative as they used to be
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When it comes to an annual wealth tax, there are all sorts of practical implications
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including how to value people's assets, how much is a classic painting, a piece of jewellery
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or a vintage car worth if you're not trying to sell it. Another common argument you hear is that
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But people with plenty of money tend to spend a lot and invest a lot, generating economic activity
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in doing it. Governments will therefore always be tempted to attract them and their wealth
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meaning attempts to collaborate internationally will combust when they come into contact
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with reality. Here at City AM we'd like to know, do you think governments are right to
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raise taxes on the rich? And do you think those attempts will be successful? Let us know in the
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comments below. Thank you
