IPPR, the Institute for Public Policy Research, describing itself as "the UK’s leading progressive thinktank", has just released an essay by a Chris Nicholas, "Fairer taxes for a better economy
" This sounded promising. There is a section on taxing wealth. Nicholas writes
"Closing the circle both fiscally and progressively, a general wealth tax would be introduced.
The new tax would be levied on all holders of wealth, including both individual and corporate entities, with total net wealth over £150,000 at a progressive rate of
0.5–1.5 per cent per annum.
Inheritance tax would be overhauled to dovetail with this new tax, capturing significantly more wealth than at present but taxing it at initially lower, then progressive rate."
The document is, unfortunately, mostly in a gobbledygook style of English. It verges on the unreadable. This makes it impossible to discern the line of argument, if indeed there is one. It is full of unsubstantiated assertions. Presumably the authors think they can be taken for granted.
The whole rests on a shaky foundation of assumptions which are also pretty much impossible to discern clearly. "Wealth" is never defined, nor does the author explain why, in principle, it ought to be taxed. Nor does is "fair" defined. He refers to the ill-effects of the present tax system, which he attributes, without further reflection on the matter, to the under-taxation of wealth. The fact that the proposal chooses an arbitrary threshold is always the indication of a lack of sound principle. Why is something worth £149,000 not wealth? And how is this value established anyway?
The author objects to the idea of a land value tax, which he seems to think would unduly penalise both the wealthy and the poor owner-occupier, thereby revealing his home-ownerist credentials. Nicholas clearly does not understand land value tax or the economic analysis that underpins it or he would not have made the comments that he did. It is a shoddy document and reflects poorly on the IPPR. The organisation should impose proper quality-control to ensure that this kind of thing does not go out under its name.
Mark Wadsworth has done a thorough demolition job which you can read on his blog here