Why we can, and why we should now have a wealth tax

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This is a summary of my slides on wealth tax for a presentation at the World Bank this morning but they may not represent all I actually said: I tend to go off piste, especially when speaking last, as I did.

Tax COOP at the World Bank 
Winning the Tax Wars
Wealth Taxation

Prof Richard Murphy

City University, London and Director, Tax Research UK

24 May 2016

Any tax requires at least 5 things:

  • Economic justification
  • A definition of the tax base
  • An ability to find the tax base
  • And to prove who owns it
  • And then go out and collect the cash

The economic justification for taxing wealth

  • There is growing inequality
  • It is now accepted inequality imposes a cost
  • At the same time every state accepts it has the duty to protect private property
  • But not all share in the benefit of doing so equally: some tread very lightly on the world's wealth
  • The justification for a wealth tax is then that it's a charge on the rent wealth enjoys from the protection the state provides to it

The tax base must be simple

  • It has to be as wide as possible - there is no room for exemptions
  • It has to be by self declaration
  • It has to be backed by the right of the state to acquire an asset at its declared value – which would be nothing in the case of under-declared wealth

The important thing wealth tax is now possible

  • Because of automatic information exchange there is a real prospect of finding wealth now
  • And if we get beneficial ownership data then we will know who owns it
  • And that means there is a real chance of collecting payment

The world has changed in a remarkably short period of time

  • Tax havens are being cracked open
  • The world is aware of the danger of inequality
  • Piketty's dream does not look so unrealistic after all
  • Wealth can no longer run from tax authorities
  • It may be mobile, but it can no longer hide
  • We can, then, for the first time tax wealth
  • It is my suggestion that we should