An argument for wealth taxes

My argument for wealth taxes is a simple one and takes just a few logical steps to explain.

The economy is not a natural thing

The economy was invented by humans initially to support trades (I sell my chickens for coins that I use to buy your corn rather than trying to bater them directly) and has grown to be the dominant political factor - "It's the economy, stupid".

The economy is unpredictable

Having created this economic monster we cannot control it. On any major issue, such as raising taxes or imposing tariffs, economists present a wide range of views on the likely outcome. This is not because economists are stupid, it is because the economy is complex (not complicated) and is implicitly unpredictable.

The way our economy works has lead to great inequalities in wealth

This lack of control means that the economy does not work well for us, the amount of abject poverty in the world is one proof of that.

While there is little abject poverty in the UK these is still great inequality in wealth. 

This chart comes from The Resolution Foundations briefing paper The UK’s wealth distribution and characteristics of high- wealth households. I say that you give them credit for the chart but I could have chosen any one of many similar charts produced by many similar organisations. It is only the basic shape of the chart that matters here.

Both ends of the scale, extreme poverty and excessive wealth, are unexpected and unwanted outcomes. We did not design our economies to produce this outcome.

We have measures in place to support those with least wealth

Politicians have introduced policies to try and support those with least wealth. These measures include things like income tax thresholds, personal benefit payments and exemption from some charges. 

It could be argued, and I would, that these interventions are too little and there is still too little wealth at the bottom end but that is not the point here, the point is there are measures in pace to try and address issues at one end of the unbalanced scale.

We should also have measures in place to address those with most wealth

However, there are few, if any, measures in place to address the issues at the other end of the scale. High Rate Income Tax is not that high these days, is fairly easy to avoid and it only addresses income, not absolute wealth.

Wealth taxes are needed to reduce the steepness of the curve.

Wealth taxes could be out to good use

It is not just about hurting the rich, the so-called "politics of envy" it is about using the money that is largely sitting in bank accounts or asset holdings doing nothing productive.

For example, the money raised by wealth taxes could be spent on the people at the other end of the scale, further flattening the curve, as well as on the obvious things like schools and hospitals.

We need a range of wealth taxes

Excessive wealth comes from errors in the economic system and a range of taxes is needed to address each of the errors and the results of them.

An obvious example would be a property holding tax and another might be a super-yacht tax. It would be easier to identify individual income sources and assets used to store wealth and to tax them separately rather than trying to calculate an individual's total wealth from all their activities and holdings.

Also, some of these taxes would be permanent, e.g. a property holding tax, while others would be once-off correction measures, or windfall taxes.