Wealth taxes would generate steady and meaningful revenue
Sir, – In arguing that a wealth tax would not generate meaningful revenue, Eoin Burke-Kennedy seems to use very limited interpretations of what such a measure might entail (“The problem with a wealth tax? There are not enough rich people”, Business Opinion, May16th) .
Although, in fairness, it should be acknowledged that wealth is a rather subjective concept. It often feels analogous to the definition of an alcoholic as someone who drinks more than their doctor. People perceive “the rich” as being those who are significantly better off than themselves, and on that premise, feel they ought to pay more tax.
There are several ways in which wealth taxes might be levied and which would generate steady, meaningful revenue, however. Property taxes are perhaps the most obvious, especially on owners of multiple properties. Estate taxes also could contribute, there being no logical reason anyone should pay less tax on what they inherit than on money they actually earn. The ludicrous anomaly whereby capital gains taxes die with the investor, meaning the resource can be inherited tax free, is a particularly odd approach, rewarding individuals who neither invested nor most likely even knew of the risk taken more than those who did.
Perhaps, however, even if the returns are not enormous it might represent an important statement of values. As economic activity resumes, many who have become accustomed to more free time may wonder if they need to work as hard, or even at all. If paying the government debt arising from Covid means increasing income tax, some will choose not to do so. The black economy is also bolstered by higher income taxes. Dying and becoming wealthy will remain as unattractive and attractive, respectively, as they now are, irrespective of almost any level of taxation.
We simply have to make it rational for people to work hard and pay taxes. Finally it’s worth bearing in mind that the details of a tax don’t need to be worked out at their inception. Income tax in the UK was introduced in 1799, initially for a one-year period. And in its first year, it yielded far less than had been anticipated – a mere £6 million. That, in itself, however, was seemingly not a reason to drop the idea entirely. – Yours, etc,
Kinsale, Co Cork.