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Revenue and distributional modelling for a UK wealth tax

Author

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  • Advani, Arun
  • Hughson, Helen
  • Tarrant, Hannah

Abstract

In this paper, we model the revenue that could be raised from an annual and a one-off wealth tax of the design recommended by Advani, Chamberlain and Summers in the Wealth Tax Commission's Final Report (2020). We examine the distributional effects of the tax, in terms of both wealth and other characteristics. We also estimate the share of taxpayers who would face liquidity constraints in meeting their tax liability. We find that an annual wealth tax charging 0.17 per cent on wealth above £500,000 could generate £10 billion in revenue, before administrative costs. Alternatively, a one-off tax charging 4.8 per cent (effectively 0.95 per cent per year, paid over a five-year period) on wealth above the same threshold, would generate £250 billion in revenue. To put our revenue estimates into context, we present revenue estimates and costings for some commonly proposed reforms to the existing set of taxes on capital.

Suggested Citation

  • Advani, Arun & Hughson, Helen & Tarrant, Hannah, 2021. "Revenue and distributional modelling for a UK wealth tax," LSE Research Online Documents on Economics 112699, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:112699
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    File URL: https://researchonline.lse.ac.uk/id/eprint/112699/
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    Cited by:

    1. Nick O'Donovan, 2021. "One‐off wealth taxes: theory and evidence," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 565-597, September.
    2. Advani, Arun & Summers, Andy & Tarrant, Hannah, 2025. "Measuring top wealth shares in the UK," European Economic Review, Elsevier, vol. 178(C).
    3. Glen Loutzenhiser & Elizabeth Mann, 2021. "Liquidity issues: solutions for the asset rich, cash poor," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 651-675, September.
    4. Advani, Arun & Summers, Andy, 2022. "Measuring and taxing top incomes and wealth," The Warwick Economics Research Paper Series (TWERPS) 1403, University of Warwick, Department of Economics.
    5. Tippet, Benjamin & Wildauer, Rafael & Onaran, Özlem, 2021. "The case for a progressive annual wealth tax in the UK," Greenwich Papers in Political Economy 33819, University of Greenwich, Greenwich Political Economy Research Centre.
    6. Stephen Daly & Helen Hughson & Glen Loutzenhiser, 2021. "Valuation for the purposes of a wealth tax," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 615-650, September.
    7. Krenek Alexander & Schratzenstaller Margit, 2022. "A Harmonized Net Wealth Tax in the European Union," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 242(5-6), pages 629-668, December.
    8. Arun Advani & George Bangham & Jack Leslie, 2021. "The UK's wealth distribution and characteristics of high‐wealth households," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 397-430, September.
    9. Arun Advani & Helen Miller & Andy Summers, 2021. "Taxes on wealth: time for another look?," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 389-395, September.
    10. Tippet, Benjamin & Wildauer, Rafael, 2023. "The good life at the top: analysing The Sunday Times Rich List 1989-2023," Greenwich Papers in Political Economy 42714, University of Greenwich, Greenwich Political Economy Research Centre.
    11. Summers, Andy, 2022. "Is it possible to tax the super-rich?," LSE Research Online Documents on Economics 121990, London School of Economics and Political Science, LSE Library.
    12. David Burgherr, 2021. "The costs of administering a wealth tax," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 677-697, September.

    More about this item

    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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