Revenue and distributional modelling for a UK wealth tax

Advani, Arun, Hughson, Helen ORCID: 0000-0001-7873-4141 and Tarrant, Hannah (2021) Revenue and distributional modelling for a UK wealth tax. Fiscal Studies, 42 (3-4). 699 - 736. ISSN 0143-5671

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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.

Item Type:	Article
Official URL:	https://onlinelibrary.wiley.com/journal/14755890
Additional Information:	© 2021 The Authors
Divisions:	International Inequalities Institute
Subjects:	H Social Sciences > HJ Public Finance H Social Sciences > HB Economic Theory
JEL classification:	D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
Date Deposited:	19 Nov 2021 15:03
Last Modified:	12 Dec 2024 02:44
URI:	http://eprints.lse.ac.uk/id/eprint/112699

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