The Tax Justice Network said trillions could be raised with a ‘featherlight’ tax on the 0.5% of richest households, copying a current Spanish tax
Governments around the world copying Spain’s wealth tax on the super-rich could raise more than $2tn (£1.5tn), according to campaigners calling for the money to help finance the climate transition.
As a growing numbers of countries consider raising taxes on the ultra-wealthy, the Tax Justice Network campaign group said in a report that evidence from a “featherlight” tax on the 0.5% richest households in Spain could help raise trillions of dollars globally each year.
The Spanish government, under the socialist prime minister, Pedro Sánchez, introduced a temporary “solidarity” wealth tax in late 2022, which is collected in 2023 and 2024, on the net wealth of individuals exceeding €3m (£2.6m). It is estimated to apply to the richest 0.5% of households.
That seems painfully simple to make an exception for: assets you are not legally allowed to sell, transfer, convert, use as collateral would be excluded.
And that creates a loophole that is trivially easy to exploit, which is the problem. I simply wrap up any asset I want to hold onto into a fund or trust that stops me doing the above…
If the asset was ever legally liquid while in your possession, it qualifies for the tax.
Something can be legally liquid, but not practically liquid. Like a house. For example the Board of the company could give me permission to sell, but why would they?
You know that people pay taxes on the wealth embodied in their house, every year, right? Not even their equity in the house, but the full value - both the piece they own and the piece the bank still owns. Their primary residence is most of the wealth for most of the middle class, so we already have a wealth tax for everyone but the ultra-wealthy.
I’m sure you’re also aware of tax brackets? The same concept can be applied to wealth tax: legally liquid assets above a certain threshold would be taxable. Owner-occupied homes would be exempt.
This is a lot easier than you think.