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1975 B.T.R. 283 (1975)
The Wealth Tax - The Wrong Tool for the Job

handle is hein.journals/britaxrv1975 and id is 307 raw text is: Graeme Macdonald THE WEALTH TAX- THE WRONG TOOL FOR THE JOB GivEN that the Government is committed in principle to the intro- duction of a wealth tax, it is natural that discussion of the tax should be centred around its form and coverage rather than its objectives. Nevertheless, it is instructive to discuss the tax in terms of its ob- jectives as declared in the Green Paper since it is by its ability to fulfil these .objectives that the tax should finally be judged. Two objectives can be identified in the introduction to the Green Paper.' The first is to redistribute wealth; the second, to make the tax system as a whole more equitable by taxing hitherto untaxed taxable capacity. Though separable, the two are considered to be closely connected since it is suggested that it is the failure to recognise the additional taxable capacity attaching to ownership of wealth that has led to the present distribution of wealth. It is not the purpose here to discuss what the present distribution of wealth is; neither is it proposed to question what is or is not an acceptable distribution of wealth. Rather the aim is to show very briefly that a wealth tax of the sort proposed in the Green Paper can only achieve a very limited redistribution, and then turn to a more detailed discussion of whether in fact it is correct to view the owner- ship of wealth as additional taxable capacity. REDISTRIBUTION OF WEALTH It is noteworthy that there is no explicit indication in the Green Paper of what the government considers to be an unacceptable distribution of wealth. All that we can assume is that the illustrative exemption limit of E100,000, possibly per person, is indicative of the point at which the accumulation of wealth is considered unacceptable. This in itself suggests that the wealth tax is aimed not at ownership of wealth per se, but at excessive inequalities of wealth. If this is the case then the equity argument of additional taxable capacity is the weaker unless it too is intended to apply only to concentrations of wealth. Redistribution of wealth can take two forms: one the redistribution of a fund of wealth from one individual to a number of other in- dividuals; the other the confiscation of wealth from an individual and its transfer to the state. Because of the static nature of a wealth tax it can only achieve the latter. The tax only operates when the unaccept- able level of wealth has been reached, and it can thus only serve to confiscate accumulations above that level. Even then, at the rates 2 Wealth Tax, Cmnd. 5704, H.M.S.O. 1974, p. iii. 283

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