A once-off wealth tax is the wrong solution to Ireland’s funding problems

Debates about wealth taxes tend to mushroom up after big crises. We had them post 2008. On paper, they offer a solution to the two things that financial emergencies leave in their wake: depleted public resources and greater inequality. The anvil of Covid has fallen disproportionately on lower-paid workers, while those on higher incomes with remote-working options have been insulated, illustrated by the increased level of savings. The recent surge in house prices and rents also favours the wealthy. You can see how a wealth tax might be presented as a corrective to these trends.

The UK’s Wealth Tax Commission has proposed a one-off wealth tax to pay for the country’s Covid bill. The tax would be based on the value of all assets: homes, businesses, investments, pensions, savings – everything an individual owns or jointly owns apart from low-value items such as computers. In terms of rates and thresholds, it gave several examples. One involved a tax of 5 per cent on an individual’s wealth in excess of £500,000. This could raise £260 billion (€305 billion) provided the valuation date is set prior to any announcement to reduce the scope for avoidance and the payment spread over five years to ease liquidity concerns.

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