The Return of Wealth Taxes

After decades of retreat, wealth taxes are making a comeback. Once common across advanced economies, net wealth taxes nearly disappeared by 2020—surviving in only a handful of countries. Today, however, shifting political priorities, fiscal pressure, and rising inequality are driving a renewed global debate.

This episode explores why wealth taxes are returning, how they are being redesigned, and what the evidence says about their impact.

🔎 The Big Picture

Wealth taxes—direct levies on an individual’s net assets—peaked in the 1990s, when 12 OECD countries applied them. By 2020, only Norway, Spain, and Switzerland retained a net wealth tax.

That period of decline is now ending. Policymakers are again viewing wealth taxation as a viable—and politically salient—tool.

📊 Key Findings & Debates1️⃣ Revenue Potential

Economic modelling suggests that a 4% “Wealth Proceeds Tax” could raise more than USD 45 billion annually for U.S. state governments—highlighting why the concept has regained traction.

2️⃣ Focus on Unrealised Gains

Recent U.S. federal proposals include:

• A 25% minimum tax on unrealised gains

• Targeted at individuals with net wealth above USD 100 million

This represents a significant conceptual shift away from realisation-based taxation.

3️⃣ State-Level Adoption

At the sub-national level, several U.S. states are considering “millionaire taxes”, typically structured as:

• Income surtaxes

• Applied to earnings above high-income thresholds

While not classic wealth taxes, they reflect the same policy objective: greater taxation of top wealth holders.

4️⃣ Economic Criticism

Critics argue that wealth taxes:

• May discourage investment and entrepreneurship

• Are costly and complex to administer

• Often raise less revenue than projected once avoidance, valuation issues, and behavioral responses are factored in

These concerns contributed to their earlier repeal in many countries.

5️⃣ Democratic Rationale

Supporters counter that wealth taxation is necessary to:

• Sustain public finances

• Reduce reliance on labor and consumption taxes

• Address the political and economic power associated with extreme wealth concentration

From this perspective, wealth taxes are framed as tools of democratic balance, not just revenue collection.

🎯 Key Takeaway

The return of wealth taxes signals one of the most consequential shifts in modern fiscal policy. Whether through net wealth taxes, unrealised gains, or high-income surtaxes, governments are clearly moving toward greater scrutiny of accumulated wealth.

For high-net-worth individuals and advisors, the direction of travel is unmistakable:

wealth—not just income—is back on the tax agenda.