Burnham shouldn’t let practical problems kill the wealth tax debate

They own a disproportionate share of assets, benefit heavily from rising stock and property markets, and very often pay lower effective tax rates than workers whose income arrives in a monthly payslip.

That is why wealth taxes keep returning to the political agenda. The Patriotic Millionaires have already written to Andy Burnham asking to be taxed more and supporting a 2% tax on wealth over £10m. He himself has talked about the need for "greater fairness” in the UK’s tax system.

But why are wealth taxes so notoriously hard to implement? The problem is not a moral one - it’s a practical one.

In California, for example, millionaire wealth has surged while public services face mounting pressure. Taxing even a fraction of that wealth sounds like a way to raise serious money without increasing the burden on ordinary households, but unsurprisingly many Californian billionaires are fighting hard against such a policy.

Wealth is not like wages. Wages are visible. Wealth is often tied up in private companies, trusts, property portfolios, intellectual property and complex investment vehicles. The richest taxpayers are highly advised and can restructure ownership, move assets or litigate rules for years. Before governments collect a penny, lots of legwork must be done to define the tax base, value assets, establish reporting rules, prevent avoidance and survive court challenges.

These are not minor technicalities, they are steps that determine whether a policy works.

These practical difficulties in defining and collecting assets and tax cannot be used as an argument for leaving the ultra-rich alone. If Burnham wants the wealthy to contribute more, there are powerful policy levers available.

First, tax capital gains more effectively. Labour income is taxed regularly and visibly, while capital gains are often taxed only when assets are sold. That creates an obvious incentive to hold assets, borrow against them and delay realisation. Raising rates and limiting exemptions would address a major source of inequality.

Second, introduce mark-to-market taxation for publicly traded assets. Shares have observable prices and taxing annual gains would capture some unrealised wealth without requiring government to value every asset every year.

Third, strengthen taxes on high-value inheritance. If the concern is dynastic wealth, taxing large transfers is a direct response as many inheritance tax systems remain riddled with exemptions and planning opportunities.

Fourth, make land taxes fairer to target passive rental income from land owned by the ultra-wealthy. Land and real estate are visible, difficult to hide offshore and already recorded in public systems.

Finally and most crucially, Burnham needs to invest far more in enforcement, transparency and international cooperation. Beneficial ownership registers, stronger trust reporting and better-resourced tax authorities are essential.

A wealth tax can be part of the answer, but Burnham should not treat it as a fiscal magic trick. The real test is not symbolism but collection. The goal should be a tax system that follows wealth more intelligently: when it grows, when it is sold, when it is transferred, when it is hidden and when it is converted into power.

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Dr Miriam Marra is an Associate Professor of Finance at Henley Business School. Her research focuses on empirical finance, from corporate finance matters to asset pricing.

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