Why Taxing the Super-Rich Is So Hard to Do

Britain's new prime minister, Andy Burnham, wants to raise money by changing how the government taxes wealthy people. One big idea is called a land value tax, which would charge people based on how much land they own. But a large and powerful group — lawyers, doctors, managers, and other well-paid professionals — is pushing back hard. These people are not the richest in the country, but they have a lot to lose if tax rules change, and they have the power to slow things down.

Economists and policy experts say the current tax system has a big problem. It lets the very wealthiest people — those with hundreds of millions of pounds — pay very little in taxes. Some studies show that families with more than £100 million in assets can pay an average tax rate at least half of what ordinary households pay. That seems unfair to many people, but changing the system is not easy because those who benefit from the current rules fight hard to keep them.

A key group in this fight is sometimes called the 'professional classes.' This includes people like company managers, lawyers, doctors, architects, and senior government workers. Many of them own valuable homes and have large pension savings. They worry that new taxes would take money away from them. Even though they are not billionaires, they act like guardians of the system that protects the very rich.

One tax idea getting a lot of attention is the land value tax, or LVT. Instead of paying council tax and stamp duty — the two main property taxes right now — people would pay a yearly tax based on how much their land is worth. A research group called Tax Policy Associates has studied how this could work. Their plan would collect about £56.7 billion in taxes, and roughly 70% of homes — mostly outside London — would actually pay less than they do now.

The land value tax has a special advantage over other taxes on the rich. Wealthy people often move their money into stocks, companies, or accounts in other countries to avoid paying taxes. But they cannot pick up land and move it somewhere else. That means the super-rich would find it much harder to dodge this particular tax, and economists widely support the idea for this reason.

The concept of a land value tax is not new. A writer and economist named Fred Harrison has studied how this idea was discussed back in the early 1800s. At that time, large amounts of wealth were being built up by a small number of people, and a land tax seemed like a fair solution. But the professional classes of that era fought against it, just as some are doing today.

Burnham has said he supports the idea of a land tax and could start by replacing council tax and stamp duty over time. This would be a big shift in how Britain handles property and wealth. If it works in England, other parts of the United Kingdom might choose to follow along. It could push people to use land more productively, rather than simply holding on to it as a store of wealth.

While a full land value tax would take time to set up, Burnham also needs to find money now. One option is raising capital gains tax, which is a tax people pay when they sell something — like a house or shares in a company — for more than they paid for it. Right now, this tax rate is lower than the rate people pay on regular income, which encourages people to build up wealth rather than earn wages. Raising it could bring in more than £10 billion.

Another idea targets the very wealthiest families directly. Because they are so rich, they do not need to sell their assets, so they never have to pay capital gains tax at all. A special tax aimed at families with more than £100 million in total wealth could close this gap. Years ago, a tax commission suggested a one-time wealth tax that could raise more than £300 billion, though that idea never moved forward.

For Burnham, making any of these changes will be a real challenge. The professional classes — many of them older Gen X and Baby Boomer generations who built up wealth in property and pensions over 40 years — have a strong interest in keeping the current system. They vote in high numbers and have loud voices in public debate. As long as they resist change, any prime minister who wants a fairer tax system will have a tough road ahead.