Like most economies in the world, the UK is struggling to achieve the growth needed to fund all the responsibilities of government. The latest forecasts underline the problem. Borrowing is difficult because investors look at the size and strength of the economy, the public debt and the country’s capacity to service it. Bond markets do not pay dividends: investors demand yields that reflect inflation, interest-rate and fiscal risks. With high debt, weak growth and high interest rates, the public finances become much harder to manage, as the IFS has explained.
Taxation is already a heavy burden for ordinary people after more than a decade in which real wage growth has stagnated dramatically. Professor Richard J Murphy, a tax expert, has detailed measures that could increase government income without causing economic distress to the lower paid. In 2024 he identified reforms to the taxation of income from wealth and capital gains which he estimated could raise about £28bn a year — a huge contribution to the UK’s needs, including the defence spending our armed forces say is necessary in response to the threat posed by Russia.
It could be that a future government will use some of those measures to increase Treasury income. Rachel Reeves was a competent conservative Chancellor, as I have said before, but she lacked imagination and the confidence to take the bold steps needed to allow the UK not only to pay for the services it deemed necessary for its citizens, but to invest in order to stimulate and promote the growth needed to make the GDP match the demands on the economy.
I could not possibly criticise Murphy in his assessment of the tax possibilities available to government, but there is a bigger problem facing not only the UK, but the whole world. There have been ultra-rich people for hundreds of years, but periodically their grip on the economy causes societal damage and redress ensues. In the last century there were multi-millionaires who were able to use legal means to pay less tax than working people, constantly increasing their wealth.
Following the second world war, a reset occurred in the UK and other European countries. For three decades or so, progressive taxation and state-funded health and social care provided better lives for most people. Then modern globalisation arrived. In the 19th and early 20th centuries, a reset occurred in the UK and other European countries. For three decades or so, progressive taxation and state-funded health and social care provided better lives for most people. Then modern globalisation arrived. In the, that advantage declined, and eventually the process began to reverse. European countries began to import from countries with equal or better technology and lower prices.
Wealth inequality
As trade became more global, so did wealth. That posed, and still poses, a threat to progressive taxation. It does not have to, and the current state of the world economy means it cannot be allowed to. Multi-millionaires and billionaires have been tolerated in society. They are seen as unjust by many people because it is difficult to defend such huge rewards for individuals. But they were tolerated largely because their wealth did not directly affect most people.
Over the past 30 years, the number of millionaires and billionaires has risen sharply, and the fortunes at the very top have reached unprecedented levels. The global billionaire count and their combined wealth are now at record highs. This is largely because laws and taxation have not tackled the problem. Law, politics and taxation are not governed by rules like physics, chemistry or biology. They are constructs made by people. They have been embodied in texts written by people, but they can and should be changed. Very rich people have grown extremely wealthy by exploiting the laws and taxation systems countries employ.
Multi-millionaires and billionaires can arrange their affairs so that much of their economic gain is not taxed as salary. Mark Zuckerberg, for example, receives a $1 annual salary from Meta, although he also receives dividends as a major shareholder. Jeff Bezos has historically received a comparatively modest fixed salary from Amazon; the overwhelming source of his wealth has been the rising value of his shareholding. Ultra-wealthy individuals can also borrow against appreciated assets rather than sell them, obtaining cash without immediately realising taxable capital gains.
Another strategy is to use a holding company which does not itself trade but owns profitable companies. Dividends paid between UK companies are often exempt from Corporation Tax, largely to prevent the same profits being taxed repeatedly as they move through a corporate group. That does not mean the ultimate owner can take the money tax-free: when profits are distributed to an individual, dividend tax may be due. But complex ownership structures can defer personal taxation and allow wealth to continue accumulating within companies.
By these and other means, the wealth of multi-millionaires and billionaires can grow extraordinarily quickly, as it has done over the past few decades. This is damaging to society because much of that wealth is invested in assets and lent through the financial system, including to governments. Governments then pay interest to those who already own the most. The concentration of wealth and the transfer of public money to its holders are becoming serious problems across the world.
When there were a few multi-millionaires and a handful of billionaires, people might have found that unjust, but it had little direct impact on their lives. We have reached a stage where extreme concentrations of wealth are impoverishing the world economy. The globalisation that affected trade has also globalised wealth. When a wealth tax is proposed in one country, the cry is that all the wealthy people will leave, or that their wealth is already in a tax haven. Tax migration is a genuine issue, but it is not the end of the argument: the Wealth Tax Commission has examined how residence, migration and worldwide assets could be addressed in the design of a tax. These arrangements are constructs of law which we have written, and we can change the law.
The United States rules that its citizens generally remain subject to US taxation on their worldwide income wherever they live, although credits and exclusions affect what they ultimately pay. Other countries could consider their own versions of that principle. As the world’s economies begin to recognise the danger that billionaires and multi-millionaires pose to the wellbeing of governments, they are also realising that they do not have to tolerate the present system. International exchange of financial account information is making it more difficult to obscure where funds are held and who owns companies.
Over the coming years, it is highly likely that more governments will act to prevent tax avoidance and tackle the threat that wealth inequality poses to the wellbeing of people everywhere. The wealth-taxation case has been championed by Gary Stevenson in the UK and by Gabriel Zucman among the G20 economies. Zucman’s G20 proposal set out a coordinated minimum effective tax equal to 2% of billionaire wealth.
If you think the danger is exaggerated, consider this. Even a 5% annual return would generate £1m on £20m of assets, £50m on £1bn and £50bn on £1tn, before tax and without consuming the underlying capital. In June 2026, Elon Musk briefly became the first person estimated to be worth more than $1tn. Meanwhile, Tax Justice UK revealed that the number of billionaires in the UK increased from 15 in 1990 to 156 in 2025, with combined wealth of £772.8bn. That is not merely a question of envy or fairness. It is a question of economic power, and of whether democratic governments are still willing to use the laws they make.
