Once again, we hear calls for a wealth tax not just from Nick Clegg and Simon Hughes, but also from Tim Montgomerie.
These calls cannot go unchallenged. A wealth tax is a pernicious tax because it taxes the same wealth year after year after year. It is double taxation and an attack on property rights far greater than the attack on property rights that comes from taxation in general. A wealth tax specifically targets only income that people choose to save and invest and build up into a store of property and assets. Earn £0.2m and spend it on a luxury cruise and some entertainment packages at the Olympics and you avoid the tax; earn £0.2m and invest it in a business and you pay the tax. It is as simple as that. The income out of which the taxed wealth is accumulated has, of course, been taxed already.
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