The UK's public finances are not in great shape, with estimates of tens of billions of pounds needed to be found in tax increases or spending cuts in the October budget. (And the recent U-turn on disability benefit cuts removes one potential avenue for spending cuts.)
Reluctant to break their manifesto pledge of not increasing income tax, will the government introduce a wealth tax?
If a wealth tax is introduced by the end of 2025 (realistically in the October budget), market resolves YES. The tax doesn't need to actually be in place, but does need to be passed by Parliament. Market can resolve YES early if the appropriate bill has passed all necessary votes in Parliament. If not, market will resolve NO on the 18th December, when Parliament goes to recess.
I expect that the definition of a "wealth tax" will be straightforward. Considerations will be: does the government call it a wealth tax? Do newspapers of record (FT, Guardian, Telegraph, Times) call it a wealth tax? In my judgement, does the policy result in wealth being taxed?
Things that will count as a wealth tax:
An unrealised capital gains tax
A wealth tax limited to real estate
(Possibly a wealth tax limited to some other type of asset, but only if it feels like a wealth tax. I won't resolve YES on a technicality. Rules of thumb: Does it raise a significant amount of revenue? Could it be more reasonably interpreted as a Pigouvian tax instead? Is the type of asset mostly held for the sake of its use-value rather than to store wealth?)
Things that will not count as a wealth tax:
A land value tax (see my other market for that: /Fion/will-the-uk-introduce-a-land-value )
Changes to property taxes (council tax)
In the unlikely event that judgement is required, I won't bet in this market.
In the very unlikely event that a "wealth tax bill" is partway through Parliament when they break for recess, and it looks (to me) like it will probably be passed, I will extend the close date of the market to the 15th of January. If it is finally and fully passed by then, I'll resolve YES. I know it's a bit weird to resolve a market about something that happens by the end of 2025 in 2026, but I also think it would be weird to resolve NO if the government made the decision and did 90% of the work, but just got held up by some logistical issue or whatever. But like I say, this is very unlikely to happen. It'll probably be in the budget if it happens at all.
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The two-week criteria-finalising window is over. Thank you all for your questions and suggestions. I've edited the description:
Clarifying what will and won't count as a wealth tax
Clarifying the possibility of early resolution
Explaining what will happen in some very unlikely edge cases
I also removed a parenthesis about assuming that the tax will be applied in the coming financial year. That was never intended to be part of the resolution criteria (but just me guessing when the most likely time would be for it to come in) but I realise it could have been interpreted as being part of the resolution criteria so I removed it. So in principle, this market could resolve YES if the government introduces (in 2025) a wealth tax that will come into effect in, say, 2027. I hope nobody was confused or misled by this, but I think it was fairly clear that this market was always about "will they introduce it in 2025", rather than "will it be in effect in April 2026" or whatever.
@Fion I assume it's a "no" but: A tax on unrealised capital gains that would apply only to people leaving the UK (aka an exit tax) would not count?
@traders just a few more days of the two week window to finalise criteria. I'll edit the description, make everything clear and up to date, and remove all that horrible AI summary stuff.
Any more questions or suggestions for tweaking the criteria, now's the time!
@Fion Idea:
Resolves yes if one of the following occurs:
- Two (or three?) out of the four British newspapers of record (FT, Telegraph, Times, Guardian [you might add or remove some newspapers from the list]) call it a wealth tax,
- A tax based on net wealth is introduced, even if limited to some assets, as long as liabilities (debt) are deduced
- Unrealized capital gains are taxed, even if limited to some assets
@adssx hmm, tricky. My first thought was "no", because that sounded similar to a property tax, which I already ruled out below.
But after a very quick Google, it does seem that everybody calls it a "wealth tax", and it seems to target high values, rather than being something every homeowner pays. Which makes me think it should count.
I'll sleep on it, and I welcome opinions, but I'm leaning towards "yes".
@Fion There's a difference between a property tax (gross value, often flat rate, and most often to fund local gov / services) and a wealth tax limited to real estate (net value [debt is removed] often progressive rate and used to fund national gov and redistribution). The OECD classifies the former under the 4100 code (Recurrent taxes on immovable property) while the latter is under the 4200 code (Recurrent taxes on net wealth). So you can defer to the OECD (but we'll have to wait for a while) or use your best judgment or a third party source that could help.
@adssx thanks for explaining that, and sorry to everyone for the slow decision. But yes, wealth taxes limited to certain assets (such as real estate) will count.
I reserve the right to exclude such taxes if they feel very far from the spirit of the market. For example, say the government had the mad idea of putting a tax on everybody who owns a gas boiler. This is a tax on an asset, but I think it's obviously not a wealth tax.
Probably a good rule of thumb is whether it's an asset that's primarily bought as an investment or one that is bought for its use-value. But even some investment assets might not count if the purpose of the tax seems more like Pigouvian than revenue-raising. Or a really niche asset that doesn't have much wealth in it. Unlike real estate.
Suggestions welcome for making this more formal. Otherwise I'll use my judgement when the time comes, using the above as a guide.
@PaulBenjaminPhotographer Thanks! This is exactly the sort of thing I had in mind when I asked for advice on refinements to resolution criteria! (I worried I was being too cautious, but it seems not.)
I'll admit my ignorance here - I just spent ten minutes with Claude trying to understand the differences and implications.
It agreed with you that "unrealised capital gains" tax was a more likely thing for the UK government to implement, for several reasons
It suggested that if the government implements an unrealised capital gains tax, that many commentators and political opponents will call it a wealth tax
An unrealised capital gains tax would result in wealth getting taxed (even if not as comprehensively as a "wealth tax")
Based on this, I think I'll say that unrealised capital gains tax would count for resolving the market YES. I think that's more in line with the spirit of the market.
Welcome pushback or other comments (from you or anyone else reading this).
I'm entirely happy with that decision, I just think whatever tax increases do happen won't be called 'wealth taxes', which sound like they affect regular pensioners, while 'unrealised capital gains' sounds like something that will only punish 'millionaires and billionaires'...
In a similar vein, what are your thoughts on an increase in land/property taxes introduced through a re-design/increase of council tax?
@PaulBenjaminPhotographer I don't think I'll include land taxes or property taxes. They do kind of have the effect of taxing "wealth", but I don't think anybody would call them "wealth taxes" for shorthand, the way they might with an unrealised capital gains tax.
Some scattered thoughts:
A modest council tax rise is the sort of thing that happens all the time. Not a new tax, not newsworthy
A re-evaluation of council tax bands is something that needs to happen sooner or later and would be big news, but not relevant for this market. Probably revenue neutral. Revenue goes to local councils anyway. Pattern of winners and losers will be more complicated than "tax the rich more".
A massive increase in council tax (perhaps targeting very valuable properties), and a restructuring so that the revenue goes to central government, would be big news, and starts to get close to being relevant for this market. But it's so unlikely that I don't really want to include a provision for it.
Introduction of a land value tax would be very big news. Depending on how it was done, it might seem quite a lot like a wealth tax, but it also might not. It might feel like a tax on middle class people living in houses in the city. As above, very unlikely to happen and kind of hard to quantify the criteria for whether it's sufficiently "wealth-like" enough to be relevant for this market, so I don't really want to include a provision for it.
@Fion your market, do as you please, but taxes on the largest store of wealth (~£6T at current valuation) feel a lot like taxes on wealth to me...
If local government gets more revenue, they will require less central government funding, making the net effect a transfer to Whitehall.
¯\_(ツ)_/¯
@PaulBenjaminPhotographer I've decided that wealth taxes limited to real estate (like France's one) will count. I'll stick to my guns on council tax - as @adssx points out above, there are some quite significant and clear differences between council taxes and wealth taxes targeting real estate.
I've created a new market for LVT: /Fion/will-the-uk-introduce-a-land-value I agree that LVT can function quite similarly to wealth taxes, but I'd prefer to keep it in its own category. So LVT will not count for the resolution of this market.