A 'Laffer Levy' Alternative to a Wealth Tax

Too many wealthy individuals are leaving the UK, creating a vulnerability in tax revenues, as a small number of people contribute a large share of the total tax take.

Rather than imposing a wealth tax—which risks driving more of them away—we could introduce a ‘Laffer Levy’.

Inspired by the Laffer Curve, which shows that excessive tax rates can reduce revenue, the Laffer Levy offers a smarter alternative. It would require wealthy individuals to invest 5% of their wealth into a UK Taskforce Fund in exchange for equity, while the government would automatically hold a 10% stake.

Modelled on the successful Vaccine Taskforce, this fund would bring together industry leaders and government to deliver high-impact investments—such as reducing housing and energy costs—to stimulate economic growth.

In return for their investment, participants would regain previous tax perks, such as Non-Dom status. Additionally, those who invest 5% of their wealth and forgo their state pension for life would receive a 0% inheritance tax rate on their estate after two years, provided they maintain both conditions.

With half of the UK’s £12 trillion in wealth concentrated among 10% of the population, the Laffer Levy could raise around £300 billion. Coupled with expert leadership, it could drive transformative change, lowering energy and housing costs through strategic, large-scale investment, and in doing so spurring economic growth and therefore increasing the overall government tax-take from a larger economy.

Unlike a traditional wealth tax, this approach would likely retain more capital within the UK. It would also reduce pension costs and shift expectations—encouraging wealthier individuals to forgo state pensions, easing pressure on public finances.

In tax policy, we should remember the fable of the wind and the sun: the harder the wind blew, the tighter the man clung to his coat. The Laffer Levy is the sun—an attractive, collaborative solution that raises and spends more money, more quickly and more effectively to drive national renewal.