As the gap between the rich and the poor continues to widen in many countries, the call for wealth taxes has grown louder. Several attempts have been made to introduce such taxation, the most recent being at the G20 meeting in November 2024, where a 2% annual wealth tax was proposed. However, the proposal failed due to opposition from Germany and the USA.

Some argue that instead of imposing a wealth tax, the focus should be on addressing inequality at its root by influencing the underlying factors that contribute to economic disparity.

Moreover, there are significant practical challenges for states attempting to impose higher taxes on the wealthiest individuals. The ultra-rich can swiftly relocate their assets, making wealth taxes likely to result in capital flight, legal tax avoidance and even illegal tax evasion.

Another major obstacle is that in many countries, politicians themselves are often among the wealthy elite. As a result, they may have little incentive to introduce a wealth tax, as it would directly impact their own financial interests.

All in all, it can be said that there is still a long way to go for such taxation to be introduced and various political and practical factors must come together, such as political will, clear policies and efficient tax authorities with enforcement powers at both, the international and national levels.

Are you HNWI and interested to know more about the recent development in wealth tax? On the other hand, we are interested what do you think about this highly debatable topic, we would love to know your opinion, tell us by writing at office@vasilpartners.com or call us at +44 20 3974 1244.