Can somebody be too rich?

What is an Extreme Wealth Line?

The poverty line is a level below which we agree someone doesn't have enough to live a decent life.

An Extreme Wealth Line flips that idea. It marks a level of wealth above which a person has more than they could ever reasonably need and where that wealth may start causing problems for everyone else.

The idea has been developed most fully by the philosopher Ingrid Robeyns. She suggests a political limit of around ten million in pounds, euros or dollars. [1] Other campaigners use different figures, and there is no single agreed number.

Wealth vs Income

The difference is more important than you might think.

Many of the world's richest people pay themselves fairly modest salaries. Their fortunes grow through the rising value of what they own.

What's the point?

Supporters usually make three arguments.

Where would the line be drawn?

This is the first big decision, and there are three main approaches:

• A fixed amount, such as £10 million. This is simple to understand, but it needs updating as prices rise.
• A multiple of typical wealth, such as a hundred times what an average household owns. This adjusts automatically as the economy changes.
• A slice of the population, such as the wealthiest one in a thousand people, whatever amount that turns out to be.

There are also finer details to settle. Should the line apply to individuals or households? Should a family home or a working farm count towards the total?

What could we actually do with it?

The options range from the gentlest to the strongest.

1. Simply measure it

   Track and publish how many people are above the line and how much they own, just as poverty statistics are published today. Nothing changes directly, but the issue becomes visible.

2. Tax wealth above the line

   An annual wealth tax applies only to the portion of wealth above the line. Everyone below it pays nothing.

   So for example, if the line is set at £10 million, and someone owns £12 million. They pay tax only on the £2 million above the line. At 2%, that's £40,000 a year.

3. A graduated tax

   The rate rises the further someone is above the line. This avoids a sudden jump and asks the most of fortunes in the hundreds of millions or billions.

4. A hard cap

   Wealth above the line is taxed at or near 100%. This is the most literal version of the idea, but it is rarely proposed seriously because of the practical problems it would create.

5. Other approaches

   Some options target the effects of extreme wealth rather than the wealth itself:

   • Inheritance limits: tax gifts and inheritances once someone's lifetime total passes the line.
   • Donation limits: tighter caps on political donations.
   • Transparency: public registers showing who really owns companies and property.

What are the challenges?

1. Putting a value on things

   The problem

   Cash is easy to value. A private business, a painting or a large estate is not, and disputes can be long and costly.

   A possible fix

   Standard valuation rules and independent assessors, with effort focused on the small number of people near the line. [3]

2. People leaving the country

   The problem

   Wealthy people might move abroad, taking their money and businesses with them. Some countries with wealth taxes have seen this happen, although researchers disagree on how big the effect is. [3]

   A possible fix

   An "exit tax" on people who leave, or linking tax to citizenship rather than residence, as the United States does.

3. Hiding wealth

   The problem

   Wealth can be hidden in trusts and offshore companies.

   A possible fix

   International cooperation, with countries sharing financial information and maintaining registers of who really owns what. [4]

4. Rich on paper, short of cash

   The problem

   A company founder might be worth millions on paper but have little actual money to pay a tax bill.

   A possible fix

   Let payments be deferred, spread over time, or made in shares instead of cash. [3]

5. A mixed track record

   The problem

   In 1990, around a dozen wealthy countries had annual wealth taxes. Most have since scrapped them, often because they raised less than expected. Switzerland, Norway and Spain still have them. [5]

   A possible fix

   Supporters argue that earlier taxes failed because their thresholds were too low and they had too many loopholes. A high, simple line with few exemptions could avoid those mistakes.

6. Political resistance

   The problem

   The people most affected are also the best placed to fund campaigns against it.

   A possible fix

   Strong public support, built on a clear explanation of who is affected and why.

The arguments at a glance

Sources and further reading

These sources support the facts and examples on this page. They explain the evidence and the policy options, but they don't all endorse the ideas discussed here.

1. Utrecht University: What is limitarianism? Professor Ingrid Robeyns explains — the "political limit" of around ten million and the reasoning behind it.
2. Office for National Statistics: Household total wealth in Great Britain, April 2018 to March 2020 — how household wealth is distributed in Great Britain.
3. Wealth Tax Commission: A wealth tax for the UK (2020) — valuation, emigration, avoidance and payment options. The Commission favoured a one-off tax over an annual one.
4. OECD: First automatic exchanges under the Common Reporting Standard (2017) — countries automatically sharing information about offshore financial accounts.
5. OECD: The Role and Design of Net Wealth Taxes in the OECD (2018) — why many countries abolished wealth taxes, and how design affects results.