Impulse: Wealth taxes and high-net-worth individuals in Europe. Five lessons for the Twenty-First Century

Wealth taxes are not a novel idea. While many European countries abandoned them over time, others have kept them in place to this day. With new research showing that high-net-worth individuals are subject to lower effective tax rates than the average citizen, calls for a new taxation framework become louder across the European Union.

For a new FES study, Gabriel Zucman, Quentin Parrinello and Giulia Varaschin from the EU Tax Observatory ask what went wrong in the past, and how can we design a fair and simple tax on extreme wealth in the 21st century?

They outline five lessons for designing enforceable policies:

1. Wealth taxes should apply to abroad base without carveouts
2. They should target extreme wealth through high thresholds to avoid liquidity pressures
3. They should operate through minimum-tax or top-up mechanisms rather than standalone net-wealth taxes
4. They should incorporate credible anti-exile rules to neutralise relocation incentives
5. They should integrate coherently with existing transparency systems and international cooperation tools.

Find out more about each lesson and an overview of wealth taxation in the Member States in our study below.