Billionaires are a threat to democracy – taxing them more is the only solution.

As a democratic country the UK relies on the resilience of its citizens.

Their individual health, happiness and security is the bedrock of a healthy society.

We need people to have good material conditions in order for them to engage in their community and wider society. But this is under threat.

Inequality and poverty are eroding the living conditions of normal people up and down the country, leading to a disengagement with politics and society at large.

At the same time the rich and powerful are seeing their influence over politics grow and grow – as people disengage.

Societal breakdown

This growing inequality and disengagement is “a strategic risk” to the UK, according to a new report from our friends at The Fairness Foundation and could lead to “societal breakdown”.

“The UK risks entering a period of deep social deterioration that will affect everyone, however wealthy they are”, unless inequality is reversed, the report argues.

According to Katie Barnes, executive ­director of the National Preparedness Commission, and a participant in the research:

“Growing inequality presents a genuine risk to [the UK’s] resilience, acting as both cause and amplifier of multiple societal challenges.”

“Adding ‘growing inequality’ as a chronic risk on the government’s national risk register would be a pragmatic first step towards tackling this problem.”

Too much influence

Growing inequality doesn’t simply mean growing poverty. It means that the wealth of some is growing relative to others: the financial position of those at the top is growing more than those at the bottom.

This is the concentration of wealth in the hands of the super rich. And this growing wealth leads to growing political power.

I made this point in last week’s newsletter: as the tech billionaires gathered around Donald Trump at his inauguration.

New polling shows this week that two thirds of British people have the same concerns in the UK.

63% believe the very rich have too much influence on UK politics, according to the polling for the Fairness Foundation’s report.

This brings us back to the original point: growing wealth inequality is undermining our democracy as people lose trust in political institutions.

But what can we do about it?

Take inequality seriously

First of all we have to take the problem seriously. We have to recognise that the concentration of extreme wealth – and ultimately billionaires themselves – are a threat to our societies.

Groups like the Fairness Foundation do an excellent job of highlighting how important this is. And how fairness is key to a functional society and economy.

How we communicate extreme wealth is also important. Patriotic Millionaires and the New Economics Foundation this week proposed the concept of an “extreme wealth line” (at the opposite end of the spectrum to the “extreme poverty line”).

They want to normalise the idea that any wealth above this line is extreme, and therefore unacceptable. What should the line be? The researchers suggest over £10m at least.

Next, we have to think about how to reverse the trend – and reduce inequality. The tax system can help us do this.

Tax the super rich

The strongest tool we have is a wealth tax. A 2% annual wealth tax on fortunes over £10 million would gradually reduce the concentration of wealth among the super rich. It would also raise tens of billions a year to fund better public services for normal people.

We’ve been fighting for a wealth tax for several years. And the idea has become a lot more popular recently: for example the Green Party adopted it as a policy in 2024.

Beyond a wealth tax, governments have other options: they can close tax loopholes exploited by the super rich.

They could also tax income from wealth the same as income from work.

This would stop the ridiculous situation where the super rich often pay lower rates of tax than working people. We highlighted this last year when Rishi Sunak only paid an effective tax rate  of 22% on his £2.2 million income. This is the same rate paid by the average teacher.

These taxes can help us gradually reduce the flow of wealth going to the super rich.

They can help us rebalance our society: reducing inequality, revitalising our public services and strengthening our democracy.