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Recent proposals for levying a ‘mansion tax’, an annual tax on properties worth more than £2 million, sit uneasily with the recommendations of the two major reviews of the tax system undertaken during the past 40 years. Both the Report of the Meade Committee on The Structure and Reform of Direct Taxation (1978) and the Mirrlees Review Tax By Design (2011) recommended that the transfer, not the ownership, of capital (houses, shares, savings etc.) be the object of any wealth tax.
The Meade Report was established in 1975 by the recently-founded Institute for Fiscal Studies (IFS) to examine a tax system in which inflation and years of ad hoc practice had resulted in a particularly distorted and inefficient structure. The Mirrlees Review was another IFS initiative deliberately following in the footsteps of the Meade Report. Both committees were led by Nobel laureates in economics, Professor James Meade and Professor Sir James Mirrlees, and both were agreed that wealth, especially unearned wealth (whether an inheritance or a gift from a living person), was a suitable target for taxation.
