Wealth taxes are almost inevitable as investors make strong gains from AI on stock markets, a City wealth manager has warned.
Analysts at Pictet Asset Management said there would be a “significant increase in wealth” as a result of AI, with an era of “super normal profitability” lasting another one to two years.
However, the beneficiaries are expected to be “very concentrated” among those investing their capital in markets, driving demand for wealth taxes among the wider population in global democracies.
Luca Paolini, chief strategist at Pictet Asset Management, said: “I think the wealth tax will come because if, especially with AI, we are going to have a significant increase in wealth, there is a lot of money to go into capital. It is very concentrated.
“It’s almost inevitable – even in California, it’s a political belief with democracies. There will be a significant demand for wealth taxes, inheritance taxes, whatever you want to call it.”
California will vote in November on whether to impose a one-time billionaire tax that would levy 5pc on households with assets of more than $1bn (£744m).
Fund managers at the group have issued a thinly veiled warning to Wes Streeting, a Labour leadership hopeful, who has called for a “wealth tax that works”.
The former health secretary has suggested equalising capital gains tax (CGT) with the three income tax bands at 20pc, 40pc or 45pc. CGT stands at either 18pc or 24pc, depending on income tax bracket.
Mr Paolini suggested this would deter British people from buying shares, even as Pictet predicted that UK stocks would deliver annual returns of 6.7pc over the next 10 years.
He said: “If you want to increase the appeal of equities, you don’t increase the capital gains tax.”
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