Britain taxes the wage the day it's earned and the asset barely at all. That isn't an argument for a wealth tax, which has a poor record. It's a description of a bias the country runs against work itself.
Crossbencher · 19 July 2026
The strongest objection is a sound one. Income from capital isn't untaxed. A company pays corporation tax before it hands over a penny, and the shareholder is taxed again on the dividend, so the headline rate understates the real bite. Capital is mobile in a way labour isn't: tax it too hard and it leaves, and the investment goes with it. And the remedy usually demanded - an annual tax on wealth itself - has a genuinely poor record. France, Sweden and others tried versions and found they raised less than promised, cost more than expected, and fell hardest on the moderately wealthy who couldn't afford the advisers the truly rich employ. As an instrument, "just tax the rich more" is mostly a way to raise little and distort a lot. All of that is true.
It's true, and it leaves the structure standing, because the structure isn't about the rich at all. It's about the gap between two kinds of income. And the gap is stark. Earned income - the wage - is taxed immediately, in full, at the highest combined marginal rates in the system: income tax up to 45 per cent, employee national insurance on top, and a further employer charge the worker never sees on the payslip (HM Revenue and Customs, 2025/26). Income from capital is taxed later, and lighter - a capital gain at 24 per cent, a dividend at up to 39.35 per cent - at a moment the holder largely chooses, and through wrappers built to shelter it: the pension, the tax-free allowance on gains, the family home that pays no tax on its growth. Wealth that's held and never sold is barely taxed at all. The most sophisticated estates borrow against rising assets rather than sell them, and pass the lot down having triggered almost nothing - because tax mostly falls at the point of sale, and sale can be deferred forever.
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