Making the wealthy pay tax

The UK tax system is supposed to be progressive. In reality, wealthy people can pay a smaller proportion of their income in tax than millions of people who work for a living.

That is not an accident. Wealth is taxed differently from work.

Workers pay income tax and National Insurance. They then pay VAT when they spend. Wealthy people can instead turn income into capital gains, retain profits inside private companies, use offshore structures, transfer assets between generations, and they also spend a smaller proportion of their income on items subject to VAT.

The result is a tax system that helps create and preserve wealth while imposing a disproportionate burden on ordinary households.

In this video, I explain seven ways in which the UK tax system favours wealth. I also explain why I do not think that an annual wealth tax is the best immediate answer to that problem.

Instead, I explain that we could raise well over £50 billion a year by reforming existing taxes. Capital gains could be taxed at income tax rates. Higher investment income could be subject to a charge equivalent to national insurance. Private companies could be prevented from accumulating untaxed personal wealth. Inheritance tax loopholes could be closed, while council tax could be made genuinely progressive.

This is not technically difficult. The necessary information already exists. What is missing is political will.

Fair taxation means taxing wealth like work.

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