Taxing rich people’s capital returns beats a traditional wealth tax – and the reason starts with a simple question: why do we feel so poor in one of the richest countries on Earth?
That was the question recently posed on East Anglia Bylines — and the answer is as blunt as it is obvious: the money went to the rich.
But that’s not the end of the story – it’s the beginning of a much bigger question: how did that happen, and what are we going to do about it?
It’s not just that the rich earn more — it’s that they own more. A lot more. The top 10 per cent of people in the UK now control 57 per cent of all private wealth.
And while wages have stagnated and public services have been cut to the bone, asset prices — from housing to stocks — have ballooned, enriching those who already had wealth and leaving everyone else behind.
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This isn’t just unfair – it’s dangerous. As the 2009 book The Spirit Level demonstrated, unequal societies are worse for everyone — rich and poor alike — with lower trust, higher crime, worse health outcomes, and less overall prosperity.
So what do we do?
The problem with wealth taxes
On the face of it, a wealth tax — a direct tax on someone’s net worth — seems like an elegant solution. After all, if a tiny elite holds the majority of the wealth, why not ask them to give back a little more?
But here’s the snag: wealth taxes, as tried in other countries, often fall short. The reasons are practical and political:
Valuing complex assets like businesses, land, or art is expensive and time-consuming.
Administrative costs are high, and enforcement is difficult.
Loopholes and flight are real concerns — the richest know how to hide money or move it offshore.
Liquidity issues mean people may be ‘asset rich but cash poor’ and forced to sell in a downturn.
In short, wealth taxes sound great on paper but rarely work well in practice. That doesn’t mean we give up — it means we get smarter.
The smarter move: taxing rich people’s capital returns
There’s a better, more effective way to rebalance our broken tax system: tax the returns on capital.
Right now, income from work is taxed far more heavily than income from wealth. That’s not just backwards — it’s obscene. Why should a nurse pay a higher effective tax rate than a landlord, hedge fund manager, or rentier?
Here’s how we can start fixing that:
Equalise tax on capital gains with income tax. No more rewarding people for making money from money rather than from work. This alone could raise £12 billion a year.
Introduce a surcharge on investment income — interest, dividends, rents — while protecting modest savers. A 15% surcharge (with allowances) could bring in another £18 billion.
Reform pension tax relief, which disproportionately benefits high earners. Capping relief at the basic rate could raise £14.5 billion.
VAT on financial services, largely used by the wealthy, could add another £8.7 billion.
Update Council Tax bands and add higher tiers for luxury homes. A progressive property tax — long overdue — could reduce inequality without hitting ordinary homeowners.
Together, these reforms would not only raise serious revenue, but start to unwind the perverse incentives that have driven our current crisis of inequality.
Will it work?
Critics say taxing rich people’s capital returns will make them flee. But most won’t – they benefit from the infrastructure, services, and stability of countries like the UK.
And those who do leave? Frankly, if their loyalty lies only with their bank accounts, we may be better off without them.
Besides, these aren’t radical proposals.
They’re about fairness.
They’re about taxing income — all income — at fair rates, regardless of where it comes from.
They’re about encouraging the wealthy to put their money to productive use, rather than hoarding it in property or tax shelters.
If that nudges some to sell off unproductive assets — say, that third home in Chelsea — so be it.
Let others have a chance to own and build wealth. That’s how a healthy economy works.
A full-scale wealth tax might remain elusive, but that’s no excuse for inaction. We already have the tools to tax capital fairly and progressively — and we can start using them now.
The question isn’t whether we can afford to tax the rich. It’s whether we can afford not to.
What we can do
Take action now: Write to your MP and demand fair taxation of capital income. Ask them to support reforms that tax wealth like work:
Equal capital gains tax,
Surcharges on unearned income, and
A revaluation of Council Tax to reflect real property values.
These changes would bring in billions for public services and begin to reverse the growing gap between the super-rich and the rest of us.
You can find and contact your MP easily via TheyWorkForYou.com. It takes just a few minutes — but if enough of us speak up, we can force this issue onto the political agenda.
Let’s stop letting the wealthiest off the hook. It’s time they paid their fair share.
What do you think?
Should I launch a petition demanding that the government fairly tax the returns from capital and reform Council Tax?
🗳️ Take the one-question poll here — and if enough of you vote yes, I’ll get it started.
Why taxing rich people’s capital returns beats a traditional wealth tax
Taxing rich people’s capital returns beats a traditional wealth tax – and the reason starts with a simple question: why do we feel so poor in one of the richest countries on Earth?
That was the question recently posed on East Anglia Bylines — and the answer is as blunt as it is obvious: the money went to the rich.
But that’s not the end of the story – it’s the beginning of a much bigger question: how did that happen, and what are we going to do about it?
It’s not just that the rich earn more — it’s that they own more. A lot more. The top 10 per cent of people in the UK now control 57 per cent of all private wealth.
And while wages have stagnated and public services have been cut to the bone, asset prices — from housing to stocks — have ballooned, enriching those who already had wealth and leaving everyone else behind.
This isn’t just unfair – it’s dangerous. As the 2009 book The Spirit Level demonstrated, unequal societies are worse for everyone — rich and poor alike — with lower trust, higher crime, worse health outcomes, and less overall prosperity.
So what do we do?
The problem with wealth taxes
On the face of it, a wealth tax — a direct tax on someone’s net worth — seems like an elegant solution. After all, if a tiny elite holds the majority of the wealth, why not ask them to give back a little more?
But here’s the snag: wealth taxes, as tried in other countries, often fall short. The reasons are practical and political:
Valuing complex assets like businesses, land, or art is expensive and time-consuming.
Administrative costs are high, and enforcement is difficult.
Loopholes and flight are real concerns — the richest know how to hide money or move it offshore.
Liquidity issues mean people may be ‘asset rich but cash poor’ and forced to sell in a downturn.
In short, wealth taxes sound great on paper but rarely work well in practice. That doesn’t mean we give up — it means we get smarter.
The smarter move: taxing rich people’s capital returns
There’s a better, more effective way to rebalance our broken tax system: tax the returns on capital.
Right now, income from work is taxed far more heavily than income from wealth. That’s not just backwards — it’s obscene. Why should a nurse pay a higher effective tax rate than a landlord, hedge fund manager, or rentier?
Here’s how we can start fixing that:
Equalise tax on capital gains with income tax. No more rewarding people for making money from money rather than from work. This alone could raise £12 billion a year.
Introduce a surcharge on investment income — interest, dividends, rents — while protecting modest savers. A 15% surcharge (with allowances) could bring in another £18 billion.
Reform pension tax relief, which disproportionately benefits high earners. Capping relief at the basic rate could raise £14.5 billion.
VAT on financial services, largely used by the wealthy, could add another £8.7 billion.
Update Council Tax bands and add higher tiers for luxury homes. A progressive property tax — long overdue — could reduce inequality without hitting ordinary homeowners.
Together, these reforms would not only raise serious revenue, but start to unwind the perverse incentives that have driven our current crisis of inequality.
Will it work?
Critics say taxing rich people’s capital returns will make them flee. But most won’t – they benefit from the infrastructure, services, and stability of countries like the UK.
And those who do leave? Frankly, if their loyalty lies only with their bank accounts, we may be better off without them.
Besides, these aren’t radical proposals.
They’re about fairness.
They’re about taxing income — all income — at fair rates, regardless of where it comes from.
They’re about encouraging the wealthy to put their money to productive use, rather than hoarding it in property or tax shelters.
If that nudges some to sell off unproductive assets — say, that third home in Chelsea — so be it.
Let others have a chance to own and build wealth. That’s how a healthy economy works.
A full-scale wealth tax might remain elusive, but that’s no excuse for inaction. We already have the tools to tax capital fairly and progressively — and we can start using them now.
The question isn’t whether we can afford to tax the rich. It’s whether we can afford not to.
What we can do
Take action now: Write to your MP and demand fair taxation of capital income. Ask them to support reforms that tax wealth like work:
These changes would bring in billions for public services and begin to reverse the growing gap between the super-rich and the rest of us.
You can find and contact your MP easily via TheyWorkForYou.com. It takes just a few minutes — but if enough of us speak up, we can force this issue onto the political agenda.
Let’s stop letting the wealthiest off the hook. It’s time they paid their fair share.
What do you think?
Should I launch a petition demanding that the government fairly tax the returns from capital and reform Council Tax?
🗳️ Take the one-question poll here — and if enough of you vote yes, I’ll get it started.
No account? Register here
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Let’s show there’s real public demand for tax justice.
Oh, and while we’re at it, Bylines needs cash as much as Vox Political does, so if you have the wherewithal, please help by donating here.
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