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Faiza Shaheen is right: Rachel Reeves needs to find cash fast – and a wealth tax is one of the fairest ways to do it.

Writing in The Guardian, Shaheen makes a compelling case for a two per cent annual levy on individuals with more than £10 million in net wealth. It’s simple, targeted, and – crucially – popular: polling consistently shows three-quarters of the public back the idea, including a majority of Reform UK voters.

But here’s the catch: wealth taxes on their own often run into the same old problems. They can be tricky to administer, slow to enforce, and easy for the ultra-rich to wriggle out of with trusts and offshore games.

That doesn’t mean we should give up. It means we should make sure a UK wealth tax is part of a smarter package.

Why taxing capital returns is the missing piece

If we want fairness, we don’t just need to tax the stock of wealth (the pile of assets sitting in a billionaire’s vault). We also need to tax the flow of wealth – the income that those assets generate, year after year.

At the moment, the UK does the opposite. Work is taxed heavily, while wealth is taxed lightly. A nurse pays more in effective tax than a landlord. A hedge fund manager can pay less on capital gains than a teacher pays on wages.

That’s obscene!

Here’s what a “capital returns fairness package” could look like:

• Equalise capital gains tax with income tax. No more rewarding people for making money from money. (Raising an estimated £12 billion a year)

• Surcharge on unearned income – dividends, rents, interest – while protecting modest savers. (Est. £18 billion a year)

• Reform pension tax relief, which overwhelmingly benefits the rich. Capping relief at the basic rate could raise £14.5 billion.

• VAT on financial services, largely a playground of the wealthy. (£8.7 billion)

• Progressive property reform, including higher bands for luxury homes, to fix the outdated council tax.

These aren’t radical ideas – they’re common sense. And unlike a pure wealth tax, they go straight for the returns that the rich can’t easily hide.

Wealth and returns: a fairness double act

This isn’t about “either/or”. A wealth tax and a capital returns tax package would complement each other perfectly:

• Wealth tax (Shaheen’s plan): catches the ultra-rich hoarding dynastic fortunes.

• Capital returns tax (my plan): stops inequality growing year after year by taxing unearned income fairly.

Together, they would rebalance the system, restore faith in taxation, and provide the billions Reeves desperately needs – without hammering ordinary workers.

Why Reeves won’t touch it

There’s just one problem: political will. Reeves is hemmed in by Labour’s pledge not to raise income tax, national insurance or VAT – but she’s also terrified of spooking the wealthy.

So instead we get half-baked talk of tinkering with stamp duty or adding council tax bands, which risks hitting the squeezed middle while letting the truly wealthy off the hook.

That’s not reform – it’s cowardice.

The real question

Do we want a system that keeps punishing work while protecting wealth?

Or do we want fairness – where all income, whether from sweat or stocks, is treated equally?

Faiza Shaheen is right to demand a wealth tax. Vox Political says: let’s go further. Tax capital returns too.

Reeves says she has no choice. In fact, she does – she just needs the courage.

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