Gridlock: What’s blocking higher taxes on wealth?

To find out what’s stalling higher taxes on wealth, we teamed up with researchers at the Fraser of Allander Institute and interviewed 30 MPs, MSPs and a member of the Senedd from across the political spectrum, including Labour, Conservative, Liberal Democrat, SNP, Green and Reform politicians. We wanted to understand what happens behind the scenes when ideas on taxing wealth—from a 2% annual tax on wealth over £10million, or equalising CGT with income tax, to adding NICs to investment income or progressive council tax reform— move from public debate into political decision-making.

What we found is that the barriers run much deeper than simple disagreement over tax policy. Politicians described a system where higher taxes on wealth face resistance from all directions: economic fears, research gaps, negative media narratives and billionaire owned media spaces, party political machinations, lobbying by powerful interests, as well as deeply held ideological beliefs around extreme wealth and the role of tax. Many of these obstacles reinforce one another, producing political gridlock that stalls out these hugely popular, and much needed reforms. 

Researchers, academics, policy specialists (and those with a lot of time!) can find the full report here. But for general readers here’s the 6 major obstacles, and THE most striking comments from politicians.…

The final barrier we’ll have to tackle is the outsized influence wealthy individuals, major businesses and elite interests exert in the halls of power. Lobbying, investment decisions, privileged access to decision-makers, and open threats that wealth and investment might simply leave the country, are influencing key decision makers. But this influence cuts both ways. Those we interviewed did stress that wealthy individuals and business leaders can also play a powerful role in building support for reform. Many successful entrepreneurs, investors and millionaires have publicly backed wealth taxes, which make it much harder to dismiss the idea as anti-business, anti-success or driven by envy. However, as a key element in unlocking progress this seems like an important place to invest further efforts, through our allies and networks such as Patriotic Millionaires UK.

Especially among Labour politicians who were supportive of taxing wealth more in principle, the political machinery of both their party and the wider democratic system emerged as a significant barrier. Many described a political environment in which proposals for higher taxes on wealth are judged not only on their merits, but on their perceived political risks. Participants pointed to concerns about attacks from political opponents or falling out of favour with the leadership. These pressures were felt at both the party and individual level. Politicians conscious of career progression, ministerial ambitions, or their ability to advance other priorities often felt constrained from publicly backing policies that lacked support from party leadership. As a result, support for wealth taxation frequently appeared contingent on signals from senior figures, with many suggesting they would be more willing to champion such reforms if party leaders did so first. 

Note: these interviews were conducted whilst the Labour Party were under Keir Starmer’s leadership, and so may not account for shifts in party atmosphere and leadership since Burnham’s election

Beyond internal party dynamics, participants highlighted barriers coming from the broader political system including: short electoral cycles which discouraged bold reforms, especially those with complex implementation and benefits that may take years to become visible, increasing partisanship, limiting opportunities for cross-party consensus needed to push through difficult reforms, resistance from a status-quo-minded civil service, and opposition from a House of Lords, predisposed to protect generational wealth. Securing a manifesto commitment to such policies was suggested as an important way of securing a powerful mandate which could remove much of this institutional drag.

This came through really strongly in the interviews: winning the argument on wealth taxes isn’t just about the policy, it’s about the story. Politicians across the political spectrum stressed that the best way to talk about wealth taxes is not by focusing on who’s paying, but on what the money could do. Better public services. Investment in communities. Less inequality. A stronger economy. People are usually more interested in what they’ll gain than in what somebody else might lose. Positive messaging also avoids feeding into the unhelpful sentiment that tax is a negative thing.

At the same time, many participants worried that people often misunderstand who wealth taxation would actually affect, a problem made worse by wealthy vested interests that shape both traditional and social media. Support for taxing extreme wealth was seen as fairly broad, but many people still assume reforms would hit ordinary families rather than the super-rich. Crucially, many of the fears raised elsewhere in the report, around capital flight, economic damage or the practicalities of designing wealth taxes, are themselves shaped by sticky narratives that persist long after they’ve been challenged or disproved. Several participants pointed to the powerful role played by billionaire-owned newspapers and media outlets in keeping those stories alive. Others noted that debates about wealth often struggle to break through because other narratives dominate the conversation, especially around migration. Time and again, public anger is channelled towards migrants rather than the economic system that concentrates wealth at the top.

One of the biggest barriers we found was uncertainty. Many politicians worried that wealth taxes could have unintended consequences, from reducing investment to the classic fear that the super-rich would simply move overseas. Others questioned how much revenue such taxes would actually raise, or whether governments would spend the money effectively. That hesitation is perhaps unsurprising. Public debate on wealth taxes is often clouded by exaggerated claims about their risks, while genuinely robust research and modelling remains limited in some areas. After all, there isn’t exactly a queue of billionaires lining up to fund research into taxing themselves more.

Interestingly, though, most politicians weren’t completely convinced by these arguments, or claiming that negative outcomes were inevitable. Rather, they felt there were still too many unanswered questions to confidently back major reforms. Many told us they wanted a stronger evidence base before supporting wealth taxes publicly. If that’s true, then one route to progress is clear: build the evidence base, and do a better job of getting the existing evidence into politicians’ hands. In many cases, the research is already more compelling than politicians realise. Helping them engage with it could be crucial in giving them the confidence, and political courage, to act.

The effectiveness of tax policies can often depend upon the details of policy design, setting the right rates, thresholds, systems and other administrative details. Another blocker to politicians getting behind taxes on wealth was around the feasibility and administration of such proposals: with competing ideas, and plans perceived as vague or lacking clear implementation methods. Politicians stressed they needed clear, complete and consistent policy, with credible and detailed mechanisms, and arrangements, in place. These particularly revolved around the requirements of a Wealth Tax in identifying and accurately valuing estates, and assets— something we know is technically achievable but would require improvements to HMRC’s current data collection and capacity.

The good news

The good news is that we now have solid, well-researched evidence. Alongside our movement partners, we’re already working to tackle many of the barriers identified in the report. These findings will help us do that work more strategically and effectively, giving us a clearer understanding of where the gaps, needs and opportunities lie.

That means conducting deeper research, with economists and other experts, to strengthen the evidence base and flesh out policy design. It means briefing MPs and political figures so they’re aware of the existing evidence, and confident in standing up for reform. It means working with a diverse movement to push a stronger positive story through the media and social media, about why taxing wealth more unlocks new possibilities for our society and the economy to thrive, and challenging the myths and misinformation that are so often mobilised in defence of the status quo.

It also means campaigning to take on big money politics and the corrosive influence of extreme wealth on our democracy, building a people’s lobby to counterbalance the slick operations of the super-rich, championing the voices of the wealthy and big business already supportive of change. And it means building pressure on Burnham and the wider UK leadership to follow through on his positive words with tangible actions

Interested in the full report? Download it below.

DOWNLOAD FULL REPORT (PDF)