Inequality is the engine of growth. Attempting to eliminate it will inevitably make everyone poorer
10 July 2025
Daily Telegraph
The wealth tax many in Labour are mulling after the benefits climbdown is not just practically unfeasible. It is a moral abomination. It belies their enduring commitment to the socialist principles some of us hoped had long ago been put to bed. It represents property theft, violating the individual’s right to justly acquired wealth.
The fundamental problem is that since Margaret Thatcher’s downfall, and the triumph of the Tory Wets over the party’s Right, Conservatives have conceded the moral high-ground to the Left. Where the Right has pushed back against socialist policies, it has done so on practical grounds.
High taxes disincentivise work, pay rises and promotions. They risk tipping us onto the wrong side of the Laffer Curve. They only made rational arguments, not emotional ones, drawing on economics, not morality.
Kemi Badenoch is now trying to correct this with her talk of “takers” and “makers”. Yet many of her arguments in a speech yesterday laying out her vision for welfare reform were practical: the benefits bill is a “ticking time bomb” that could “collapse the economy”.
The implication is always Left-wing ideas are nice in theory, yet unworkable in practice. But if the Right is to ever win, it must stop implicitly apologising for, or shying away from, the benefits of capitalism.
This wealth tax provides the perfect opportunity. Concerns over “workability” are important, but the Tories should emphasise the immorality of a Labour Government coming after our assets – assets which are already taxed on their gains, interest and dividends.
The notion that private property cannot be justifiably raided by the state ought to be sacrosanct. It is unfortunate that our Prime Minister once, as a recent graduate, reportedly said: “Isn’t all property theft?”.
To the Left, the individual, their labour and their possessions belong to society.
Then there is the idea that taxing wealth represents a necessary rebalancing of our economy. Those who are “rich” – a word which now only seems to have negative connotations in modern Britain – have achieved success through the exploitation of the deserving poor.
And the wealthy behave like hoarders, living off asset returns whilst those in work are forced to pay.
The Left are gaslighting us on an industrial scale. Many of Britain’s wealthiest are successful entrepreneurs who made smart decisions, took risks and worked hard. Their assets have typically been acquired through taxed income.
Almost 90 per cent of mortgage applicants are working people, including the self-employed. Returns from appreciating assets often merely offset excessive taxation and regulation.
Just as not all the wealthy are parasites, not all the poor are deserving. Our welfare system is no longer a cushion for the most vulnerable, those any civilised society would want to shield from hardship.
We can trace the problem back to the Coalition government, which implemented a series of changes to welfare that made claiming disability benefits significantly more attractive. Unsurprisingly, it prompted an explosion in claimants.
It is to sustain our ballooning welfare bill that a wealth tax is advanced. This isn’t about helping the state perform its most basic functions, but keeping an ever-rising number in a state of permanent dependency.
A wealth tax denigrates the kind of values society should be encouraging – prudence, ambition, delayed gratification. It justifies the worst of human impulses, such as envy.
As Dr Anne Hendershott, author of The Politics of Envy, tells me: “Envy compels us to focus on what others have and what we don’t have. Trump knows that we envy the rich, but he also tries to tell us that we too could be rich.”
In Britain, we don’t see success as something to aspire to, but rather to be torn down. In practice, a wealth tax would be a non-starter. Evaluating assets is fiendishly difficult, especially when public officials of middling talent are responsible.
One leading tax expert recounted a revenue official who argued a violin’s asset value must be less than a cello’s because it is smaller.
Even economists sympathetic to the Government admitted to me that “unless a crack team has been secretly working on it”, a wealth tax will take years to set up.
We have no central register of wealth, so it would involve creating an evaluation body, with running and administrative costs significantly denting revenue. Every year the authorities would have to value homes, furniture, art, jewellery, antiques, cars, boats, pension rights, businesses, farms and other land, and intellectual property.
All of this helps explain why most countries which have experimented with these asset taxes have subsequently abandoned them.
When the French socialist president François Mitterand introduced a wealth tax in 1982, it was estimated that the losses in tax flight from the country were twice the revenue it brought in.
When François Hollande sought to introduce a supertax, 12,000 millionaires departed in 2016 alone. Advocates are confident that, for the mega rich, a 2 per cent tax wealth tax would be a “drop in the ocean”. They are wrong.
The UK is slowly squandering its competitive advantage with its changes to the inheritance tax and non-dom regimes.
A wealth tax could be the final straw, driving away investment, and making capital more expensive for small businesses.
And yet, while the practical arguments against a wealth tax might seem decisive, the Conservatives need to stop ducking responsibility to point out that such ideas are morally repugnant.
Britain needs politicians who are unafraid to declare that the rich benefit us all and wealth inequality is an inevitable outcome of a well functioning economy.
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