Franklin Roosevelt forced through “the wealth tax” in 1935, which wasn’t—in technical terms—a wealth tax at all, but rather a tax on very high incomes. By contrast, Rachel Reeves has increased taxes on wealth in a whole range of ways—I make it around 10 in all, affecting everything from multi-million pound farms to inherited pensions—and yet has for some years run a mile from any suggestion that she would tax wealth as such.
As Labour’s fiscal dilemmas sharpen, arguments about taxing wealth are ramping up anew. A lot of the debate is, inevitably, about the practicalities of what might “work.” But for me, the lesson of history is that the technical details of any new charges on capital, important as these can be, could be less significant than the language politicians use to describe them—and, ultimately, their willingness to pick a fight with big money.
Roosevelt, though a Hudson Valley aristocrat himself, profoundly recast capitalism to give ordinary people a new deal: with social security, union rights and other protections. He never pretended this could be done without combat, and very publicly squared up to it. He geared up for re-election by declaring at Madison Square Garden: “Never before in all our history” have the forces of big money “been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.”
That was in 1936, the year after Roosevelt had signed “the wealth tax.” In 2025 by contrast, the year after Reeves had called time on the privileges of “non-dom” tax status, she let slip at Davos that she had been “listening to the concerns that have been raised by the non-dom community.” She would now offer a softer transition for wealthy types with foreign connections. Just last month, there were further whispers of possible concessions affecting inheritance tax for the same privileged group. Until now at least, the government has seemed to want both to raise revenues from the assets of the wealthy, and not to look like it’s doing so. The trouble is that, if you want to cement serious social change, then appearances matter.
The revolution may not be televised, but it will need to be rhetoricised. Wealth never lies down and waits to be taxed. A politician that wishes to tackle its privileges, and to do so in a way that sticks, must take the fight to wealth, by finding the phrases that can turn those privileges into a source of embarrassment, even shame. Consider David Lloyd George. In the great battle to force through his People’s Budget in 1909, the then-chancellor went to deprived Limehouse in east London and spoke with such fire about “the landlord”—“a gentleman who does not earn his wealth” whose “day of reckoning is at hand”—that the King made his displeasure known.
Great reforming liberals like Lloyd George and Roosevelt waged a war of words in order to create an era of newly shared wealth. Subsequently, our own age of resurgent riches—in which private wealth has roughly doubled relative to national income since 1980—was forged by counter-revolutionaries who played their own language games. The recent history of estate duty in the United States—an inheritance tax only ever paid by the super-rich—is a case in point. The plutocrats’ propagandists gave it an emotive rebrand—“the death tax.” They plugged away for decades before they made the name-change stick, which it had finally done by the 1990s. As if by magic, the reduction, even abolition, of estate duties now became a popular cause. Donald Trump is now cutting them again.
I appreciate it sounds counterintuitive, even contrarian, to argue that the spin could matter more than the substance in taxing wealth. Of course, the detailed substance is important. Treasury officials do need to carefully factor the risks of capital flight into any schemes to tax each unit of capital more. Special advisers and junior ministers must grapple delicately with assorted policy schemes, from land value taxes to devising some means of bringing at least part of the vast windfalls that accrue on family homes into the tax net. But there are three reasons why any political top-brass should concentrate less on such detail than on the framing of the argument.
First, if there is dogged resolve to make sure the taxing of wealth happens, then at least some of the escape routes that make it so difficult can begin to be closed off. Increase inheritance tax without any further action today, for example, and the wealthy would simply ramp up gifts years before their death to avoid the tax net. If there were a clearly articulated aim from the top to raise more revenue from the wealthy, however, then everyone—officials and rich individuals alike—would understand that the automatic corollary of higher inheritance tax would have to be more restrictive gift relief, too. A similar logic could bite on all sorts of tax-dodging schemes to move money about, or to morph wealth from one form to another.
Second, only by channelling a full-throated, emotive case for fairness will wealth-taxing politicians stand a chance against the forces of emotion that will—for certain—be conjured up in defence of big money.
I was in Norway 18 months ago, where a government led by the country’s own Labour party had raised various taxes on ownership, including a new charge on hugely profitable salmon beds, and a modest hike in the country’s established general wealth tax. A revenue official told me that widespread reports of multi-millionaires fleeing to Switzerland were over-hyped: enough rich people were sticking around to ensure that revenue did creep up. But one leftist thinktanker, Magnus Marsdal, worried that the political argument was nonetheless being lost, due to what he called “Trojan mice”—smallish family firms, whose owners had abundant assets, but not necessarily ready cash. The super-rich could secure huge publicity for these hard-luck cases, and then hide defence of their own interests within them.
Back in the UK a year later, the likes of Jeremy Clarkson, who was on the record as having moved his wealth into agricultural assets for tax reasons, whipped up noise and fury in response to what was successfully branded “the family farm tax.” In the absence of an unapologetic argument about the need for farms worth more than £3 million to contribute to a parched public realm, “Trojan tractors” briefly held British politics to ransom.
Finally, and more subtly, taxing wealth can create space for a far wider raising of revenues. Technocrats point out, with some justice, that no plausible wealth tax is going to be sufficient to restore a robust, social-democratic welfare state in the UK. They therefore regard the whole issue as an evasion of the duty to tell ordinary voters that, if they want better services and social protection they, too, will have to pay more.
But once again, casting one’s eyes up from the spreadsheets and back at history changes the perspective. Alongside its dramatic assault on the landed classes, the People’s Budget of 1909 more quietly sought a contribution from the masses, via taxes on tobacco, alcohol and an overhaul of the pub licensing system. Who now even remembers that these tax rises were ever part of Lloyd George’s plans?
When resolute efforts are made to secure sacrifices from those who can best afford them, then far broader possibilities for shared sacrifices for the common good open up. Here is a lesson from history for a marooned Labour government to consider.
