
13th July 2025
On today's episode of Thinkers, Stig Abell is joined by behavioural economist and author of 'why we're getting poorer' Dr Cahal Moran. They discuss what tax on wealth Cahal would like to see in the UK, the effect migration has on the economy and the changes Cahal would make if he was Chancellor for the day.
Comment
Here in the UK we have had very high income tax rates before and wealthy people still had many advantages to reduce their tax liability such as tax reliefs on loans and mortgages were unlimited. So although the top rate were high people did not pay it until they all their reliefs kicking in to lower the final sum.
That eye-watering 98% income tax rate was real—and it peaked in the 1970s.
Here's how it worked:
The top rate on earned income (like salaries) was 83%.
But for unearned income (like dividends and rental income), there was an additional 15% investment income surcharge.
That brought the effective top marginal rate to 98% for some high earners.
This applied to incomes over £20,000-£24,000 at the time, which would be roughly £120,000-£150,000 in today's money. So it wasn't just billionaires—it hit senior professionals, executives, and even pop stars. (The Beatles famously griped about it in "Taxman": "There's one for you, nineteen for me.")
📉 The system was so punitive that many wealthy individuals used perks, offshore arrangements, and creative accounting to avoid paying the full rate. Despite the headline figures, the effective tax paid by the top 1% was often much lower than it appeared.
The 98% rate was abolished in 1979, when Margaret Thatcher's government slashed the top rate to 60%, and later to 40% in the late 1980s.
Currently with the freeze on personal allowances more and more people are being drawn in to pay tax on very low incomes including pensioners. More people are being pulled into paying higher rate income tax and slight higher in Scotland.
We also have inequality when some people get income from Capital Gains or Dividends and avoid certain rates of tax.
No matter how rich people get money they still depend on workers to make everything and supply services often on very low wages despite minimum wage levels. Smart rich people should encourage government to introduce fair taxes and not what we currently have.
We should all vote for politicians likely to do this.