According to Financial Times News, Britain now has the most progressive tax system in the developed world based on OECD data, with top earners paying 45% of their salaries in taxes and social contributions compared to 29% for average workers. This creates a 16 percentage point gap that exceeds Scandinavian countries like Sweden and Denmark, which have gaps around 12 points. The transformation happened over the past 15 years, reversing Britain’s previous system where top earners were relatively undertaxed. During the Conservative government’s tenure from 2010 to 2024, the top 10% became the only income segment paying more taxes than in 2010. Despite these high taxes on top earners, Britain collects less revenue from middle-income taxpayers than European neighbors with better public services.
The political nobody wants to talk about
Here’s the thing that makes this situation so awkward: nobody in British politics wants to claim ownership of this system. The Conservatives increased taxes on high earners significantly during their 14 years in power, which doesn’t fit their traditional low-tax narrative. Meanwhile, the left has nothing to gain from telling their base that wealthy Britons have been squeezed harder than anywhere else in the developed world. So we have this bizarre situation where Britain’s tax reality completely contradicts the prevailing political narratives from both sides.
Britain’s economic dilemma
Basically, Britain has managed to combine the worst aspects of both American and Scandinavian models. Countries like Denmark tax everyone moderately high but deliver excellent public services that foster social solidarity. The US keeps taxes lower but maintains strong economic incentives and innovation. Britain? We get high taxes at the top combined with underfunded public services that leave everyone dissatisfied. The data shows that other European countries fund their better services by taxing the middle class more substantially – something Britain has avoided.
The unsustainable path forward
Now we’re facing a budget that seems likely to continue this muddled approach. The government floated broader tax increases but retreated, instead proposing smaller tweaks that will likely hit higher earners disproportionately while raising insufficient funds for public services. The latest proposals continue this pattern of relying heavily on top earners without addressing the fundamental revenue problem. So where does this leave us? Britain needs to decide whether it wants Scandinavian-style services funded by broader taxation, or American-style lower taxes with correspondingly lower spending. The current experiment in eating the rich while shrinking the state has left Britons poorer than both Americans and most Scandinavians, and less satisfied with public services than either. That’s not a winning combination for anyone.
