Why Andy Burnham should win over Britain's wealthy middle class, not scare them with wealth taxes

If Andy Burnham and John Healey really want to sort out Britain’s economy, they should shun calls for a wealth tax and get Britain’s wealthy middle class on side instead.The protracted arrival of the new Prime Minister and Chancellor has triggered a spate of rumours on what Labour might tax next, as commentators trawl through Burnham’s back catalogue.Among the many ideas rattling the cages of the mass-affluent have been a 1 per cent property tax, a land value tax, capital gains tax hikes, and even raising the top rate of income tax back to 50p.I’d take all those suggestions with a pinch of salt, but a common thread that runs through them is they are the exact opposite of what we need to be doing.Burnham has promised us a new direction. And if ever one was needed it’s for a tax system that’s been getting progressively worse and holding back growth since the financial crisis.The Tories and now Labour have been trying to solve the problem of needing more money for public spending and debt interest by squeezing more from the same bunch of lemons. Britain is stuck in a doomloop, where aspiration doesn't feel like it's rewarded - Andy Burnham and John Healey should change tack, says Simon LambertAnaemic economic growth, a colossal debt pile and mounting interest bill, combined with a tax burden shoved disproportionately onto a small pool of taxpayers, has created what former Institute for Fiscal Studies boss Paul Johnson has dubbed a ‘fiscal doom loop’.Burnham and Healey could keep pushing this boulder up the hill, or they could recognise failing to properly revise the economic plan was one of the things that sank Sir Keir Starmer and Rachel Reeves.A real shake-up would mean genuinely supporting growth. And playing to the strengths that we have in the UK economy, the obvious way to do that would be to change the record and encourage people to earn more, feel wealthier, and be more willing to get out and spend some money.We’ve painted ourselves into a corner, where higher earners feel penalised for hard work and the mass affluent feel their wealth is under constant attack, despite having plenty of money on paper.And forget Gary Lineker and friends' call for a wealth tax, there aren't enough multi-millionaires in the country happy to pay one for it to make a meaningful difference, more taxes on wealth would end up falling much further down the scale.It’s crazy that Britain’s ranks of modestly well-heeled feel so hard done by. This narrative needs to shift. A genuine change of direction would see tax thresholds unfrozen and rise with inflation from next April.Sky-high marginal tax rates that unfairly eat people’s pay rises should be killed off: we need the 60 per cent tax trap above £100,000 abolished, the child benefit removal tax trap sorted, meaningful action on student loan repayments slashing 9 per cent extra from graduates’ take-home pay, and more.We should drastically reduce stamp duty bills on buying a home permanently and get rid of stamp duty on buying UK shares.Investors and entrepreneurs need a concrete plan for capital gains tax laid out and stuck to, with any increase in CGT rates combined with the return of inflation indexation rewarding long-term investment and the annual tax-free threshold back to where it was before Jeremy Hunt slashed it from £12,300 to £3,000.We also need to stall the looming pensions and inheritance tax double taxation problem in its tracks, before it smashes into estates with 60 per cent-plus rates next April.To help fund this and to get out of hock to flighty international bond market investors, we should tap up the wealthy middle class.British personal investors have already shown a surprisingly large appetite for buying gilts direct in recent years, attracted both by short-term CGT-free gains and the idea of holding them to maturity and picking up a solid interest rate return.Let’s tie this to solving our inheritance tax problem and easing the burden of that most hated of taxes: make gilts held to maturity free of inheritance tax.There is a wall of patient capital out there that could help shift British bondholding back towards the domestic market. We should think imaginatively and tap into it.It’s easy to argue that we can’t do these things, because we can’t afford to. But I would argue that we can’t afford not to.Of course, we need to avoid another Liz Truss and Kwasi Kwarteng lurch into unfunded promises that trigger a bond market collapse. But a credible and comprehensive plan to change direction, which has been mapped out and then costed properly by the Office for Budget Responsibility, would not be the same as that disastrous mini-Budget.Britain is riddled with bad taxes that are getting worse. We know it, politicians know it, businesses know it and investors know it.People want Britain to get better, they want to feel richer, and are happy to support those who have genuinely fallen on hard times until they can get back on their feet. They need to feel like their hard work and taxes are appreciated rather than being taken advantage of.What we’ve been doing for the past 15 years isn’t working, it’s time to stop and do something else.I sincerely hope Andy Burnham does that. This is Money podcast