{
  "id": 4959901,
  "title": "Fund defence spending from tax rise on middle earners, thinktank tells Healey",
  "url": "https://urgent.news/2026/09/01/fund-defence-spending-from-tax-rise-on-middle-earners-thinktank-tells",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-01T23:01:16.000Z",
  "source": {
    "name": "Guardian Business",
    "slug": "guardian-business",
    "url": "https://www.theguardian.com/politics/2026/sep/02/fund-defence-spending-from-tax-rise-on-middle-earners-thinktank-tells-healey"
  },
  "original_language": "en",
  "account": "The Resolution Foundation, a UK-based thinktank, argues that the UK's internationally low \"tax wedge\" must increase to fund significantly more defence spending. Chancellor John Healey, who recently resigned from Keir Starmer's government, needs to consider raising taxes for middle earners if he wants to meet Labour's pledge of devoting 3.5% of GDP to defence by 2035. However, Healey has stated that he will wait until next year's spending review before presenting a plan to achieve this goal.\n\nIn their report titled \"Thin End of the Wedge,\" economists at the Resolution Foundation suggest that the £28bn annual increase required for this pledge cannot be met without asking average workers to pay more. Despite recent tax increases totaling £70bn per year since Labour came to power in 2024, the \"tax wedge\" – the difference between taxes on earnings and benefits – remains comparatively low by international standards. According to the foundation's chief economist, James Smith, the UK currently taxes average earners less than most of its international peers.\n\nThe analysis shows that tax rises under Healey's predecessor, Rachel Reeves, resulted in a 2.4 percentage point increase in the tax wedge last year, the most significant jump for any country in the Organisation for Economic Cooperation and Development (OECD). However, at 32.4% for single earners on average pay, the UK's tax wedge still remains below the average for the OECD and G7 major economies. The economists found that countries with higher public spending tend to ask their average workers to contribute more, rather than relying on business or wealth taxes.\n\nThe foundation argues that if a politician promises both a larger state and a lower burden on average workers, they are being unrealistic. They contend that there is a strong case for any benefits of increased defence spending to be broadly shared, including higher rates on middle earners. The UK's tax wedge is also low by historic standards and is still below the level before the global financial crisis in 2008.",
  "summary": "Resolution Foundation argues that UK’s internationally low ‘tax wedge’ must rise to pay for defence ambitions The chancellor, John Healey, must be prepared to raise taxes for middle earners if he wants to fund significantly higher defence spending, the Resolution Foundation thinktank has said. Healey resigned from Keir Starmer’s government in June , protesting against what he argued was the then…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}