# Fund defence spending from tax rise on middle earners, thinktank tells Healey

- URL: https://talkfuse.com/story/fund-defence-spending-from-tax-rise-on-middle-earners-thinktank-tells-healey/
- Published: 2026-09-02T07:14:39+00:00
- Updated: 2026-09-02T13:18:09+00:00
- Original publisher: The Guardian (publisher lean: Left)
- Original article: https://www.theguardian.com/politics/2026/sep/02/fund-defence-spending-from-tax-rise-on-middle-earners-thinktank-tells-healey
- Topics: Business, Celebrity, Entertainment, Government, Politics

## Key points

- Resolution Foundation says Healey must raise middle earners' taxes for defence goals
- UK's "tax wedge" still below OECD and G7 averages despite £70bn in rises
- Healey's first budget as chancellor falls on 28 October

## Summary

The Resolution Foundation thinktank has warned Chancellor John Healey that he cannot meet Labour's pledge on defence spending without raising taxes on middle earners, arguing the UK's "tax wedge" remains internationally low despite recent rises. This matters because Healey, who resigned from government in June over what he called inadequate defence funding, now holds responsibility for financing that ambition from No 11, with his first budget due on 28 October and additional pressure to help households with energy bills and tackle youth unemployment.

The thinktank's report, Thin End of the Wedge, found that despite tax rises since 2024 totalling £70bn a year — including the largest single-year jump in the tax wedge of any OECD country last year, at 2.4 percentage points — the UK's rate of 32.4% for an average single earner remains below the OECD and G7 averages. Meeting the pledge to spend 3.5% of GDP on defence by 2035 would require finding an extra £28bn a year, with Healey needing roughly £1.4bn annually over the next three years just to fund Keir Starmer's existing defence investment plan; the report's authors, including chief economist James Smith, argue that no OECD country combines a larger state with a lower tax burden on average workers, and that any tax rises to fund defence should be broadly shared, including through higher rates on middle earners.

## Coverage

- [The Guardian: Fund defence spending from tax rise on middle earners, thinktank tells Healey](https://www.theguardian.com/politics/2026/sep/02/fund-defence-spending-from-tax-rise-on-middle-earners-thinktank-tells-healey)
- [The Independent: UK politics live: Andy Burnham warned he will have to raise taxes on middle classes to fund defence spending](https://www.independent.co.uk/news/uk/politics/burnham-labour-brexit-commons-speech-badenoch-live-b3043109.html)

---
Summarised by TalkFuse (https://talkfuse.com/). Quote the original publisher for the reporting and link this page for the summary and discussion.