A new briefing paper from the Institute for Public Policy Research (IPPR), which advocates a higher tax, higher spend economy, sets out two proposals ‘designed to make the taxation of income simpler, more progressive and better able to raise public money’. The proposals are motivated by the principle that income, regardless of source, should be taxed equally across individuals.
The first proposal would tax income from wealth the same as income from work, with capital gains taxed at the same rates as income from employment, and separate CGT reliefs abolished. The IPPR estimates these changes could raise up to £120bn of additional revenue over five years, falling to £90bn when accounting for potential behavioural effects. Removing the CGT exemption upon death could raise up to an additional £25bn over the same time period, falling to £15bn with behavioural effects. The institute acknowledges ‘large uncertainties’ around these estimates.
The second proposal would involve a fundamental reform of the income tax system, based on the German model, taxing all sources of income (earnings, dividends and savings) together and equally under a single tax schedule, with a gradually rising marginal tax rate as income rises. The IPPR believes this system would be ‘more transparent, eliminate the “tax cliffs” endemic in the current system, and have the potential to raise significant revenue in a progressive manner’.
See the IPPR paper, Reforming the taxation of income from wealth and work (bit.ly/2kqUpHr).
A new briefing paper from the Institute for Public Policy Research (IPPR), which advocates a higher tax, higher spend economy, sets out two proposals ‘designed to make the taxation of income simpler, more progressive and better able to raise public money’. The proposals are motivated by the principle that income, regardless of source, should be taxed equally across individuals.
The first proposal would tax income from wealth the same as income from work, with capital gains taxed at the same rates as income from employment, and separate CGT reliefs abolished. The IPPR estimates these changes could raise up to £120bn of additional revenue over five years, falling to £90bn when accounting for potential behavioural effects. Removing the CGT exemption upon death could raise up to an additional £25bn over the same time period, falling to £15bn with behavioural effects. The institute acknowledges ‘large uncertainties’ around these estimates.
The second proposal would involve a fundamental reform of the income tax system, based on the German model, taxing all sources of income (earnings, dividends and savings) together and equally under a single tax schedule, with a gradually rising marginal tax rate as income rises. The IPPR believes this system would be ‘more transparent, eliminate the “tax cliffs” endemic in the current system, and have the potential to raise significant revenue in a progressive manner’.
See the IPPR paper, Reforming the taxation of income from wealth and work (bit.ly/2kqUpHr).
