Carys Roberts, Grace Blakeley and Luke Murphy in an IPPR newsletter
The UK is a wealthy nation but that wealth is very unevenly distributed. This has negative implications for both economic prosperity and justice. These issues are set to become more important as technological change, stagnating wages and rising house prices increase the income and gains that can be made from wealth.
The UK's system of wealth taxation currently fails to tackle these issues. In fact, it frequently exacerbates them by creating opportunities for avoidance, distorting investment decisions, poorly capturing wealth transfers and under-taxing income from assets, particularly housing. This is unjust.
The paper makes five recommendations which together would amount to a transformation of the tax treatment of wealth in the UK:
- All income from wealth should be taxed under the income tax schedule.
- Inheritance tax should be abolished and replaced with a lifetime donee-based gift tax.
- Non-domiciled status should be removed and trusts reformed to be more transparent.
- Property taxes should be reformed through the replacement of council tax with an annual property tax.
- Business rates should be replaced with a land value tax.
Together, these measures would make the UK's tax system both more just and more economically efficient – reducing wealth inequality and helping to build a tax system fit for the 21st century.
Full text (PDF 44pp)
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