Monday, September 09, 2019

Taxing Problems

Analysis of land ownership in Britain has shown that half of England is owned by less than 1% of the population, with 25,000 landowners accounting for almost all the 50% share.

The wealthiest people are more likely to get income from wealth and can end up paying less tax than they would if their income was from work, the thinktank, the Institute for Public Policy Research said.

The reduced tax rate on gains from owning shares, property, fine art and wine was “unfair and outdated” and needs radical reform following years of worsening inequality. Two people who earn the same can end up paying vastly different amounts of tax depending on the source of their earnings, said the IPPR.

People in the higher income tax bands are also more able to avoid their tax obligations by shifting their income source from wages so they are paid in the form of capital gains and dividends, which are taxed more lightly, it was said.

 “This dynamic means the rich can continually get richer, whilst everyone else struggles to catch up,” said the report.

The highest capital gains tax rate was 40% between 1988 and 2008 but it is just 20% today on most assets, and 28% on property. Higher rate taxpayers pay 40% on their income and 45% on income above £150,000.

Tom Kibasi, the director of the IPPR, said “This is a matter of basic fairness. It is fundamentally wrong that people who get their income from betting on stocks and shares or playing the property market pay less tax than those who go out to work each day to provide for their families. The current tax system works for the rich, designed to help them avoid paying their fair share. Taxing all income in the same way would be a crucial step forward.”
Rebecca Gowland of Oxfam said: “The government should seriously consider IPPR’s proposal to tax wealth more fairly. This would help to tackle corrosive inequality that is preventing the poorest from having a fair chance in life.”

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