When it comes to tax Briton’s wealthy have ‘never had it so good’.
Recent research found that the unearned income of the most well off more than doubled in recent years while taxes on wealth are often lower than those on income from work. It is no wonder that wealth inequality is now estimated to be double that of income inequality.
Today’s report by Oxfam ahead of the G7 summit calls for an end to the low tax lifestyle enjoyed by the wealthy. It urges the creation of a new wealth tax and an end to the lower tax rates enjoyed by people who make a living from their property and assets. We really welcome putting this issue on the agenda.
Until recently income and capital gains taxes were charged at roughly the same rate. Prior to April 2008, capital gains were treated as the top slice of income, and the tax was charged at the same rates of tax as savings income (10%, 20% and 40%). Today income tax rates are 20, 40 and 45%, whereas the main Capital Gains Tax rates for individuals are 10 and 20%.
Bringing Capital Gains Tax back in line with tax on work was a key recommendation in IPPR’s Economic Justice Commission report, as well as the 2011 IFS Mirrlees report on reforming the tax system. It was last done by a Conservative government under Margaret Thatcher.
A decade on from the start of the financial crisis austerity has placed a huge strain on public services and a clear public majority has emerged that is in favour of increasing government spending and of accompanying tax rises.
As set our in our report ‘The World We Want’, Tax Justice UK believes unearned income should be treated the same as income tax and we are working with Oxfam and the Institute for Public Policy Research on proposals to bring them into alignment.
It is no longer justifiable for the wealthy to continue to benefit from a low tax lifestyle while the rest, toiling on stagnant wages, face the full income tax whack.