Title page
Contents
SUMMARY 5
1. INTRODUCTION 7
2. THE FAIRNESS OF WEALTH 8
WHY SHOULD WE CARE ABOUT WEALTH INEQUALITY? 8
WHAT IS WEALTH? 9
WHY DOES WEALTH INEQUALITY MATTER? 9
WHY IS WEALTH INEQUALITY UNFAIR? 10
HOW DOES WEALTH INEQUALITY HARM PROSPERITY? 11
TAXATION OF WEALTH AND REGIONAL INEQUALITY 12
3. THE SHAPE OF WEALTH 13
HOW IS WEALTH DISTRIBUTED IN THE UK? 13
WEALTH IN THE UK HAS FOUR MAIN COMPONENTS 13
4. THE TAXATION OF WEALTH 19
HOW ARE INCOMES FROM WEALTH TAXED IN THE UK COMPARED TO WORK? 19
COUNCIL TAX: A HIGHLY INEFFECTIVE, POOR IMITATION OF A WEALTH TAX MAKING THOSE IN LOWER VALUE HOMES PAY RELATIVELY MORE 25
LANDLORDS' INCOME TAX: SOME PREFERENTIAL TAX TREATMENT BUT RECENT REFORMS SHOW HOW TAX CHANGES COULD HELP SLOW SURGING INEQUALITIES 26
PRIVATE PENSION INCOME: FURTHER CONSIDERATION REQUIRED TO BALANCE FAIRNESS, EFFICIENCY, AND ENCOURAGING PEOPLE TO SAVE SUFFICIENTLY 29
5. THE INEQUALITY OF WEALTH 31
WHAT ARE THE IMPLICATIONS OF THESE FINDINGS FOR FAIRLY REFORMING TAXES? 31
WHAT ARE THE IMPLICATIONS OF OUR FINDINGS? 33
A FAIRER, MORE PROSPEROUS PATH 34
6. THE FUTURE OF WEALTH 36
WHAT CAN BE DONE TO FAIRLY REFORM TAX? 36
REFERENCES 39
TABLE 4.1. THE DIFFERENT ELEMENTS OF WEALTH TAXATION ANALYSED IN THIS SECTION 19
TABLE 4.2. TAX RATES ON CAPITAL GAINS ARE CONSIDERABLY LOWER THAN TAX RATES ON WORKERS' WAGES 20
TABLE 4.3. EQUALISING CAPITAL GAINS TAX RATES TO INCOME TAX RATES WOULD RAISE £68 BILLION BY 2029/30 22
TABLE 4.4. DIVIDENDS ARE TAXED AT LOWER TAX RATES THAN EARNINGS FROM WORK 23
TABLE 4.5. PREFERENTIAL TREATMENT ON INCOMES FROM DIVIDENDS OVER EARNINGS FROM WORK PROVIDES A SUBSTANTIAL TAX ADVANTAGE 23
TABLE 4.6/TABLE 4.5. CHANGES IN THE FINANCE ACT 2015 HAVE REDUCED THE TAX ADVANTAGE OF RENTAL INCOME OVER INCOME EARNT FROM... 28
FIGURE 2.1. THE TYPOLOGY OF WEALTH 9
FIGURE 3.1. PRIVATE PENSION WEALTH AND PROPERTY WEALTH ARE GREAT BRITAIN'S LARGEST WEALTH STOCKS 14
FIGURE 3.2. DESPITE COLDSPOTS IN EVERY REGION, WEALTH IS OVERWHELMINGLY CONCENTRATED IN THE GREATER SOUTH EAST COMPARED... 15
FIGURE 3.3. PROPERTY WEALTH HAS DIVERGED THE MOST IN GREAT BRITAIN SINCE 2006 16
FIGURE 3.4. WE EXPECT REGIONAL WEALTH INEQUALITIES TO WIDEN OVER TIME 17
FIGURE 3.5. TWO-FIFTHS OF ALL NON-PENSION INVESTMENT INCOME IN THE UK IS GENERATED IN LONDON AND THE SOUTH EAST, DESPITE ONLY... 18
FIGURE 4.1. CAPITAL GAINS ARE MUCH MORE LIGHTLY TAXED THAN WAGES 21
FIGURE 4.2. CAPITAL GAINS ARE HIGHLY CONCENTRATED IN LONDON AND THE SOUTH EAST 22
FIGURE 4.3. EQUALISING DIVIDEND TAXATION WOULD LARGELY IMPACT ONLY LONDON, THE SOUTH EAST AND EAST OF ENGLAND 24
FIGURE 4.4. COUNCIL TAX OPERATES LIKE A POORLY DESIGNED WEALTH TAX WITH REGIONALLY DIFFERENT IMPACTS 26
FIGURE 4.5. LANDLORDS CAN PAY LESS TAX ON THEIR INCOMES FROM RENTS THAN HAD THEY EARNT THEIR INCOME FROM WORK 27
FIGURE 4.6. BUY-TO-LET LANDLORDS ARE MORE CONCENTRATED IN LONDON AND THE SOUTH EAST 28
FIGURE 4.7. THE CONCENTRATION OF INHERITANCE TAX PAID IN THE SOUTH REFLECTS THE STRONG CONCENTRATION OF WEALTH AND GENERATIONAL... 30
FIGURE 5.1. LOWER TAX RATES ARE FOUND ON THE INCOME PROFILES MORE LIKELY TO BE FOUND IN LONDON AND THE SOUTH EAST 32
FIGURE 5.2. THIS ALSO HOLDS TRUE AND IS MORE STARK AT HIGHER INCOME LEVELS 33