Tapering over the tax: Reforming taxation of income in the UK

Article

This policy paper sets out a mechanism for improving the progressivity, efficiency and revenue raising potential of income taxes in the UK. It proposes a major reform of the current system, with two elements.

First, income tax and employee national insurance contributions would be combined into a single tax ‘schedule’, with all sources of income taxed at the same rate, and on the same basis. Second, the existing system of marginal tax bands would be replaced by a ‘formula-based’ system such that every taxpayer’s marginal rate would depend on their own precise level of income. The paper argues that such a system would be more efficient and progressive, and in addition could be used to raise revenues in a way that is fairer and more politically acceptable than the current system.

Related items

  1. Two young children run playing underneath a rainbow canopy in a park or garden

    It takes a village: Empowering families and communities to improve children's health

    How can we build the healthiest generation of children ever?

  2. Scotland: Taxed enough already? Maybe not

    It is possible to make the case for progressive increases in income tax while in government. You can win the argument, and the world won’t come to an end.  
  3. The Houses of Parliament and Big Ben, River Thames and Westminster Bridge

    Fairness first: How the budget can make life better and the economy stronger

    The chancellor faces a daunting task at the upcoming budget. A fiscal gap sets the stage, putting the chancellor in the unenviable position of having to raise taxes.