Top income inequality and tax policy

• DOI: 10.1093/ooec/odad068
• Publication Date: 2024-07-17T10:20:45Z
• Authors: Isaac Delestre; Wojciech Kopczuk; Helen Miller; Kate Smith
• Keywords: Microdata (statistics); Adjusted gross income; Dividend tax; Income in kind; Net national income; Comprehensive income

Abstract The share of pre-tax income flowing to the top UK distribution increased continually and substantially in three decades leading up financial crisis, but has changed little since 2013. Using microdata sampled from tax records, we describe nature incomes how they are taxed. We show that wage is dominant source income, even for highest-income 0.1% adults. However, ‘active’ business income—derived self-employment or closely-held incorporated businesses—is considerably more important 1% than those with lower incomes. High-income earners work disproportionately services. high-income self-employed predominately working partnerships professions such as accountancy legal Overall, taxes progressive: average rates rise income. Taxes on have been 2010, result post-tax fallen. But vary significantly within depend received. Incomes ownership investment taxed at employment discuss options reforming taxation