Therefore the IPPR backed the taxing of all sources of income — earnings, dividends and savings — together and equally under a single tax schedule, with a gradually rising marginal tax rate as income rises.
According to the report, such a system would be more transparent and avoid ‘tax cliffs’ which exist in the current banded tax system.
This wouldn’t change the total amount of tax received by the government, but the richest 20 per cent would pay a larger share, stated the IPPR.
Tax reform is likely to be a hot topic in any upcoming election, with new Prime Minister Boris Johnson already believed to have set its sights on reform.
Before he was elected, Mr Johnson appeared open to changing the current stamp duty system and had previously promised to make changes to pension tax in order to deal with issues stemming from the tapered annual allowance.
Neither Mr Johnson or Sajid Javid, the new chancellor of the exchequer, have come out in favour of any form of income tax increases, however. In fact, both have opted for tax breaks.
In the election race, Mr Javid backed a cutting of the basic rate to help lower-paid workers but told The Telegraph he could also slash the rates for high earners in a no-deal Brexit scenario to inject “dynamism” into the economy.
Early in his leadership campaign, Mr Johnson promised to raise the 40 per cent income tax threshold from £50,000 to £80,000 which would benefit the top 10 per cent of earners to the tune of almost £2,500 a year.
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