Up to £20 billion a year could be raised for public services just by taxing all income and capital gains at the same rate as earnings, argued a new report by Arun Advani of Warwick University of Andy Summer of LSE.An “Alternative Minimum Tax” (which already exists, in some form, in the USA) forcing everyone on more than £100,000 a year to pay at least a 35% tax rate on taxable income and gains would raise £11 billion.
The best-off appear to pay higher taxes than most — a 47% “headline” rate. A few do pay that. Most use deductions and reliefs, and “repackaging” of their income as capital gains, to pay a much lower rate. On average, people with total remuneration of £10 million a year pay an effective average tax rate of 21%, less than would be paid by someone on £30,000. The average effective rate starts declining above £250,000 a year.
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