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Tax system doesn’t help cut inequality | Letters


One of the authors of the report discussed in your article (Tax system helps cut gap between rich and poor, says IFS report, 27 May) states that “contrary to the ONS claim, taxes do also reduce inequality”. No they don’t! The IFS study is a study of individuals, not of households. Households are the significant economic unit for receipt of income and expenditure. It is inequality among households which matters, and the tax system is more or less flat across deciles of households – with the exception of the lowest decile, who pay the highest proportion of income as all tax of any decile. Also the IFS report asserts that indirect taxes are progressive. They base this on calculations of indirect taxation as proportions of expenditure “because [indirect taxes] are levied on expenditure”. That is how they are levied, but they are paid out of income, and in relation to income indirect taxes are regressive. The UK taxation system is not progressive for households. Regressive taxes are regressive if assessed in relation to the incomes out of which they are paid. The tax system does not help cut the gap between rich and poor.
David Byrne
Emeritus professor of applied social sciences, Durham University

So often, reports on inequality concentrate on mere incomes and salary. Why do these analyses not include profits from unearned income – particularly those in property, at a time when a recent report showed that 1% of the population owned 50% of the land. If John McDonnell wants to set out Labour’s stall clearly, he should be going beyond simply pointing out the scandal of inequality and laying out Labour’s proposed policies on the matter, including some ideas on how to deal with tax havens – something about which the EU is already rattling the sabre, but on which Britain is largely silent.
David Redshaw
Gravesend, Kent

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