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In the first episode of our new mini-series on how to fix the UK’s tax system, Helen is joined by Stuart Adam and Ben Zaranko to explore income tax - the cornerstone of government revenue, and one of the most confusing parts of our system.
Why do we have two separate taxes on earnings? Why do odd kinks and cliff edges exist that distort behaviour? And what would a well-designed income tax actually look like?
This episode dives deep into the structure of income tax and National Insurance, revealing how small design flaws create big inefficiencies - and what we can do to fix them.
Zooming in: discussion questions
These are a set of questions designed for A Level economics students to discuss, written by teacher Will Haines.
1. Using an example, can you explain how income tax may alter people’s behaviour.
2. There is effectively a marginal income tax rate of 60% on income between £100,000 and £123,000. Explain why someone earning an income within this range would pay this marginal income tax rate and how may it influence their behaviour?
3. Having listened to this episode, what changes would you make to the current income tax system? Justify your response.
Authors
Stuart Adam
Stuart is a Senior Economist working in the Tax sector, and focuses on analysing the design of the tax and benefit system.
Helen Miller
Helen joined the IFS in 2007. She has almost two decades of experience analysing UK fiscal policy and providing trusted advice to policymakers.
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