Expensive, distortionary and inequitable: time to sort out the way we tax business owners

Published on 22 October 2019

Small businesses are widely perceived to be the engines of growth and employment. That’s one reason why most self-employment income, dividends and capital gains are taxed at lower rates than wage income.

Small businesses are widely perceived to be the engines of growth and employment. That’s one reason why most self-employment income, dividends and capital gains are taxed at lower rates than wage income. The trouble is that most such businesses are no more and no less than the way in which people decide to earn their living and have little to do with entrepreneurship. Meanwhile, as new IFS research shows, the associated tax breaks can be expensive, distortionary and inequitable.

This article was published in Prospect Magazine and you can access the full version on their website.