Distributional effects

Income inequality, as well as the impact of tax and benefit reforms on it, has typically been evaluated with respect to ‘snapshot’ incomes, measured over short periods such as one week or year.

The tax and benefit system has undergone significant reform since 2010, with large cuts to working-age benefits, a rise in the main rate of VAT, increases in the rate of the state pension, and reductions in direct tax, including a big rise in the income tax personal allowance. In this briefing note we investigate the impact that these reforms have had on household incomes.

While the benefit system has undergone substantial reform over the past 10 years, there remain significant changes due to take place over the next parliament.

The tax and benefit system is a key tool for a government trying to reduce inequality. In this briefing note, we examine the effects that cash benefits and taxes had on UK inequality in 2016–17.

In this research we investigate who wins and loses from universal credit, and by how much. For the first time, we also look at the effects of universal credit on people’s incomes over eight years of their lives, rather than just at a point in time. This lets us look at the impact on those that are persistently, rather than temporarily, low income.

TAXBEN is the IFS’s tax and benefit microsimulation model, which calculates the impact of tax and benefit policy on households. It is used heavily in IFS’s work on the impacts of tax and benefit policy. This document gives a high level summary of TAXBEN, covering what policies and effects it does and does not include, and its limitations.

Mobility and the lifetime distributional impact of tax and transfer reforms

IFS Election 2017 analysis is being produced with funding from the Nuffield Foundation as part of its work to ensure public debate in the run-up to the general election is informed by independent and rigorous evidence. For more information, go to http://www.nuffieldfoundation.org

Background: It is not clear whether the harm associated with smoking differs by socioeconomic status. This study tests the hypothesis that smoking confers a greater mortality risk for individuals in low socioeconomic groups, using a cohort of 18 479 adults drawn from the English Longitudinal Study of Ageing. Additive hazards models were used to estimate the absolute smoking-related risk of death due to lung cancer or Chronic Obstructive Pulmonary Disease (COPD). Smoking was measured using a continuous index that incorporated the duration of smoking, intensity of smoking and the time since cessation. Attributable death rates were reported for different levels of education, occupational class, income and wealth. Smoking was associated with higher absolute mortality risk in lower socioeconomic groups for all four socioeconomic indicators. For example, smoking 20 cigarettes per day for 40 years was associated with 898 (95% CI 738, 1058) deaths due to lung cancer or COPD per 100 000 person-years among participants in the bottom income tertile, compared to 327 (95% CI 209, 445) among participants in the top tertile. Smoking is associated with greater absolute mortality risk for individuals in lower socioeconomic groups. This suggests greater public health benefits of smoking prevention or cessation in these groups.

This election briefing note looks at the impact of tax and benefit reforms on household incomes.

Remembering Tony Atkinson

Two decades of income inequality in Britain: the role of wages, household earnings and redistribution.