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Capital Gains and UK Inequality

Arun Advani and Andy Summers
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Andy Summers: London School of Economics, III, and CAGE

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: Aggregate taxable capital gains in UK have tripled in past decade. Using confidential administrative data on the universe of UK taxpayers, we show that including gains changes the picture of UK inequality over the past two decades. These taxable gains are largely repackaged income, so their exclusion biases the picture of inequality. Including them changes who is at the top of the distribution, adding more business owners and older people. The share of income plus gains (both pre- and post-tax) going to the top 1% is 3pp higher than for income only, and this gap has been steadily rising.

Keywords: inequality; capital gains; income shifting; top shares JEL Classification: D31; E01; H2 (search for similar items in EconPapers)
Date: 2020
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https://warwick.ac.uk/fac/soc/economics/research/c ... tions/wp465.2020.pdf

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Working Paper: Capital Gains and UK Inequality (2020) Downloads
Working Paper: Capital Gains and UK Inequality (2020) Downloads
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