IPPR research shows under-taxing of income from wealth is holding the region back

No one wants to even contemplate paying more tax but the reality is that there is an under-taxing of income from wealth that is harming poorer areas of the country.

Recent research by think tank IPPR highlights how regional wealth gaps are growing and that those in London and the South East are more likely to benefit from the preferential tax treatment of income from wealth.

As Dr George Dibb, associate director for economic policy at IPPR, says “Taxes don’t just raise revenue, they also shape our economy.”

Economists have long argued for the need to pivot towards taxing wealth more proportionately to income.

French economist Thomas Piketty argued in his 2013 book Capital in the Twenty-First Century for greater emphasis on economic growth in the developed world.

Taxing income continues to be a great inhibitor to economic growth in this country.

The IPPR has called for different types of income to be taxed equally, including capital gains and dividends. Working people have long been frustrated that for them and their families hard work is simply not paying while rentiers continue to flourish.

Actions such as equalising capital gains tax with income tax are likely to be invidious. There are those that will argue that wealth underpins economic growth. But as IPPR’s research shows, there is clearly a handicap when it comes to efforts to rebalance wealth and opportunity between the regions.

That should be the priority for the new government as left behind regions will continue to limit economic growth.