Distributional analysis
William Elming and Andrew Hood
© Institute for Fiscal Studies
What we model
• Analysis includes (with exceptions)
– Income tax and NICs
– Benefits and tax credits
– Excise duties
– Council tax
• Does not include
– ‘Business taxes’ (corporation tax, business rates, North Sea taxes)
– Capital taxes (capital gains tax, inheritance tax, stamp duties)
– Sugar tax
• More details available from the authors on request
© Institute for Fiscal Studies
Long run impact of tax and benefit reforms
announced in the Budget 2016
£300
0.35%
Change in annual net income
Budget measures, £ per year (left axis)
£250
0.30%
Budget measures as a % of net income
(right axis)
0.25%
£200
0.20%
£150
0.15%
£100
0.10%
£50
0.05%
£0
0.00%
-£50
-0.05%
Poorest 2
3
4
5
6
7
8
9 Richest
Income Decile Group
Assumes full take-up of means-tested benefits and tax credits
© Institute for Fiscal Studies
and all changes fully in place
All
Impact of tax and benefit reforms
Change in annual net income
May 2015 – April 2019 (including universal credit)
£400
£200
£0
-£200
-£400
-£600
-£800
-£1,000
-£1,200
-£1,400
-£1,600
-£1,800
-£2,000
2%
0%
-2%
-4%
Pre-announced, £ per year (left axis)
Budget measures, £ per year (left axis)
Total, £ per year (right axis)
-8%
Total as a % of net income (right axis)
-10%
Poorest 2
3
4
5
6
7
8
Income Decile Group
Assumes full take-up of means-tested benefits and tax credits
© Institute for Fiscal Studies
-6%
and all changes fully in place
9 Richest
All
Impact of tax and benefit reforms
May 2015 – April 2019 (including universal credit)
Change as a percent of net income
4%
2%
0%
-2%
-4%
-6%
Working-age with children
-8%
Working-age without children
-10%
Pensioner households
-12%
-14%
Poorest
2
3
4
5
6
7
Income Decile Group
Assumes full take-up of means-tested benefits and tax credits
© Institute for Fiscal Studies
and all changes fully in place
8
9
Richest
All
Impact of tax and benefit reforms
May 2015 – April 2019 (including universal credit)
£1,000
Change in annual net income
£500
£0
-£500
-£1,000
-£1,500
Working-age with children
-£2,000
Working-age without children
-£2,500
Pensioner households
-£3,000
Poorest 2
3
4
5
6
7
Income Decile Group
Assumes full take-up of means-tested benefits and tax credits
© Institute for Fiscal Studies
and all changes fully in place
8
9
Richest
All
Impact of tax and benefit reforms
May 2015 – April 2019 (including universal credit)
Single, no work
Single, in work
Lone parent, no work
Lone parent, in work
Couple, no children, no work
Couple with children, no work
Couple, no children, one earner
Couple with children, one earner
Couple, no children, two earners
Couple with children, two earners
Single pensioner
Couple pensioner
Multi-family household, no children
Multi-family household with children
All
-25%
-20%
-15%
-10%
-5%
0%
Change as a percent of net income
Assumes full take-up of means-tested benefits and tax credits
© Institute for Fiscal Studies
and all changes fully in place
5%
Impact of tax and benefit reforms
May 2015 – April 2019 (including universal credit)
Single, no work
Single, in work
Lone parent, no work
Lone parent, in work
Couple, no children, no work
Couple with children, no work
Couple, no children, one earner
Couple with children, one earner
Couple, no children, two earners
Couple with children, two earners
Single pensioner
Couple pensioner
Multi-family household, no children
Multi-family household with children
All
-£5,000 -£4,000 -£3,000 -£2,000 -£1,000
Change in annual net income
Assumes full take-up of means-tested benefits and tax credits
© Institute for Fiscal Studies
and all changes fully in place
£0
£1,000