New capital gains research informs U.K. tax policy debate

Counting taxable capital gains as income reveals that the top 1 percent of adults in the United Kingdom received “a far greater and faster growing” share of income before the COVID-19 crisis than previously thought, according to economists.

Capital gains are “a major source of income” but are excluded from official income statistics, researchers from the Resolution Foundationthe London School of Economics and Political Science, and the CAGE Research Centre at the University of Warwick noted in a report titled, “Who Gains? The Importance of Accounting for Capital Gains,” published on May 21.

The researchers question whether the current, lower tax rates for capital gains can continue to be justified. “A lot of capital gains are, in fact, just repackaged income going to the already-rich,” Andy Summers, assistant professor at the London School of Economics and Political Science, said in a statement.

My new story for Tax Notes, May 23, (paywall):

New Capital Gains Research Informs U.K. Tax Policy Debate