IFS Zooms In: The Economy How to fix wealth taxes
Oct 27, 2025
Joining the discussion are Stuart Adam, a Senior IFS economist known for his detailed analysis on taxation, and Ben Zaranko, an IFS researcher who makes complex topics more accessible. They delve into the contentious world of wealth taxation, examining why investment income is often taxed less than salaries. The pair highlight the challenges of implementing a wealth tax, including valuation issues and potential avoidance. They also explore the flaws in the UK's inheritance tax system, suggesting reforms to enhance equity and reduce evasion.
AI Snips
Chapters
Transcript
Episode notes
Don't Tax The Risk-Free Return
- Tax should not fall on the normal risk-free return you get for deferring consumption.
- Deducting that safe return preserves saving and work incentives, say Helen Miller and Stuart Adam.
High Returns Are Hard To Separate
- High returns can come from luck, skill or economic rents and deserve different treatment in theory.
- In practice, taxing them like labour income works well because you cannot reliably separate the sources.
Give Full Deductions For Investment
- Give full deductions for genuine investment costs so normal returns aren't overtaxed.
- Make loss relief symmetric to avoid discouraging risk-taking and entrepreneurship.