The Poverty Trade-off: Work Incentives and Income Redistribution in BritainTwo strategies that governments have to help people on low incomes - providing them with financial support directly, and encouraging them to earn more - generally conflict. This report provides new evidence on the trade-off between redistributing income and improving work incentives. Drawing on large-scale survey data spanning the last 26 years, the report analyses the incomes and work incentives facing thousands of individuals and families, and how they are affected by the tax and benefit system. It shows how work incentives vary across the population and how this has changed since 1979 and estimates how far tax and benefit reforms have been responsible for changes in work incentives. It compares these trends with trends in poverty and inequality and examines how various policy options for the future would affect the distributions of both income and work incentives. The report is aimed at policy-makers, academics and students in the field of taxation and welfare reform, and all those who wish to improve their understanding of the trade-off between redistributing income and improving work incentives. |
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0.0 Proportion 0.5 percentage point 75th centile adults aged adults receiving aged over 55 April 2005 tax average work incentives benefit changes benefit system benefit taper rate benefits and tax calculations using Family child element child tax credit containing any adults council tax benefit decomposition disability benefit earnings effective marginal tax element of CTC Excludes families containing Family Resources Survey financial work incentives Gini coefficient HM Treasury housing benefit taper incentives and redistribution incentives to progress income distribution income support jobseeker's allowance lone parents marginal tax rates mean EMTR means-tested benefits Median mothers in couples NICs Notes and sources out-of-work income participation tax rate poorest poverty and inequality poverty rates Proportion whose rate rates at 40 receiving a disability reduce poverty reform we consider replacement rate rise Resources Survey 2002-03 second pension self-employed starting-rate limit strengthen work incentives tagging tax and benefit TAXBEN under April wage weakened