UK: Tax and benefit system significantly reduces inequality

The latest data on household income distribution, after taking into account the effects of benefits and taxes for 2016/17 financial year, shows that the tax and benefit system significantly reduces inequality in the UK, explains the research team at RBS.

Key Quotes

“Before taxes and benefits the average income of the richest fifth of households was 12 times greater than that of the poorest fifth (S20/S80 ratio).”

“After taking into account benefits (including in-kind) and taxes (including indirect) the ratio reduced to 3.7 times. One striking observation is how stable various measures of income inequality are over time.”

“There was hardly any change in Gini coefficient and S20/S80 ratio since early 1990’s.Inequality continues to be a powerful rallying cry but on these measures at least it isn’t getting any worse.”

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