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CEP election analysis

Inequality: Are we really 'all in this together'?

The UK's top 1% have between 12.5% and 15.5% of all income. This is mid-way between the United States (20%) and Continental Europe (8%). This share has been rising steadily since the late 1970s, mainly due to labour income (wages), but also with a role for capital income (dividends, capital gains, etc.). In the global financial crisis of 2008-09 inequality fell, but has been stable since then. It is too soon to tell whether inequality will resume its rising trend as the economy fully recovers. Overall, coalition policies have been mainly regressive. Tax credit and benefit cuts took more away in the bottom half of the income distribution than they gained from higher income tax allowances.

Gabriel Zucman

16 April 2015     Paper Number CEPEA030

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