The think tank says that looking at a single year, two thirds (64%) of individuals in the UK pay more in taxes than they receive in welfare payments.  However, when assessed over the course of an entire lifetime the picture changes, as people may move in an out of work, and 93% pay more tax than they receive in social security.

The findings come from a report, Redistribution from a lifetime perspective, funded by the Nuffield Foundation and the European Research Council using data on the baby-boom generation (born 1945-54). The research looks at how taking a lifetime – rather than a single-year snapshot – perspective changes views of inequality, redistribution and reforms to the tax and benefit system.

Peter Levell, a research economist at the IFS, and an author of the report, said: ‘While over a third of individuals receive more in social security than they pay in taxes in a single year, this is true for very few when you look over an entire lifetime.’

The study’s results also how that more than half of the redistribution achieved by taxes and benefits is effectively across periods of life rather than between different people, in the sense that the tax and benefit system takes from an individual at one age and gives back to the same individual at another.

As a result, the tax and benefit system is less effective at reducing inequality over the lifetime than within each year, although the study says changes to the higher rate of income tax ‘do target the lifetime rich reasonably well’, as they tend to remain rich over prolonged periods of time. 

In its analysis, the IFS argues that  in-work benefits are just as good at targeting the ‘lifetime poor’  as out-of-work benefits, as they spend the majority of their working lives in paid work, but are not as good as out-of-work benefits at addressing temporary hardship.

Jonathan Shaw, senior research economist at the IFS, and joint report author, said: ‘The existing tax and benefit system, assessed largely against circumstances in the current year, doesn’t do especially well at redistributing resources towards the lifetime poor. Targeting lifetime redistribution more effectively may require new policies that take longer-run circumstances into account.’

The report also looked at the distributional effects of historical tax and benefit reforms. It concluded that while the Labour government’s expansion of in-and out-of-work benefits between 1999 and 2002 was less well targeted towards the lifetime poor than the ‘snapshot poor’, the losses from tax and benefit reforms of the Conservative-LibDem coalition between 2010 and 2015 are more evenly spread across the income distribution from a lifetime perspective. However, these reforms still take proportionally more from the poorest half of people, it concluded.

 The IFS report Redistribution from a lifetime perspective is here

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