Since its foundation in the 1960s, the IFS has studied the design of the UK's tax and benefit system, and the effects it has on individuals and companies. This continues to be a core part of the Institute's work. We monitor and analyse policy developments and proposals on an ongoing basis and use this work to make important contributions to public debates. Each year in the run up to the Budget we publish our own Green Budget, which addresses the challenges facing the Chancellor, and we publish analysis of policy changes immediately following the Budget and fiscal statements. More recently we have also began supporting the analysis of tax policy in developing countries, including via our TaxDev initiative.
To ensure that our analysis is relevant and impactful, we constantly maintain and improve the Institute's tax and benefit model. We use this, in conjunction with large cross-sectional household datasets, to model the impact of reforms on individuals' incomes and behaviour. As a public resource, we maintain surveys of the tax and benefit system and provide data on rates and allowances.
Our policy work is underpinned by academic research. IFS research has made seminal contributions in understanding how taxes and benefits affect choices – including over whether to work, how much to work, fertility decisions and human capital investment – and how the tax and benefit system provides insurance over peoples’ lifetimes. The IFS was also home to much of the seminal work on how tax affects firm location choices.
The decades of research on taxes and benefits, along with the expertise of the large network of IFS researchers and fellows, was bought together for the Mirrlees Review. This project identified the characteristics of a good tax system for any open developed economy, assessed the extent to which the UK tax system conforms to these ideals, and recommended how it might realistically be reformed in that direction. The review produced a set of chapters dealing with specific aspects of the tax system and a final volume that set out the conclusions for how to design the system as a whole.