The ‘end-times’ must be upon us. Former Labour cabinet minister, Stephen Byers, has just said something with which I agree: abolish inheritance tax.
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15 comments to Inheritance tax |
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Chris Dillow has a good post on this: For Inheritance Tax. Given that only 20% of inheritances are eligible for taxation, it doesn’t strike me as good frontline issue for a tax cutting agenda.
Why is there a seaparate inheritance tax? I’d suggest simply treating it as income, and cutting income tax.
Editors note: URL fixed
Kit, you forgot the URL? *goes to check Chris’s site to see if he can find it*
Ah, but he also said it should be replaced, so it isn’t quite as happy and dandy as it first appears.
The tax was a piece of Labour spite to steal money from the rich. Every penny of a deceased person’s estate has already been taxed.
Why should the government be up for another slice of the cake just because a loved one dies?
At a time of bereavment, which is bad enough to cope with, what with the loss, then the registration of death, the funeral arrangements etc you get some bastard from the tax office wanting their cut off the top.
House prices have rocketed , as we all know. Which is what forms the bulk of these estates, but the threshold of the tax has not.
I think this law is actually immoral, and much as I loathe the Human Rights Act, I wouldn’t mind( I may actually have to!) sue the bastards under it. It is tantermount to theft.
In the context of the welfare state, I’d rather see a heavy inheritance tax take the place of income tax. It would encourage retirees to use their existing assets to fund their retirement, rather than relying on state-provided benefits and passing down an asset, which, if its value was realised, could comfortably sustain most.
The current system forces the taxpayer to subsidise beneficiaries.
But James doesn’t the inheritance tax make people more dependant on the state? My Grandparents had their share in the family business disolved some years ago partly because fear of that tax if I remember correctly.
Don’t we have a lot of old people who are poorer than they would have otherwise been by trying to avoid this unfair tax?
Although inheritance tax will soon be useless because peoples life expectancy will increase dramatically to over 1000 years!
http://www.sens.org/
And that is why is it a mistake to discuss something “in the context” of something unacceptable, because it forces you to make wrong choices because within the context itself there are no ‘correct’ choices.
Once you are willing to discuss what form of state ‘incentives’ are best to encourage ‘correct’ behaviour, you are fighting a battle on ground the enemy has chosen and you cannot possibly win that because you are reduced to proposing one unacceptable policy over another unacceptable policy to get to an unacceptable end that the state has no business being involved with in the first place. It is like arguing for suicide by dioxin rather than suicide by arsenic when you should be arguing for no suicide at all.
Sorry James but that post is just clueless!
Do the sums. Inheritance tax, however heavy, could never cover the needs and wants (bugger the needs and wants of the citizens!) of a Kleptocractic socialist Government like ours.
Byers is the worst sort of political weasel. Why is this lying bastard lying to us?
John K, Absolutely right. Never EVER believe anything this lying, dirty little man ever says since whatever this individual announces can only be to serve his own personal interest and not that of the UK in any way.
What would be of far more interest would be HM Inland Revenue declaring openly what ongoing investigations are currently being carried out into the Byers’ family affairs …
RAB – I know that 🙂 It’s a way of choking the beast; one of the reasons I like the idea. Not that I’m so naive to think it would ever come about.
It is true that the Labour party man wanted to see inheritance tax replaced by more “Green” taxes – but the principle is still important.
He accepted that inherited wealth (whether a house, an estate, or a business) is not evil (a big advance for the Labour party) and that it was wrong to tax the same earnings twice (once with income tax and then with the death tax).
As for replacing income tax with a bigger death tax.
Well let us say everyone (over the tax threshold) was taxed 100% on their deaths. Or the people who got the house (or whatever) were taxed 100% (which amounts to the same thing).
Assuming no tax avoidence (a rather heroic assumption) that would make up only a tiny fraction of the revenue from income tax – so there would have to be massive government spending cuts (say getting rid of government health care and education). I would regard that as no bad thing (indeed as very good thing indeed) – but most voters would not agree.
Of course a bigger inheritance tax would mean MORE people dependent on the state.
For example, instead of living in houses inherited from their parents people would have to sell their houses (to pay the big inheritance tax) and then the government would have to house them (or leave them on the street).
Ditto people who have spent their best years looking after their old parents. Instead of living (as they themselves get old) on investments partly made by their parents they would look to the state to provide them with benefits.
Getting rid of the death tax would not mean much in terms of revenue (about 1% of revenue if I remember correctly), but would be a great matter of principle.
It would be a rejection of a whole principle of statism – i.e. that people should be taxed on their death and that inherited income or wealth is evil.
Inheritance tax should not be combined with National Health Service for reason of obvious conflict of interests.
I think, on a practical level, agitating for the abolition of income tax is far more economically defensible, and certainly more pressing (and, not that it should matter, more popular). That is, if you still want some kind of government to exist, income and company taxes are the least economically defensible, and should be eviscerated ASAP, while sales and inheritance taxes are more defensible, even if obnoxious like all other impositions, and could be maintained or perhaps even extended if necessary.
Obviously, the overall tax burden should be slashed, but I don’t think it is unwise to nominate which taxes in particular ought to provide the bulk of the revenue.
As I said above – income tax brings in vastly more revenue that the death tax.
Get rid of income tax and you will have to get rid of much of government (good – but try and convice the voters of that).
Get rid of the death tax and you hardly need to get rid of any spending at all.
This is where things like pie charts would come in handy.
I could show the fraction of the “pie” of revenue that income tax brings in, and then I could show you what proportion of the pie that the death tax brings (you would hardly be able to see the slice if the pie was about the size of this screen).