Inheritance tax - give the kids less
To me, arguments about taxation always boil down to morals, rather than economics.
Take the ongoing rumblings surrounding inheritance tax. The loudest voices in the anti-IHT lobby come from what might be identified as the upper middle class. These are the people whose children have benefited from their parents' income and who are likely to inherit not just assets, but the lasting legacy of private education, music/sports classes, holidays abroad and whatever other privileges they might have enjoyed.
Why then is it such an outrage that what they are allowed to pass on to their children should be limited?
The answer is simple: people are naturally, and understandably, averse to giving away what they believe to be theirs.
But those who see IHT as a 'stealth tax', or a means of taking a second bite of the income cherry, miss the fundamental point of this tax. It is the most effective, and fairest, means of distributing wealth.
Before IHT, we had in this country a landed gentry, self-sufficient, largely idle but hugely influential. They were able to pass on money and lands to their profligate offspring, who spent it mainly on vice. As you would.
But inheritance tax throws a spanner in the works of those who would be happy to live off the gains of their predecessors. It encourages young people to make their own way in life, to rely on their resourcefulness rather than their parent's resources.
Most importantly it directs surplus funds back into the economy to be spent on infrastructure and social welfare (one hopes). It is intrinsically bound up with the principle of social reciprocity.
This principle is apparently alien to those who would abolish it. No doubt they would much rather see wealth accumulate in the same regions and families it always used to than see funds go back into the coffers of a Government that they instinctively mistrust. Dislike of the Government is a handy smokescreen for those who would gladly cling on to every penny they can keep but selfishness is the true motivation.
Whether you support the Labour government or not, inheritance tax is born out of an instinctive belief that those who have ought to help provide for those who do not.
This is a belief on which successful societies have flourished since the dawn of time.
If you wish to argue against the wisdom of that feeling, please leave a comment below.
To me, arguments about taxation always boil down to morals, rather than economics.
Take the ongoing rumblings surrounding inheritance tax. The loudest voices in the anti-IHT lobby come from what might be identified as the upper middle class. These are the people whose children have benefited from their parents' income and who are likely to inherit not just assets, but the lasting legacy of private education, music/sports classes, holidays abroad and whatever other privileges they might have enjoyed.
Why then is it such an outrage that what they are allowed to pass on to their children should be limited?
The answer is simple: people are naturally, and understandably, averse to giving away what they believe to be theirs.
But those who see IHT as a 'stealth tax', or a means of taking a second bite of the income cherry, miss the fundamental point of this tax. It is the most effective, and fairest, means of distributing wealth.
Before IHT, we had in this country a landed gentry, self-sufficient, largely idle but hugely influential. They were able to pass on money and lands to their profligate offspring, who spent it mainly on vice. As you would.
But inheritance tax throws a spanner in the works of those who would be happy to live off the gains of their predecessors. It encourages young people to make their own way in life, to rely on their resourcefulness rather than their parent's resources.
Most importantly it directs surplus funds back into the economy to be spent on infrastructure and social welfare (one hopes). It is intrinsically bound up with the principle of social reciprocity.
This principle is apparently alien to those who would abolish it. No doubt they would much rather see wealth accumulate in the same regions and families it always used to than see funds go back into the coffers of a Government that they instinctively mistrust. Dislike of the Government is a handy smokescreen for those who would gladly cling on to every penny they can keep but selfishness is the true motivation.
Whether you support the Labour government or not, inheritance tax is born out of an instinctive belief that those who have ought to help provide for those who do not.
This is a belief on which successful societies have flourished since the dawn of time.
If you wish to argue against the wisdom of that feeling, please leave a comment below.
posted by Rob Davies at 9:55 PM
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