At Conservative Home, Matthew Elliott and James Frayne want to abolish inheritance tax. I'm not convinced.
Inheritance tax...is not simply a tax on the rich (who can and do employ expensive accountants to come up with ways of dodging it)...
This is a case for closing the loopholes, not for abolishing the tax.
...but affects ordinary families...A commitment to getting rid of inheritance tax would show the [Conservative] Party understood the concerns of ordinary middle class families.
It depends what you mean by "ordinary" of course. HMRC figures here and here (pdfs) show that in 2003-04 there were 282,102 estates bequeathed. Only 54,361 - 19.2% - were above the IHT threshold. Are the richest one-fifth really ordinary?
It is immoral because it forces people to pay tax on their possessions, having already paid huge amounts of tax throughout their lives....people understand the obvious immorality of what amounts to "double taxation."
No. IHT is not double taxation. It's paid by the living, not the dead; I know of no case of the taxman delivering a summons to the Pearly Gates. And if I inherit £300,000 or more, I'm paying tax on it for the first time.
If your're worried about double taxation you should fret about VAT. When we buy VATable goods, we are paying VAT out of incomes that have already been taxed. And you should fret about the taxation of interest on savings. Both are more obvious cases of double taxation than IHT.
According to a Populus poll for the BBC in March, people disagreed by 73-25 percent that inheritance tax was a "fair way" for the Government to raise money.
This only shows one of the more pernicious beliefs of the public. They're in love with the idea of getting something for nothing - which is why they play the lottery. What we need, surely, is to end this "summat for nowt" culture, and to encourage work and savings. That means cuts in income tax should take priority.
The abolition of inheritance tax should form part of a wider campaign to reduce the tax burden on families.
This misses the point that there's a trade-off. For a given tax burden - and I wholly agree this should be lower than it is - lower IHT means higher other taxes. And most of these fall upon more ordinary people than does IHT. In this sense, abolishing IHT is regressive, because it would mean higher taxes on other, generally poorer, people.
It is always dangerous to get into the game of "costing" tax cuts because tax cuts have "dynamic effects" - they create a "rising tide" which boosts the economy as a whole.
True. But is this really more true of IHT than other taxes? Would abolishing IHT really lead to more labour supply or capital formation than cuts in other taxes? I suspect the exact opposite. People who can look forward to a big inheritance have less incentive to save or work hard. Dynamic effects argue for cutting income taxes ahead of IHT. Feel free to show me hard empirical evidence to the contrary.
I'll finish with three questions. What's wrong with this argument (pdf) that there's no right of inhertiance at all? Why should you pay more tax if your dad gives you a job than if he gives you an inheritance? Given the choice, wouldn't you rather pay tax after you're dead than whilst you're alive?