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February 06, 2007

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Jon

And thus it came to pass that the genetic fallacy raised its ugly head once more...

Rob Spear

The inheritance tax is a poor incentive for government behaviour - it will inevitably lead to civil servants rampantly murdering the well off up and down the country whenever the are budgetary problems. Why do you think the NHS is in the state it is?

Mark Wadsworth

Hang about here. Of course a sensible Citizen's Income/flat tax system is the key to all this, along with Land Value Tax.

But lefties fall into the trap of thinking that they can make the world a better place by making the wealthy pay more.

How about a system where the wealthy pay a bit less tax (i.e. scrap IHT, which only raises £3bn-odd) but get a lot less in subsidies and tax breaks (i.e. tax relief for pension contributions that give the wealthiest ten percent about £20bn a year back in tax breaks). Of course tax relief for pension contributions would not be required under a Citizen's Income/flat tax type scheme.

AntiCitizenOne

> Why do you think the NHS is in the state it is?

Because it's organised in the same fashion as the north Korean food service.

___________________________________________
I think abolishing all taxes on transfers between citizens would be a good idea (that's Income tax, inheritance tax, sales taxes, dividend tax, sales duty etc.) instead tax the stuff the government secures i.e. (Intellectual) property rights (the right to exclude others from, and thus have a monopoly on, your property) excess raised from tax after the costs of security should be returned directly to the citizens via a state dividend.

chris

Jon - I don't think I am committing the genetic fallacy.
I'm in favour of IHT for reasons like these:
http://vinospoliticalblog.blogspot.com/2007/02/in-defence-of-inheritance-tax.html
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2006/08/for_inheritance.html
It's entirely legitimate - even necessary - to ask: why do others think differently from me? In most cases, I can see good reasons for this. But in this case, I just can't.
Everyone - I agree there might be a case for scrapping IHT as part of a radical tax reform - say, a move to a progressive consumption tax. But this is not what the Express campaign is about. They want to scrap IHT on its own, with no spending cuts (at least none the petition calls for). This would mean higher taxes elsewhere. I see neither justice nor efficiency in such a shift.

james higham

...These people will do anything to get rich - except work...

That's very right wing, Chris.

Beefeater

Better to abolish taxes on city bonuses than to abolish inheritance tax. Absolutely agree. But why abolish either?

There is still a question over the extent to which the very bright and dedicated individuals that work in investment funds and investment banks are adding to the overall size of the economy through their efforts. In fact one might say that they're actually doing a little light redistribution of wealth themselves - from capital providers to capital managers, that is.

If this is so, why not continue that redistribution by levying windfall taxes on bonuses above a certain level? Possibly this would encourage banks to spread the cash about a bit more equitably (or even invest more of it in growing their business) and counteract the inflation levels for very expensive goods and services in London. Who knows, lower City bonuses might even act as a dampener on executive pay.

AntiCitizenOne

Beefeater,

Why should the government steal from the succesful?

Alex

Look, this is the Daily Asian Diana Tits we're talking about. It's explicitly targeting the extreme left hand side of the bell curve. What do you expect?

spencer

So you want the government to steal from the unsuccessful --that would not get them very far.

chris strange

Personally its the yuck factor. I find the idea of extorting money from grieving relatives extremely distasteful, compared to extorting money from the alive and working which is more mildly distasteful.

Why not start a petition to ask for the abolishment taxes on City bonuses? I would happily sign that as well, getting rid of any tax is good but IHT was the one they offered up.

Jon

Chris -- forgive me. It's just that my Davidsonian-charity-meter gives worryingly low readings when I see vast swathes of Middle England dismissed as "greedy parasites". People can have more principled reasons for wanting to abolish a tax than naked self-interest, y'know (and what's so wrong with naked self-interest, anyhow?). It's hard for me to see what's so unreasonable about people wanting to pass on the fruits of their labours to their offspring.

AntiCitizenOne

> So you want the government to steal from the unsuccessful --that would not get them very far.

No spencer I want them to tax for the service they are supposed to provide i.e. security and property rights.

Why do you want to fine and punish people who haven't done anything immoral (in fact they have been moral in creating wealth)? Normally the state fines people when they want to curtail an activity (like speeding). Is the state wise to fine income generators or employers based on their success?

The moral argument could be made that a tax on income is akin to state slavery.

cityunslicker

I am with Jon, as a parent all I want is my kids to well. that in itself is satisfaction for me. IHT prevents me from working hard for them; this should be a right I have in a free society.

overall IHT should not be the priority, extending the tax free band at the bottom is clearly essential; that does not mean IHT should not be targeted at some time though.

Beefeater

AntiCitizenOne - the question is whether money managers are creating wealth or merely redistributing it from investors to themselves - in this connection, Philip Augar's books on the City and John Kay's 'the truth about markets' deserve an honourable mention. Neither author is unsympathetic to wealth creators or city bonuses per se.

To the extent that investment managers are creating wealth, they should be entitled to keep most of it.

To the extent that they are just redistributing it - and taking a cut of every transaction you, even when such transactions do not create new wealth, looks a lot like redistribution - the argument for no tax is less clear.

On reflection this is an argument for taxing transactions rather than bonuses - but if the bonuses are larger than they would otherwise be because investments are losing value, there's a case for taxing them if for whatever reason the transactions cannot be taxed.

Cityunslicker - does the existence of IHT really prevent us from working hard for our kids' future? Most people I know already work as hard as they can to earn as much as they can, and I'm not aware that we're holding back just because when we kick the bucket HMRC is going to pounce on a portion of our estate.

VS

The people against inheritance tax are making arguments against taxes in general [i.e. 1) that the market allocation of income, wealth etc is just and so the state shouldn't take money away from people who already have it and 2) that they see public expenditure as unnecessary].

What they have failed to explain is why, if taxes are to be cut, inheritance tax should be reduced first? Surely, if the aim is to reward people for the 'fruits of their labour', then income tax or NI should be the first to be reduced?

Mich

I agree that Inheritance Tax is vastly more favourable than Income Taxes - the only reason we have this 'crusade' is that Income Taxes are the norm and Inheritance is not, but that doesn't make it right.

I'm in favour of keeping Inheritance Tax and even increasing it, certainly if it meant that we could reduce other far more unfair taxes.

If the Express mob got their way [and lets face it, they won't], we could always tax property as a capital gain (with a purchase of £0), and everything else as income - but I don't think they'd like that either!

VS

Indeed. Someone's primary residence is currently not counted for capital gains purposes (and i assume that inheritances are not counted as capital gains either). So, if there is no IHT, it makes sense to charge people inherting their paarents' houses capital gains tax on it instead. And, from what i recall, the CGT threashold is around £10,000 - far less than the IHT threashold.

zorro

Like a lot of things the Labour party likes, Inheritance Tax is simply a tax on the South.

Income Tax is fair (It's about the /only/ tax I can think of which is - the more you earn the more you pay), inheritance tax isn't.

Why should a family in the south not be able to have their parents house when they die but a family in the north can??

VS

People in the South pay more IHT - just like they pay more of most taxes, because they are - on average - better-off than people in the North.

The fact that a lot of houses in the South are above the IHT threashold is because of the higher price of land down here. You could equally ask - why should the children of home-owners in the south benefit from possessing lucrative property without paying taxes?

Richard J

The Tolleys point is often trotted out by lazy commentators. I'd not deny that there has been some fairly unnecessarily complex legislation introduced in recent years, and every finance act seems to break a record in terms of length - the mixer cap rules, or the disregard regulations can induce bafflement in even the cleverest, but most of the growth in bulk of the yellow books has come about because of two reasons:-

a) it's been nearly twenty years now since the last consolidating act - much of the volumes are taken up with twenty years of finance acts amending good old ICTA 1988.

b)Secondly, they pulled income taxes out into their own act as part of the ongoing tax law rewrite program back in 2005 - unfortunately, corporation tax is still in progress so all the legislation in ICTA that covered both income and corporation tax has had to be left in, and can't yet be repealed. (That said, they immediately rewrote huge chunks of the income tax act immediately after it came out in the next finance act...)

chris strange

Anybody here want to sign a better petition, one aimed to remove the low paid from income tax?

http://petitions.pm.gov.uk/raisetaxlimit/

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