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April 10, 2017

Comments

Carol

I hope you meant "unconvincing" in your 2nd note.

Stephen Johnson

** There are other arguments against taxing inheritances, though I find most convincing.

Do you mean *un*convincing? I'm guessing there's a misnegation here.

Cheers,

james c

As ever, Chris Dillow cannot see what is in front of his nose.

There are far more people who are likely to receive a substantial inheritance than are likely to pay top rate income tax.

So, people disapprove of taxes which they themselves might pay (on inherited houses) and are happy for others to be taxed heavily on their high incomes.

soru

~50% or more of the population stand to inherit more than a years salary for a League One or below footballer, 25% more than a Championship player, 5% more than a Premiership one.

The solution is probably stop doing everything year by year, and have a lifetime long inheritance/capital gains allowance.

Mark

I'd prefer to inherit a trust fund, because I disagree with Chris' assertion that trustafarians are less likely than top athletes to experience a sense of achievement.

Look at those who excel in a wide range of fields, from entrepreneurship to the arts to politics and you'll see a disproportionate number of people who were born into money. This good fortune gave them the freedom to pursue their dreams and provided them with a competitive advantage relative to those with similar aspirations but who also had to earn a living and support themselves.

Lord

I think most would say if it results in income, an income tax will capture it. An inheritance is income to the heir, but may be one they have already considered theirs. People also dislike taxes on gains; they own property, not what it is worth, only what it yields. Property is desired as a tax shelter.

Richard

I suspect opposition to IHT is also (understandably) emotional: people don't like the idea of being inhibited from helping or leaving gifts to their offspring.

YMI_Alive

It's pure conjecture to say that trustafarians are less likely to achieve notable accomplishments merely on the basis of having inherited the wealth - it just 'sounds' like it should be the case, but the basis for this argument is very flimsy - that the absence of financial struggle (which is ostensibly the driver of betterment in the athletes, per the post) implies absence of other types of drivers (be they any other type of struggle or something else, like pride, for example, or an innate need to achieve more than your parents, or something else altogether). It takes a number of important, fundamental - and unproven - assumptions to reach the conclusion that being born to wealth will invariably result in lower drive to excel and achieve.

On a separate note, the inheritance tax is, without a close second, the most stupid, unfair tax that comes to mind (coming from a lower middle-class guy who will inherit nothing). To tax property which has ostensibly already been taxed adequately during the life of its original owner again after they die? A form of legalized theft, that - no logical ground based on which this makes any sense.

All this said, in a narrow choice of sporting talent and a trust fund, I'd pick a trust fund - all other things being equal, not having prodigious talent doesn't bar me as a wealthy person from achieving moderate or even great success in sports, should I choose to apply effort to that end. It also offers me choice in the sense that I am not existentially dependent on my athletic performance - should I decide I've put my body through enough punishment, I can quit knowing my family and I won't starve... Taking talent over trust makes sense in a very, very narrow set of circumstances...

M

People dislike inheritance taxes because it's a double taxation. Their family already made the money and paid taxes on it, and the event of a death shouldn't result in a second layer of taxation.

A better idea would be a consumption based tax to replace all income taxes. It encourages saving money, and you don't have to worry about taxing wealth transfers because it will be taxed as it's spent. Neil Boortz's The Fair Tax is a great example, which maintains our current progressive system with a monthly payment to all citizens to cover basic living expenses.

It also makes the IRS a fraction of its current size (taxation would be regulated at the corporate level, which already has the infrastructure in place and with minimal incremental cost). The regulatory burden on the average citizen is then minimized.

David

@M.... up-vote
The Fair Tax... up-vote

P.S. I always have and always will dislike sport, whether for viewing or active participation. Horrible stuff.
I would give a received trust fund to any charity that worked to bring an end to all sport.

Eminent emigrant

Came here to state the bleedin' obvious but James c and ymi alive pipped me to the post.

Ralph Musgrave

Test comment. Please ignore.

Phil

Inheritance tax corrects the undertaxation of housing. If you buy a house for £250k, with taxed income, then sell it for £1m several years later, the £750k you make isn't taxed (if it was your sole property) This has led to huge economic imbalances, and more than half the country having a vested interest in keeping housing undertaxed, and bleating about inheritance tax being unfair as the estate has been taxed already, which is a) mostly untrue, and b) irrelevant (should we not charge VAT because the money used to buy the goods has been taxed at source?)

chris

@ Carol, Stephen - yes, I meant unconvincing. I changed it and added a link explaining: the "double tax" argument against IHT is especially silly, partly for a reason Phil says.
@ James c - in that ComRes poll, 49% of people oppose raising IHT. This is vastly more than the number who'll get an inheritance big enough to be taxed.
I take the point that Trustafarians might feel a sense of achievement: the self-serving bias is very powerful.

Rich

Phil's argument is just that capital gains in housing should be taxed, and that house prices are absurdly high (absurdly overvalued, most likely, as we may find out soon). It's not really anything to do with IHT.

reason

soru is on the right track.

How to do that with internationally mobile people is tricky though.

reason

YMI alive
"On a separate note, the inheritance tax is, without a close second, the most stupid, unfair tax that comes to mind (coming from a lower middle-class guy who will inherit nothing). To tax property which has ostensibly already been taxed adequately during the life of its original owner again after they die? A form of legalized theft, that - no logical ground based on which this makes any sense."

No this is complete nonsense.

Firstly, in general all taxes are based on transfers, and a transfer of wealth from one person to another is not inherently different that a transfer of money from one person to another. The inherent problem with taxation is the same for all.

Secondly, mostly a large part of the value of the assets so transfered has not been taxed at all, so the double taxation argument is also bunk.

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