Monday, October 22, 2007

Pssst I Like Inheritance Tax

Psst no lefty ever looks at this blog so just between ourselves I think Inheritance tax is infinitely preferable to the alternatives . Cutting military spending , taxing small business , curtailing pensions , getting yet further into debt or taxing work .
It is not a tax on the dead, it is a tax on the living recipient of free money. Inheritance reduces the need to work and brutally enforces the property owning class divides that scar the country.It is, after all, mostly un-earnt windfall appreciation in the first place .Studies show that taxes encourage gifts to offspring earlier as well as educational input and other nurturing input when they matter most.It is beneficial for us all to have empowered workers than rentier drones. Adam Smith was broadly in favour as meeting his criteria of “ Evident justice and utility “
Why , then has this tax relief been greeted by such cheers and bunting. Partly because it is taxing twice which appears unreasonable, but is in fact true of all non income taxes. I think there is a deeper reason . In the last ten years when growth has exploded we have actually ended up with less disposable income after tax. The middling sorts scream “Where did it all go ! “ ,but have been mollified by the increase in the value of their home .The only tangible gain they have made . Often two incomes pay the mortgage and families have sacrificed leisure and freedom , life itself, to gain this prize .They consider it a contract . They saw Brown intending to quietly break the pact by ignoring the thresholds as they crept into the territory of ordinary people. It was the final insult .

So inheritance tax may be a good tax but there will be no realigning towards income tax cuts , which I would like , until we are in a tax and borrowing regime which is not a gaping beaked cuckoo in the fiscal nest. Until people trust the government to stick to Blair’s promise “Not to increase taxes” we will be stuck in this inefficient and morally dubious deal.

Simplify tax , cut income tax at low levels and do not increase it anywhere else. Make government borrowing transparent and start the urgent work of reforming welfare . Then we may find that a high level of estate tax might be an infinitely preferable alternative .. With £60 billion of debt on and off the balance sheet and a looming demographic time bomb we may soon have no choice but to remove taxes on job creation risk and work and the IHT sacred cow will have to be melted dow.Let us hope this competence is still left in our hands by the Euro -maniacs .


Ed said...

Cutting military spending , taxing small business , curtailing pensions , getting yet further into debt or taxing work .

Err N, cutting taxes increases growth and increases tax revenue...

The way to get "down" people "up" is to improve education and training, not to hammer the already "up".

I sometimes wonder whether you aren't secretly a socialist.

Newmania said...

I mean this in the cointext of a tax regime at about 35% as opposed to 45% of GDP.

Praguetory said...

I am on balance in favour of inheritance tax but I like the cut in inheritance tax because it appears to have changed the momentum. With a few exceptions Tory modernisers are no longer arguing against smaller government.

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