Inheritance Tax

IdleRich

IdleRich
Why is everyone getting so worked up about it? Is it really this that has brought the Tories so many gains in the polls? They're planning to raise the threshold from £300k to £1 million, are there so many people who stand to inherit more than £300k and think that getting it all is the most important thing on which to base their vote?
Isn't inheritance tax one of the fairest that we have in that it is a tax on unearned wealth and it is something that at least moves in the direction of giving people an equal starting position in life? Something that ought to be seen as desirable both by the left and by those who believe that merit should be rewarded with money.
Or maybe it's not fair that someone has earned money and paid tax on it once should have to pay tax on it again when they choose to pass it on. Seems to me that most people who I've heard moan about inheritance tax are old rich people concerned about their legacy rather than the young who might one day inherit. Also there is the argument about houses now often been worth more than the threshold so people have to sell their family homes on inheriting them to pay the tax.
To me though, it just seems strange that something that doesn't affect that many people - and if it does will probably only affect them once and then only at some unspecified point in the future - could be the thing that is making people change their vote.
Just want to know what people think really.
 

vimothy

yurp
Inheritance tax is a tax on death. If I work all my life to buy an asset, paying tax at every point, shouldn't I be able to give it to my children without the state taxing it again? What incentive is there to work to earn these things if you just have to give them up at the end of your life? (I know, I know: I'm nothing if not predictable...).

Also, don't about half of all houses in London fall within the criterea for paying IT?

But I've basically got no faith in the Tories, btw. They're just as statist as the Labour Party. And I could swear I heard Osbourne blaming the (British) treasury for the (American) sub-prime credit-crunch on question time last week. I mean, wtf? And this is the shadow chancellor I'm talking about.
 

borderpolice

Well-known member
What incentive is there to work to earn these things if you just have to give them up at the end of your life?

The most obvious is that one does not know when one dies. Hence nobody really works to give things to their children at the point of death.

The converse is more interesting: what incentive is there to work or to educate yourself if you can reasonably expect to live off your inheritance?
 

IdleRich

IdleRich
"Inheritance tax is a tax on death. If I work all my life to buy an asset, paying tax at every point, shouldn't I be able to give it to my children without the state taxing it again? What incentive is there to work to earn these things if you just have to give them up at the end of your life? (I know, I know: I'm nothing if not predictable...)."
That's not predictable at all - I thought that you would argue in favour of a hundred percent tax as that's the only way your previous claims about wealth representing merit could make any sense.
Also, even if that is what you think, how important is it? How many people does it affect and to what extent? I mean, if I inherit more than three-hundred-grand I'm not going to be moaning about the tax I pay on the bit above the threshold.

By the way, this bit
"What incentive is there to work to earn these things if you just have to give them up at the end of your life?"
is probably something you should take up with God as death (and maybe taxes) is inevitable.
 

gek-opel

entered apprentice
The thing that people are really concerned with here is housing. If an OAP dies having paid off their entire mortgage, but the value of their house is greater than the minimal amount specified to pay death duties, then the children (or whoever they have given the house to in their will) often have no option but to sell the house in order to pay the duties. Problem being is that much of the time the house has an extra sentimental value to the family. Now whilst in essence I believe that there ought to be 100% death duties, in a situation where we do have a practice of allowing people to inherit wealth then the system ought to be reformed when the chief asset being passed has become massively inflated in value.

The problem Vim is that how can there be a meritocratic system (a system which will be most efficient in terms of delivering individuals to positions based on merit, rather than inherited advantage- hence creating a better functioning society, with greater economic output, more innovation etc) when wealth can be inherited? It effectively creates a more sluggish less fluid society.
 

crackerjack

Well-known member
The converse is more interesting: what incentive is there to work or to educate yourself if you can reasonably expect to live off your inheritance?

This is exactly right. It's also why some of the most voluble opponents of reforming inheritance tax in the States are billionaires.

More than all the advantages already laid on a plate for the rich (private education, safe environment, the best health care), inherited wealth is a barrier to social mobility. Those other factors are mere enablers, you still have to do it for yourself. Untaxed inherited wealth is the antithesis of a creative society.
 

vimothy

yurp
That's not predictable at all - I thought that you would argue in favour of a hundred percent tax as that's the only way your previous claims about wealth representing merit could make any sense.
Also, even if that is what you think, how important is it? How many people does it affect and to what extent? I mean, if I inherit more than three-hundred-grand I'm not going to be moaning about the tax I pay on the bit above the threshold.

Yeah, but you want (me to want?) wealth to represent merit in an absolute sense, whereas I'm happy for wealth to represent merit on aggregate, and to gradually fade out the genealogical inheritance of rank over time.

Inherit wealth from your parents and fritter it away pointlessly, without using it productively, and you return it to general circulation and yourself to your previous worth.

Also, like I said, I think it does effect a lot of people now, given the high price of houses.

By the way, this bit

is probably something you should take up with God as death (and maybe taxes) is inevitable.

There's a difference between giving something up to the state and giving it up to your children.
 

vimothy

yurp
The most obvious is that one does not know when one dies. Hence nobody really works to give things to their children at the point of death.

This isn't true. One doesn't know the time of one's own death, but one can still hope to pass assets on - I have relatives who have done the same. I will want to do the sam when I die. Not knowing when that will be doesn't change it.
 

Mr. Tea

Let's Talk About Ceps
So are you planning an egyptian-style burial surrounded by treasures to take into the afterlife?

A video of himself laughing maniacally and burning all his money, KFL style, to be played to his descendents when they open his will. :cool:
 

vimothy

yurp
So are you planning an egyptian-style burial surrounded by treasures to take into the afterlife?

No - I can't afford it. I will be starting an NGO to try to appropriate some government funds, though. "Bury your wealth - it's the Green solution!"
 

borderpolice

Well-known member
Inherit wealth from your parents and fritter it away pointlessly, without using it productively, and you return it to general circulation and yourself to your previous worth.

Well the majority of serious inheritances are frittered away. hence it doesn't make a difference if that wealth is returned to general circulation by tax or by carelessness, except that in the former case, the inheriting parties are more likely to be productive members to society and not parasites.

There's a difference between giving something up to the state and giving it up to your children.

That is correct, but you keep on phrasing the problem in an all-or/-nothing fashion: whereas nobody seriously proposes to tax away 100% of inheritance.
 

IdleRich

IdleRich
"Yeah, but you want (me to want?) wealth to represent merit in an absolute sense, whereas I'm happy for wealth to represent merit on aggregate, and to gradually fade out the genealogical inheritance of rank over time."
Why will it fade? Like I say, it's much easier to make money if you have money. I seems clear to me that you can have "money = merit" or you can have (large) inheritances but you can't have both.

"Also, like I said, I think it does effect a lot of people now, given the high price of houses."
Well, the death duty is 40% after the first 300k, the average house price in London (one of the most expensive areas in the country) is approx £370k. That means that if you are lucky enough to inherit an averagely priced house in London you will pay £28k - a lot of money sure but not that much considering you've just received a £370k asset without doing anything to earn it.
By the way, I think you meant "affect".
 

gek-opel

entered apprentice
Why not?

WHy is that such a laughable option? In terms of political realities I can see why, (ie- the ignorant selfishness of people). But intellectually the argument is pretty easy to make isn't it?
 

vimothy

yurp
Well the majority of serious inheritances are frittered away. hence it doesn't make a difference if that wealth is returned to general circulation by tax or by carelessness, except that in the former case, the inheriting parties are more likely to be productive members to society and not parasites.

Since redistribution of wealth by tax is entirely arbitrary (or should be, at least), why is this the case?

That is correct, but you keep on phrasing the problem in an all-or/-nothing fashion: whereas nobody seriously proposes to tax away 100% of inheritance.

IdleRich just did. But anyway, it sounds better than saying "there's a difference between giving 40% (!) of an asset to the state and giving that 40% to your children". And you clearly know what I mean, or you wouldn't have mentioned it.
 

borderpolice

Well-known member
This isn't true. One doesn't know the time of one's own death, but one can still hope to pass assets on - I have relatives who have done the same. I will want to do the sam when I die. Not knowing when that will be doesn't change it.

Well, hope is fine, but i don't belive that this is a truly significant motivating factor, casual anecdotes nonwithstanding. you are just clutching straws.
 

vimothy

yurp
By the way, I think you meant "affect".

When I reply to you I actually spend time looking for spelling mistakes that you are going to bring up after I post, you know. I had gone through that post already, but am sorry to say I missed that one.
 

vimothy

yurp
Well, hope is fine, but i don't belive that this is a truly significant motivating factor, casual anecdotes nonwithstanding. you are just clutching straws.

It's a fairly common desire, wanting to pass something on to your children. Of course, I don't have any figures to prove it, just as I doubt you have any to disprove it.
 

gek-opel

entered apprentice
This isn't true. One doesn't know the time of one's own death, but one can still hope to pass assets on - I have relatives who have done the same. I will want to do the sam when I die. Not knowing when that will be doesn't change it.

This isn't an argument Vim, this is just desire- you might want to do so, but why ought you to do so?
I understand your loathing for this is based fundamentally on the fact that the taxed inheritances have to be passed through government, and that you view this as being somewhat arbitrary. But what do you children do to deserve to inherit your assets? And why should we consider honouring the wishes of the dead in a world where we no longer believe that they have an existence (of sorts) after death?
 
Top