大象传媒

Much of the discussion relating to inheritance tax, especially in certain tabloids, is misleading in that it starts with the wrong question, "would you like to see IHT abolished?". And, we are assured, when this question is posed a large majority answer 'yes', whilst the inevitable effect of doing this would be that they would have to pay more of some other tax or would be opting to forgo another tax cut that would benefit them. Of course it might just be a willingness to pay more in the interests of fairness, but somehow I think not.

IMO a mature discussion of this subject area needs to start with the question "if 拢x bn is available for tax cuts, which tax(es) would you cut?", and faced with this question and a list of options with their pros and cons, I suspect that IHT would not be top of the list. Personally I my priority would be to see everyone earning well below the minimum wage taken out of PAYE and NI. But would there be votes in this?

Evan be honest about the 6% of estates that actually pay it. Could this be because when a husband dies, most of the assets are passed to the wife who is exempt from paying it so immediately 50% of all estates automatically don't count. So it is really 6% of half the remaining estates, then cut out the proportion of young people's estates who die before they have accumulated any significant assets, the figure starts becoming more relevant doesn't it....

Evan,

Why can we not just have a flat rate of income tax with a tax free allowance, a corporation tax? Obviously duties and relief on items the government wish to encourage or prevent (childcare the former, smoking the latter) are needed but it seems to me there are stealth taxes all over the place?

Are there sound economic reasons for a large number of complex to administer and calculate taxes or is it a Paul Daniel's type smoke and mirror illusion to hide our real ax bill?

Damian

There are a number of things in its favour for a chancellor: IHT is only collected once in a lifetime, so should be more cost effective to collect than say VAT. IHT revenues are likely to increase even if the threashold is raised in line with inflation, raising money without the chancellor having to put up taxes. Potentially it may redistribute the housing market which would otherwise become dominated my larger sized properties bought with inheritance. Furthermore, with many people inheriting in their 50s, large inheritances might be an incentive towards early retirement taking highly skilled high earners away from the labor market. Not that these reasons are ones to make the tax popular with people who pay it of course.

Simple make it law that as soon as a persons estate or joint estate reaches the IHT level or above then a joint life last surviver life policy must be sought to cover any due tax amount These policies if purchased when you are young and healthy cost peanuts compared to what the inland revenue will take at 40 %
You could always scrap all taxes on income .Raise it on goods and take all IHT at 60% So when you die you pay your tax in lump hahaha Make people work for their money,that way you will get the youth of Britian off their backsides and earn a crust...

You don't mention that another consequence of inheritance tax abolition would be that a great many elderly wealthy people would be likely to try to move here from other countries to see out their final years... this may have its own costs and benefits (they may pay other taxes while here and are unlikely to be a burden on the state if they are truly wealthy)

As usual you shed light on an issue from a very interesting angle, Evan. Your discussion of the dead-weight burden of tax collection reminds me of a recent discussion with a friend: he was very anxious to keep his US cash balances in non-interest bearing accounts and so avoid the burden of tax returns that would be triggered by the payment of a single cent in interest.

IHT is not just personal - it is an adjustment to society; a re-balancing of wealth. How much would people be prepared to pay to rob the rich of of their wealth in order to reduce the wealth gap? Microeconomics tells us that people will pay to make people worse off than themselves. If true, then the majority of the population (ie those of "average wealth") should accept a high IHT burden to take the wealth away from the super-rich.

This has only become an issue because the middle classes are whinging about paying tax on their huge property gains. If the alternative was to slap CGT on, that would both bring in the tax and put the lid on prices, which would be more effective and lead to more investement in productive areas of the economy. However the middle classes would whinge about that too.

"Dave" won't do anything if house prices fall and just raise the threshold a bit to reduce revenue loss.

I'm all for reducing complexity in the tax system, however won't this mean that the burden will be spread across more people? People in the '94% of estates' catagory that would never be taxed and can least afford it.

What a fascinating article with interesting comments about the value of untangible opportunity cost. Perhaps HRMC should consider manipulating the surplus equilibrium as you have suggested to reduce such inefficiency. However, what inefficiencies would occur in the collection of the tariff to eradicate such taxation complexities, as surely it would simply add another chain. But of course you were speaking hypothetically.

Inheritance Tax is one pillar of wealth redistribution in a society that has a shamefully wide rich-poor gap; - despite 10 years of labour government.

If tax take remains constant then abolition of inheritance tax for its 1-in-20 payers would presumably be paid for by the 19-in-20 poorer people. Not a vote winner for any party!

Government and opposition parties might justify raising the threshold if they could curb the tax avoidance activities of the super rich.

Inheritance Tax does seem to me to be a double taxation that is hitting those whose only real asset is their home. My mother is now 85, she is a widow and receives the state pension and a small widow's pension. Despite the enhanced personal allowance she still pays greedy Gordon income tax, not a huge amount but income tax all the same.
Her pensions do cover the cost of her basics and council tax but I pay all the maintenance charges and utility bills for her three bedroom terrace home.
Her home bought in 1965 for 拢2,200 now has a value of around 拢385,000.
Good news for greedy Gordon under the current arrangements; my mother is in hospital and unlikely to come home. Her estate, well her only asset her home, will be subject to inheritance tax at 40% on the excess.
Come on down Gordon!

I suspect one of the reasons people loathe it is that'dying to plan', as Evan so aptly puts it, is rather hard to manage. It's awkward and worrying to avoid IHT, which i think is why we resent it so much

I heard a comediene saying, in a baffled tone, when asked by a beggar whether she had any spare change:

"I have no way of knowing. I haven't finished living my life yet"

The big problem with something like inheritance tax is that the very wealthy avoid it completely while it hammers the middle classes for whom their home is usually the overwhelming bulk of their estate.

The very wealthy have the means to hire lawyers and accountants to protect themselves, and the less well-off fall below the threshold anyway. So the tax misses the people it "should" hit, and instead targets those less able to pay.

It encourages dishonesty - if someone dies with thousands of pounds in cash, jewelery etc in their home it is hard to imagine their heirs rushing to declare the fact.

It imposes additional costs where property is concerned. If I am the sole heir to an estate consisting of a 拢500,000 house I share(d) with the deceased and nothing more, I pay 拢80,000 in tax. I have to pay agents' fees to sell my home to fund the tax. Then in buying another (smaller) house I incur a further 拢12,000 or so in stamp duty, along with the stresses associated with moving house.

Finally it imposes additional stress on families at a time they really don't need it, and having to raise the money to pay taxes on an estate before realising the value of the estate adds further costs still (in the example above I would need to find 拢80,000 before selling the house - most people don't have that kind of cash floating about).

It should be pointed out a couple of things:

i) Inheritance Tax was never designed to attack those who just had property and not cash assets (for example stocks, bonds and other liquid assets)

Thus when it effects say a middle-class family with a four bed London home worth say 400k it attacks only their 'luck' of having a fast appreciating asset. This isn't that fair to be honest.

Therefore I would support it's abolishment. Or at the very least the nil-rate band should be raised at a speed that matches inflation adjusted for house prices. Perhaps tied to the area of the main asset (the house) through local taxation rather than central.

2) In regards to your point about 'how much to pay to avoid', heh, do remember the time value of money :) If I pay 6k next year, that's better than paying 6k this year :)

But being serious for a second, paying to avodi the other burdens besides the financial is a good idea in theory, but sadly HMRC would never agree. They would feel that the assessment of how much to pay would be too difficult...

3) If the Government cut down on waste in for example NHS IT... Or PFI... Or other wasteful contracts worth billions, then we wouldn't need IHT... And that should be the preferred solution. I can't believe that HMRC had its annual accounts qualified (Accountant speak for them being fundementally wrong) due to tax errors, working tax credit errors etc. This Government leaks so much money it's embarrassing!

Once you鈥檝e had to sell the house to pay out for expensive nursing home fees (and people and living longer now) I don鈥檛 think many other than the super rich will be inheriting anything.

It's also worth noting that the government's own figures suggest that benefit fraud runs to some 拢3-5bn per year. Since that's the figure openly accepted by the government the true figure is probably higher still.

So, put another way, grieving relatives are being taxed at a time they really need time without harassment from officialdom, in order to pay fraudulent benefit claims.

Abolishing inheritance tax has nothing to do with tax efficiency. It is simply due to the fact that the housing bubble has pushed many more properties (and voters) above the threshold, and these have to pay the tax despite "not being rich", as the tories themselves put it. The logic is flawed, the huge capital gains on property over the last decade, far above growth in income, means that those inheriting a property do indeed get a huge windfall. Rather than trying to subsidise house prices that the nation can't afford, they should acknowledge that there is nothing wrong with the tax, but there IS something wrong with house prices.

The most interesting aspect I can see with this approach is that it assumes that I would buy exactly the same services or products as the government does. You assume I would voluntarily pay for -

Iraqi conflict

civil servants

the current court system

Mp's salaries and pensions

ID card research

Central banking

the beeb

and so forth

Errr no thanks..

Stop taxing me and I would save a fortune.

BT DEFNITION the government only provides gooods and services that nobody is willing to acquire personally.

This might be good (hospitals) it might be bad (kickbacks for arms dealers) but it would certainly be cheaper.

Should the dead pay taxes? One way of avoiding taxes at the end of life is to give it all away. It's quite simple really.

What we can do is borrow against assets and use enough of that to buy an annuity, and give away anything left over. I plan to do just that; and in good time to ensure I can see that my money is used well. I know that, if I wait till I'm dead to give it away, I can't enjoy the spectacle of my surplus assets being of use to someone else!

What is absolutely certain is that no abolition of IHT will make any difference in the end: the grim reaper takes everything. So giving away wealth before we go is a better way of avoiding paying IHT.

If an end to IHT is top of the Tory policy list, does this mean that policies which have effectively no impact on anyone are to be prioritised if we vote them in.

IHT seems to dominate tax discussions in much the same way as nuclear power dominates energy debates. Neither item ever has been, nor could foreseeably become, big enough in market share to belong at the top of any agenda, but there it is in the headlines again.

Bizarre.

..or you could just go to a wills and trust specialist and pay a few hundred quid and aspend a few hours with an instruction-taker and save up to 拢120,000 in IHT and a lot of heartache for your grieving relatives.

I suspect the reason that only 6% pay IHT is that they are the only ones who don't know there are simple protective measures.

By the way, if the govt raises IHT in line with current measures then that percentage liable hits 50% in five years.

IHT saving wills are a one-off relatively painless way of saving a fortune.

How much would I pay the gang of thugs, who wish to expropriate a large percentage of my property every year, to stay away?

Nothing. I point blank refuse to live my life for the sake of any other man, nor do I ask any man to live his life for the sake of mine. I would continue to do the only thing which is consistent with my right to self-ownership: dodge and evade their henchmen at every opportunity. Taxation is for slaves. No thank you.

The reason more than 6% of the tax population worry about IHT is that those with assets under the threshold have parents with assets above the threshold. It's those that survive who have to deal with all the issues around IHT. Abolish it now!

6% historically. I wonder what % of the recent deceased where caught by it. Much higher than 6% methinks. Just like that other tax that suffers from fiscal creep.

I think the major reason for inheritance tax is that dead people don't vote.

If you want to remove 'inherited advantage' you should tax earnings from living parents because I'll be close to retirement (hopefully) before my parents pop their clogs.

I think the mathematics is far more simple than Evan suggests: people aged 55+, who own their own homes, and are ABC1 are disproportionately likely to vote; a tax cut just for them is therefore more likely to capture votes than a proportionate tax cut across the wider electorate. Personally I'd prefer a cut in stamp duty (try becoming a first time buyer in the south east and you might sympathise with that one).

In most cases, an individual will already have paid tax in acquiring the assets that make up a legacy. Why should they pay a second time just because they are dead? As you say, inheritance tax discriminates against those who live longer, who are honest, who prudently save instead of consume or who have untrustworthy children. It is also difficult to collect. In short, economically inheritance tax is difficult to justify. The politics of it is a different matter...

Never use the word "hypothetical" in relation to something as baroque as our tax system!

In 2000 I sold my thriving software business to a bunch of very sharp operators. By the time I was able to cash in the shares with which I had been paid, their value had tumbled, but more importantly it was a different tax year so I had to pay tax on the full amount for which I had sold my intellectual property and my share of the business.

This nearly bankrupted me, but it also left me with an impressively large capital gains tax loss, which I'm still working my way through. Effectively, in the language of your column, I have "purchased" the right not to pay CGT for quite a few years.

1) On the one hand, this wiped out a pool of cash which, during the past few years' bull market, would have been very useful to have.

2) On the other, it has certainly altered my approach to investing in shares. I"m happy to exploit even small amounts of volatility to generate some profit, something I might be less prone to do if I had to factor in 40% tax on each sale.

I'm still not sure whether this has been overall good or bad, but it's certainly had _some_ effect on my finances....

It's wrong to see IHT as a tax on those who die. It isn't, it's a tax on those who inherit a very large amount of money.
We should see it then as a tax which is actually on UN-earned income, and as such is not especially unfair.
Heirs will inherit almost 拢300,000 without paying any tax, and after that pay 40% on the rest...is that so unfair?
Of course, rising house prices make a difference, & there may be scope to raise the threshold faster, but as a tax, it's hardly so unfair.

Good idea! If you want people to buy into a scheme then surely from the government side, any proposal should be seen to be reasonable. As a compromise, I would suggest that the limit should be raised to 1 million pounds. Most people would go along with this and the government would at least collect some revenue.
I would like to see this tax abolished completely as it is unfair but I fear that this will not be possible.
Derek Moore
Finchampstead
Berkshire

we always hear the statistic that only 6% of estates pay IHT but this is to me a meaningless figure. It is the beneficiaries, not the deceased, who are missing out because of the tax take, there may be several of these for each estate, all of whom will be affected by IHT. It is perfectly possible that many of the people who actually lose out through IHT have very low incomes and very few assets.

I pay 40% income tax on the salary I work hard to earn. I don't see why I should get a tax break on a windfall that I didn't earn.

Wouldn't it make more sense to abolish inheritance tax as a separte tax and treat inherited money as income and levy income tax on it?

Thought provoking, as I've always favoured inheritance tax as a a very fair, progressive tax that only burdens people who are not around to be affected by it.

The inheritors are not burdened - they just get less of a windfall than expected.

But you count as a cost people 'who wrongly worry about paying it' - does this mean that we should shape our tax policies based on the laziest/most ignorant of tax payers who don't/won't understand the system?

Unfortunately, there is more to taxation than economics; morality plays a part, too. Inheritance tax is about the most progressive tax imaginable, as no-one is penalised (since you're only taxed when you're not around to be hurt) and yet the state benefits. It should be popular on the left (as it works against the benefits of inherited wealth) and the right (as it only effects unearned income). In fact, the perfect right-wing solution would be to seriously raise inheritance tax, whilst cutting income tax and corporation tax in return. Individuals and companies would then be rewarded for earning their money fairly, whilst being taxed more heavily on a particular form of unearned income. As it is, this isn't likely to happen - the coalition of the selfish and greedy is too powerful.

Falling for the rational being fallacy? You must be an economist.

It wouldn't be worth 拢5999 to me to save a 拢6000 tax bill, because, believe it or not, I'd rather have 拢6000 of my money spent on schools and hospitals than 拢5999 of my money spent on a set of alloys for someone's ferrari.

Sorry for being irrational.

In series 3 of The West Wing, there is a problem in passing the 'Death Tax' through Congress, despite it only affecting those worth more than 10 million - fewer than 2% of the population (back then). Perceptively, President Jed Bartlet says that it does not matter that most people are unaffected, "the trouble is that everyone thinks they will be. That's the problem with the American Dream."

Might not the same be true of the UK's IHT.

Honestly, the whole idea of abolishing IHT just won't wash with the voters.
Far more compelling is the idea of reducing the punitively high rate (40%) to something more palatable (say, 20%). Labour reaped the electoral rewards of reducing income tax rates (even if the actual tax burden has risen), and the same could happen to any party proposing a lower rate of IHT. Laffer curves don't just apply to income tax and there is a case to be made that IHT revenue could be increased by optimising the rate at a lower level - suddenly the incentive to avoid the tax would be lessened and at the margin some tax advisers could be usefully redeployed elsewhere in the economy. Come on, Tories, where's your common sense? What's Willetts doing with those two brains of his?
And what about this hare-brained proposal to increase green taxes? We already pay more duty on road fuel than anyone else in Europe, so yet higher duty is an electoral no-no (remember the protests a few years ago?). What else does that leave? An energy tax - how about increasing VAT on gas and electricity? Good idea - it contributed to the Tories' 1997 election defeat and Labour promptly reduced it to 5%. I don't see any electoral mileage in higher green taxes.
So what about capital gains tax? It's a no-brainer. There's absolutely no justification for a 10% rate, what was Brown thinking of? Up it to 20% and people would still have ample incentive to create successful businesses.
And while you're about it, harmonise corporation tax at 25% for all companies large and small - what possible justification is there for taxing distributed profits at different rates depending on the size of the firm? You want to encourage reinvestment? Easy - tax small companies at a lower rate on retained earnings - how about 10%?

Cheers

There must be ways of taxing the rich to help the poor that would annoy everyone less than IHT.

Abandoning IHT doesn't mean abandoning the poor.

I can't say I believe the 6% of estates figure. Possibley only 6% of estates which go through probate in a given year but it must certaily be a far greater percentage of families who would be liable to IHT were they to have to deal with their parents deaths. I certainly couldn't be considered in the richest 6% of the country, but assessing my parents properties alone I would be liable for a 拢40k IHT bill.

Agree to a certain extent that 'tax planning' probably costs many individuals a lot of money but it is these 'loopholes' that should be plugged!!!

As a different thought: Surely any decision to abolish IHT would be made predominently by people likely to benefit from it the most!!!! Wealthy politicians.

The way things are going most people are going to have more immediate things to worry about like:"Will I still have a job?" and "How can I paay a mortgage thats gone up 50% on a house worth half what I paid for it?". Its all happened before as so recently.

Evan - please could you tell me the rational for NOT bringing in line residential Stamp Duty Land Tax.

I'm one of those First-Time Buyers and I'm about to struggle onto the housing ladder. But guess what! I'm have been delaying my venture for the best part of a year because to buy a modest place in north west london totals circa 拢300k and that's a stomping 拢10k tax!

That's nealy a 1/3 of my gross yearly salary!

crazy....

simon

All this continuos complaining about IHT is justified.

Those who don't mind IHT are those that don't have estates that will fall within the IHT bracket. Why should people be forced to sell off their family house when their parents die just to give more money to the government to fritter and waste as they see fit as they usually do?

IHT is a total disgrace as all throughout our lives we are paying tax on this, that and the other. Through income tax, council tax, road tax, tax on anything even considered mildly enjoyable like cigarettes, alcohol, and motoring. The list is endless and tiresome and so why should we pay more for less?

For those of us who have private medical who don't use the NHS as it's slow and dirty, what benefit do we gain? For those of us that don't have children and wouldn't use the state system if we did, what benefit do we get? NOTHING.

The reason there are people with large estates and high tax bills, is that they have generally worked hard to get where they are in life. Admittedly, there are those that haven't and so be it. We celebrate lottery winners, when all they have done is randomly selected six numbers, so why not celebrate those that have been more fortunate in life?

I for one refuse to hedge my IHT bill by paying for a "get out of IHT" card - all that would do would increase governmental cash flow now, and then no doubt, the year my parents die, they will abolish IHT anyway!!

Surely the argument for IHT is that it only hits the rich. But one of the significant facts about IHT is that it's easier for some people to avoid than others. For example, if you live in one property it's difficult to transfer ownership of it before you die, since it continues to be your main residence. However, if you own two properties you can move into one and transfer ownership of the other (admittedly gradually) to the people who would benefit from your will. Thus the truly rich find it easier to escape IHT.
Clearly the political issue is that with today's property values a lot of people expect to pay IHT or, perhaps bizarrely, hope they will. The massive increase in property values and the wide spread of home ownership are creating a much more actively capitalist society than we've had for years, where certain families will have assets that were acquired by a previous generation. Good thing or a bad thing?

Very rich people can avoid IHT using sophisticated avoidance techniques and prepare for death years in advance.

"Ordinary working" people have their home as their biggest asset (payment for which has already been taxed as PAYE) and cannot easily avoid it, especially when dead.

IHT only seems fair to those who spend rather than save or expect the state to support them.

House price inflation has grown much more quickly than the threshold at which IHT is payable, so GB got more money from a less wealthy, less savvy group and became addicted to the tax revenue.

So at 51 years old my very ordinary, nearly paid for house in an expensive part of the South East, is well over the limit. I see my struggle to pay the mortgage as almost futile as GB will effectively take my savings in IHT.
Will I vote for a party that will reduce its impact. You bet.
If not will I take steps to avoid IHT. Yep.
Will I vote for GB - not on your life.

I spend many sleepness nights worrying about paying IT when my mother dies. She owns 2 small houses in London, hers, owned since her marriage in 1947, and her mother's. My Grandmother could never afford to live in her house, bought from new in the 1930s out of her wages as a cleaner, so it has been let at a low fixed rent for many years to an elderly couple, which made it uneconomical to sell. With rising prices I am looking at a bill of 拢150,000+. I am a teacher and my husband is a priest and our joint income just covers our living expenses and our 2 sons' upkeep at university. A mortgage to cover the IT is more than I earn in a month and as I'm in my mid 50s I don't have many more earning years ahead of me. I will divide my mother's estate with my brother (who is in a worse financial situation than I am), but one of the houses has always been intended as our house for retirement. Thanks to IT we are likely to be homeless when we retire, despite coming from a family who has worked hard,served the community, saved and paid taxes all our lives. IT would be fairer if it took into account the ability of the benficiaries to pay.

By the saying that very rich avoid tax is interesting if a somewhat flawedd stereotype.
Granted, yes some do evade taxes.
This is illegal, they are caught, pay arrears much larger than the evaded tax then sent off to prison.

But i do not think you were talking about criminal evaders (e.g Al Capone whom got done for tax evasion) but rather those who use the law to minimise the tax they pay. By definition there is nothing wrong (illegal) with this as they a following the laws that actually make them pay the tax in the first place. Saying it is wrong would be the same as saying taxes credits for the poor is wrong, they are same in principle but differ only in the amounts.

Lets have some logic not just repeated tabliod bigotry.

On the subject of IHT, Wilde said 'two things are unavoidable in life, death and taxes.'. Well now their synonomous. My plan to beat IHT spend it all!!

How about this for a novel idea.

Lets move away from fractional reserve banking. A system where wealth is created though debt and only benefits a handful of people around the world. And politicians. Give Money As Debt a go!

Thanks to wealth created through debt we have all been enslaved. Time for a revelution. Like the french one.

"Evan be honest about the 6% of estates that actually pay it. Could this be because when a husband dies, most of the assets are passed to the wife who is exempt from paying it so immediately 50% of all estates automatically don't count. So it is really 6% of half the remaining estates, then cut out the proportion of young people's estates who die before they have accumulated any significant assets, the figure starts becoming more relevant doesn't it...."

So what you're saying is that the 6% figure is wrong because some people who are exempt don't pay it? I think you need to rethink your complaint.

Good article Evan, shame some people have an agenda to push in response, because IHT affects only the "avoidance-stupid, fairly well-off" people, and a tax on them is clearly not right.

Where do the rich get off...?
Quick scenario two people get 拢10,000. A gets his money from rich parents and B works 35 hours per week and earns 拢10,000. A, who does nothing, contributes no tax to the system while B pays over 拢1,200 tax and NI contributing all his efforts from employment.

Net position A. 拢10,000 B. 拢8,800
And who has done the work?

Parents die and on top of receiving an unlimited amount of free gift a further 拢500k can be passed tax free. (and the runt still hasn't got out of bed)

I am all for abolishing inheritance tax and let the recipient of inheritance and gifts pay income tax and NI like the rest of us.

Finally double tax arises all over society. You earn wages and pay tax, you go to the shops buy products with your taxed income you pay VAT. Buy a house out of taxed income, you then pay stamp duty. The great inheritance tax myth is that of double taxation because the recipient pays no tax on the income at all.

Then you wonder why the gap between rich and poor gets bigger and people at the poorer end of society become disillusioned and turn to crime.

And the middle classes want more. To all the middle and upper classes. Shut up.

I just happened upon this thread and it strikes me that Inheritance Tax is a mis-nomer for a very unfair tax that should more accurately be called Estate Duty. If it were truly an Inheritance Tax, the tax would be assessed on the amount of each inheritance (or perhaps on the total amount inherited by any person in a given period) rather than on the total value of the estate. That would be much fairer than the present system, which is rather as if the rate of income tax you paid would depend on the total value of your employer's payroll rather than on your own total earnings.

Surely the numbers of folk who want IHT abolished should be at least the same numbers who want a Conservative government, say mid 30's percent, not the percentage of people who pay it...whatever the true numbers of those might be?

Or am I putting the cart before the horse somewhere?

labour say they'll increase taxes and they do. tories say they'll cut taxes and they don't. hm govt's job is to raise taxes and they do!

Regarding point 55, I suppose we could ask why the average person believes the State has an automatic right to help itself to the fruits of our labours.

Perhaps the difference between the average worker drone and the very wealthy is a difference in attitude.

I don't go to work so the government can take my money and waste it.

At the end of the day the government needs taxation revenues from somewhere. This taxation requirement has increased substancially due to Tax Credit payments, increase in public sector workers etc etc. If they abolish Inheritance Tax they need to get it from somewhere else.
Inheritance Tax will not effect the spending power of dead people personally.
All other taxes effect living peoples income which would then effect inflation.

I am fascinated by the contributor who pleads of their future poverty when they have paid an inheritance tax bill of over 拢150,000. That means they will be inheriting at least 拢660,000, and taking 拢510,000 after tax (and that is with no tax planning).

I wish I was unfortunate enough to be hit by inheritance tax in this way....

Basically inheritance tax has got to be a sensible idea. There seems to be a degree of natural justice in transferring a proportion of the wealth of a person who dies to the community, above a certain threshold.
The perception problem has something to do with the starting rate of 40%, I feel. 40% is quite a high take - it feels punitive, a bit like confiscation. I wonder whether it would not be more acceptable if there were a 20% band (above 拢250k) and a 40% band (above 拢500k). This might reduce efforts to avoid it at the lower band.
To make up the loss, since much of it consists of property nowadays, we could raise a stamp duty on property sellers. If we paid 5% stamp duty on selling a property over 拢250k we could additionally grab some back of the wealth that people work hard to transfer early in order to avoid tax.
It doesn't seem to be unfair to have a special tax on unearned property gains.

Inheritance tax is a good idea in principle, when the principle is that the top X% should pay tax on massive estates to stop us from living in a "the rich get richer" society. When poor people struggling to rent a house have to raise tens of thousands of pounds to not have to sell a family home then what have their parents worked so hard for? I look at the world my children will be born into and would like to provide for them ... it may well be even harder than I am facing in the market now, and I don't believe that my already taxed income should be taxed again just because I choose to save rather than spend. Those that leave nothing to their children by releasing the value of their houses will avoid this, as will the rich with creative accounting. The low to middle income people may find that they spend their whole lives building up a legacy to find almost half of it torn away rather than pass to family. Is this really an incentive for us to strive for fiscal balance and to provide for our loved ones as much as possible, or for us to be spend-thrift workers who run ourselves into the grave by working for a greedy government. Unfortunately I think the latter is more real.

First question: Do you the public really believe that the mass increase of taxes this government has introduced has made any difference to the contribution to society? Do you believe we have better schools or hospitals and lower crime rates as a result? Secondly, do we really believe that given a person has paid taxes their entire life, their estate should then be taxed in the most inhuman and bullish manner, or is it really the case that support for inheritance tax is more a case of sour grapes? Think about it if you support it: What is the real reason behind why you are so angry?

Opposing inheritance tax is not always about money. And I speak from experience. I oppose it, because I do not want to loose my family home. They can take what ever cash is left over, but I don鈥檛 want to give up something with such strong emotional attachment - I dont plan to sell it, and I dont plan to make money out of it. If it is taken away, can I then claim trauma and live on benefits for the rest of my life? I cant help feeling that it is more socially acceptable to do so than, heaven forbid, be given something that was not taxed.

And finally, do you really believe that in a country where hundreds of thousands of people exploit the benefits systems that the governments priority is to target the hand that feeds them? i.e. tax credits being claimed by aliens who have never entered the UK never mind contributed, while others make a conscious choice to live off and manipulate the state their entire life - I do not mean everyone but I for one know of a few who have been more than open about their exploits. Don鈥檛 get me wrong; I agree in a welfare state, and supporting those who need it by giving them a helping hand back to independence, but I do not believe in a nanny state which blames, blames, blames and points the finger at those who actually contribute. People need to take responsibility for themselves and the government needs to support where required. But this doesn鈥檛 happen and Britain just keeps banging on about certain issues for its own political agenda, while brutalising those who try to contribute. It is such an outrage that in a country that plays on its democracy, it denies certain truths to be reflected in a 鈥榶ou can鈥檛 say that鈥� motion (how many of us actually think it, but just wont say it 鈥� silenced by our surroundings?) Well it is about time that tax was spent properly first. Holiday homes for ministers seems a perk. Should it not be taxed first? What about cutting down on MP spending allowances? What about the many think tanks that have produced unproductive systems with very little output? Do you really believe that inheritance tax is justified stacked against this evidence?

To Mr Dell,

Where do you get off. At what point is it acceptable to EXPECT other people to fund your life. Go back to the Hunter Gatherer concept. You dont see the cave men being expected to find food for those who couldnt be bothered to go and look.

And the irony? The poor man who saves and buys a property finds in 20 yrs time their property has inflated in price and their child who may also be poor, cant afford to keep their one chance of property because they cant afford the tax, or dont get the asking price to pay the bill so quickly(isnt it funny house prices went up when council tax was introduced - connection?)

I see some of the comments point out the IHT liability arises from the "increased value" of houses. Put very simply a house with 4 bedrooms is worth no more today than it was in 1950. If it were sold it would realise sufficient to buy another house with 4 bedrooms in its neighbourhood. The "increased value" of the house reflects the decrease in the real value of money. If the IHT liability arises solely from the reassessed "value" of a house I argue the tax becomes due because of inflation.
Brilliant - successive governments debauched the value of money and now they levy tax on the effect of their incompetence.

The inheritance tax controversy is a telling illustration of the current stage of human ecology.
1. Non-conscious simple animals pass on genes and frequently a favourable location and season.
2. More complex but still non-conscious animals add a degree of imitative training, protection and even a position in social group.
3. Even more complex and arguably conscious animals (higher primates, elephant, dolphins) increase this inheritance to include what could be called knowledge, example and culture.
4. The highest (human) primate, complex, conscious and intelligent animals, has expanded its legacies in the last 40,000 or so years to pass on to their offspring increasingly large piles of materials, rights, privileges and symbolic "property" (money and negotiables), and a hugely expanded culture (knowledge, institutions, moralities etc.).
5. That the State wants a cut of the value of these transfers to sustain its operations is exciting strong reactions among a large part of British Society, and is an important concern in many other developed countries.
6. Taxation of inherited material transfers can play an important role in creating more equitable social conditions and thus higher levels of consent among the governed groups.
7. However neither the individual鈥檚 nor the States fiscal or social interests to determine the distribution of inheritance transfers should be the main concern of the human species.
8. What the species should be examining is the value of the transfers and their spatio-temporal footprints.
9. Quite recently, probably within the last 200 years, values became detached from realizable sustainable production.
10. This was equivalent to the abandoning of the gold standard.
11. More recently the ever-ingenious intelligent (thus imaginative) and procreative (thus increasing populations) animals created value from remote (far away and far into the future) possibilities in ways resembling the classical chain letter.
12. This has set up an open game of Monopoly, with unlimited numbers of players bringing unlimited amounts of money, using an unexpanded, now probably shrinking through land degradation and environmental effects such as global warming, board.
13. It is the tragic paradox of inheritance transfer that this intelligent animal needs to address.
14. At some point a few decades from now, the succeeding generations will find their lives becoming impoverished and shortened because their parents have essentially borrowed from the future to pass on materials, rights, privileges and symbols which will suffer value inflation at unprecedented rates as a result of:
a) Rising costs (particularly security and labour) of maintaining materials
b) Non-sustainability of rights and privilege positions in the face of civil disturbances, particularly in 鈥渦ndeveloped鈥� regions
c) Major re-alignment of monetary values to reflect supply and demand of survival essentials (food, water, fuel, shelter, medical and educational services and supplies).
d) Collapse of values of derivatives (end of the chain letter).
15. Urgent, fundamental and radical changes, (reform is too weak a term), in human culture will be needed if the consciousness-intelligence experiment is not to become an evolutionary cul-de-sac.
16. Reactions of the public and politicians to the inheritance tax issue suggest these changes are still a distant prospect.

Dr Murray Watson
Resource Management & Research
www.rmruk.com

We have had quite a number of economic downturns over the last couple of centuries - the one currently happening , 2001 , 1993 , 1987 ... 1929 ... etc. . In recent times , historically speaking , these seem to have started in the U.S. of A. . 1) is there something about the U.S. of A. that causes these - whether these be massive , or more minor like the S&L , 2) who gains from these down turns ? - the cynical question is - is it in some ones interest to cause these down turns ? , 3) a sensible solution would be to disconnect from the U.S. of A. - is this actually happening ? - there seems to be some moves to do it .