Tim Worstall

Abolish Inheritance Tax!

Tom Utley has it right I think:

Sexual intercourse has three functions: to make
babies, to give physical pleasure and to give us a means of expressing
our affection for each other. Only that first purpose should concern
the state. The other two are no more the Government’s business than Sir
Elton’s bedroom practices are any business of mine.

Every
time I think of the Civil Partnership Act, I think of my two sisters –
one of them a single mother – who have shared a house for most of their
lives and bring up my niece together. They are expressly forbidden by
the CPA from forming a civil partnership, for two reasons: (i) they are
siblings; and (ii) they have not the slightest sexual interest in each
other.

If Sir Elton dies before his partner, Mr
Furnish may now inherit all his property, free of inheritance tax – and
all because they fancy the pants off each other. When one of my sisters
dies, the other will almost certainly have to sell their house to pay
the tax bill. Where is the justice in that – and how does it serve the
interests of the state?

Rather than the restrictions imposed by the Civil Partnerships Act, abolish the tax altogther. Of course, I want to see the tax abolished anyway for I’m rather with that idea of wealth cascading down the generations rather than it going off to pay for whatever El Gordo wants to piss it away on this week. And equality be damned.

In

13 responses

  1. Paddy Carter Avatar
    Paddy Carter

    I’ll never understand you on this one. Wealth “cascading down the generations” means some luckly blighters starting life with a big advantage over everyone else. I know this is inevitable to a greater or lesser extent, but I don’t see why we can’t reduce the degree. I’m with Warren Buffet on this one. You get enough of an advantage having rich parents as it is, without needed to inherit a slug of cash when they kick the bucket too.
    Surely it’s easy enough to change the law so that people can be pass on homes – i.e. children or sisters can take ownership so long as it has been their main domicile, and they don’t have another home or aren’t just going to rent it out – if needs be tax can be levied upon sale.
    Tim adds: But if everyone inherits then we’d all be sufficiently wealthy not to need a welfare state.

    Reply
  2. Andrew Ian Dodge Avatar
    Andrew Ian Dodge

    The “death tax” is the most evil tax around. People pay tax on that money all their life and they when they die the goverment comes along and gets another chunk. Its a disgrace that civilised nations have such a Marxist tax.

    Reply
  3. Paddy Carter Avatar
    Paddy Carter

    “But if everyone inherits then we’d all be sufficiently wealthy not to need a welfare state.”
    I am baffled. Please expand Tim.
    How would abolishing inheritance tax allow everyone to inherit? What percentage of UK citizens will pay inheritance tax? Of those who will, what percentage of them (or their offspring, I suppose) are reliant on the welfare state?
    I don’t see how abolishing inheritance tax is going to make us all so well of that we won’t need the welfare state, which is designed for those with bugger all in the first place.
    Hmm, I fear I may have utterly failed to grasp the point you were trying to make, because the one I think you’re making seems self-evidently daft.

    Reply
  4. Paddy Carter Avatar
    Paddy Carter

    Andrew In Dodge
    If it bothers you that much, it doesn’t take a genius to either spend all your wealth, or pass it on to your children, before you die. You can always leave it to charity, if you really don’t want to state to get its mitts on it.

    Reply
  5. dsquared Avatar
    dsquared

    [Tim adds: But if everyone inherits then we’d all be sufficiently wealthy not to need a welfare state.]
    How is a simple tax reform going to give us all rich parents????
    Or possibly you’re suggesting that everyone should have to divide up their property in their wills on an egalitarian basis rather than favouring their own children. I could get behind that.
    btw, if Utley actually believes the argument in the first paragraph, surely the actual solution would be to abolish the married couples’ inheritance tax perk and use the money saved for a small reduction in the marginal rate?
    Tim adds: “How is a simple tax reform going to give us all rich parents????”
    Wait a few generations.

    Reply
  6. Matthew Avatar
    Matthew

    This can’t be right. Inheritance tax only raised £2.5bn in 2004, and less each year you go back. If abolishing it could work such wonders, then so could the government giving a random 200,000 people £12,500 each, every year.
    Tim adds: Oh, tut, tut Matthew. And the distorting effects of people trying to avoid it? I would and do argue that abolishing inheritance tax and trust funds at the same time would increase social mobility. Those idiot trustafarians would soon lose it all to sharper folk.

    Reply
  7. Matthew Avatar
    Matthew

    Oh come on. They’d have to be bloody big distorting effects. And how could you abolish the concept of a trust fund?

    Reply
  8. Devil's Kitchen Avatar
    Devil’s Kitchen

    Matthew,
    Why bother with a Trust Fund which, for the purposes of avoiding death duties, you cannot have any control over if there are no death duties?
    Abolishing death duties would take away the main reason for establishing a Trust Fund.
    Why is it that people like you think that we should penalise those who have saved their money, and instead encourage people to piss it away on crap and let the state carry them throughout their retirement?
    DK

    Reply
  9. Dan Avatar
    Dan

    I’ve argued before that inheritance taxes break down family ties. If you can’t pass your accumulated capital on to your children, why bother accumulating any? Indeed, be sure to piss it all away before you die.
    And if there’s nothing to inherit, why bother supporting your parents in their old age? Just move out at seventeen and never phone the blighters again.

    Reply
  10. Matthew Avatar
    Matthew

    Dk,
    Trust funds exist for many reasons, often to prevent children spending their parent’s money unwisely, I would think. If you want to legislate against that, well up to you.
    “People like me” think that £2.5bn a year won’t destroy the rationale for a welfare state, would be a fairer point. But also, I have nothing against people using their savings to ‘carry them through retirement’. In fact that’s exactly what I’m arguing they should do with them.

    Reply
  11. Tim Newman Avatar
    Tim Newman

    Trust funds exist for many reasons, often to prevent children spending their parent’s money unwisely, I would think.
    I’m not exactly sure what the mechanism is which prevents me spending my dad’s money, wisely or unwisely, but I’m sure it’s not a trust fund. It’s more along the lines of him telling me to **** off whenever I ask for any.

    Reply
  12. Paddy Carter Avatar
    Paddy Carter

    For the love of God, inheritance tax does not mean that there is “nothing to inherit”
    the threshold is £275,000 and you keep 60% of anything above that.
    If my two siblings and I got £50,000 each when our Dad dies, that would represent more money than we are ever likely to be able to save our of our salaries in over a decade. That is not ‘nothing’ – and, Dan, I like to think our family ties would remain as strong as ever, were our Dad to die penniless.

    Reply
  13. dsquared Avatar
    dsquared

    Given that the obligation to look after aged parents and the bond of familial love that underpins it is one of the very few genuine cultural universals, I am slightly aghast that so many English and American people appear to have been educated into believing that it’s only a financial arrangement, and suggest that this might imply that there is something very badly wrong with right-wing politics from a mental health perspective.
    The idea of “getting rid of trust funds” is actively insane. A trust is a fundamental concept of English commercial law. I don’t understand what anyone might intend by this.
    (in related news, very few “trustafarians” are idiots; some of them are quite lazy and many of them smoke too much dope, but the ones I know are in general quite intelligent, particularly in matters relating to the management of their trust funds and I have no reason to believe they’re not a representative sample)

    Reply

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