Good lord, the old gel is getting confused:
Bill Rammell, the higher education minister and MP for hyper-marginal Harrow West,
As noted in the comments, actually for Harlow.
This week City dealers’ bonuses soared higher than ever, to £21bn, dwarfing the £3.3bn tax take from all their inheritances.
Sorry, did we slaughter all the bankers this year so that their estates are subject to inheritance tax? You know, for this tax to be payable there’s one event that has to happen: someone dying?
Inheritance tax is already weak. The late Roy Jenkins called it a
voluntary tax paid by those who distrust their relatives more than they
hate the Inland Revenue: most of the rich give away large sums before
they die.
Yes, quite:
Meaning to plant a Blairist flag to keep middle England inside the New
Labour coalition, he ended up rousing the powerful passion for social
justice that resides in most Labour MPs. Warning that Tony Blair’s
departure (and electing Gordon Brown) could mean the loss of the south,
he unexpectedly galvanised the party against the kind of Blairism that
deliberately ignores obscene inequality.
That’s why abolishing inheritance tax will have very little effect on "obscene inequality". Because the million and billionaires don’t actually pay it.
The wise rich worry about leaving fortunes to their children. Warren
Buffett, giving away most of his £44bn, says: "A very rich person
should leave his kids enough to do anything but not enough to do
nothing."
Well, actually, he put $6.7 billion into the traditional form of family charitable trust that will feed his descendants for many generations to come. Free of any inheritance tax, in fact, in the future, that sum will be free of capital gains, income tax and anything else tax, so long as 5% is spent each year. That 5% can include charitable giving, of course, and it can also (and does and will) include paying his descendants to manage that money, the returns to which carry on rolling up tax free from here until doomsday. Oh yes, a wonderful example of eradicating "obscene inequality".
Very few ever pay inheritance tax. Just 37,000 estates paid it last
year, out of 600,000 deaths. Byers bandied about the mendacious figure
of 1.5 million people now caught by it, arriving at this by crudely
adding up the homes of the living worth over the £285,000 inheritance
tax threshold (it rises to £325,000 next year). But by the time they
die, most of these will have downsized their homes, spending much of it
in retirement or giving it away to children.
Giving it away to children?
…most of the rich give away large sums before they die. If they survive
for a magic seven years, they pay nothing. It loses the Treasury untold
billions, and no one can explain why this seven-year loophole exists.
Polly wouldn’t be saying that many people don’t pay inheritance tax, so we needn’t worry about it, because they take advantage of tax law loopholes that she would like to see closed is she? No, she can’t really be saying that can she?
Social democratic Sweden recently abolished inheritance tax, but has a property tax instead.
I believe we have a property tax in the UK as well. Called Council Tax. What she means of course is a wealth tax (which Sweden does have at 1.4 % of assets, although the valuations of housing are pretty odd leading to gross undervaluations) but then apparently she’s too ignorant to know the difference.
The Bow Group, a Tory thinktank, calls for a 1% levy on all property
over £70,000, with a 38% flat tax to simplify the whole system and make
it more socially just at the bottom. Simpler flat taxes need not be regressive: the Joseph Rowntree
Foundation has just published a report from the poverty researcher
Donald Hirsch and the Institute for Fiscal Studies, which suggests a
flat rate of 35% could lift many out of the poverty trap at the bottom.
What I think she’s missed (certainly she has about the Bow Group, less sure about Rowntree and the IFS) is that this also involves the merging of the NI and income tax systems. It leads to a dramatic fall in taxation on higher incomes. She wouldn’t like that. Also, as noted in the comments:
"(George Osborne) is the man who flirts with flat tax, the simplest
tax of all – but also the most regressive, taking the least from the
wealthiest."
Polly Toynbee 2nd June 2006
"The Bow Group, a Tory thinktank, calls for a 1% levy on all property
over £70,000, with a 38% flat tax to simplify the whole system and make
it more socially just at the bottom. Simpler flat taxes need not be
regressive: the Joseph Rowntree Foundation has just published a report
from the poverty researcher Donald Hirsch and the Institute for Fiscal
Studies, which suggests a flat rate of 35% could lift many out of the
poverty trap at the bottom."
Polly Toynbee Today
Still, perhaps we should thank heaven for small mercies. She has at least grasped the point that flat taxes can, dependent upon the personal allowance, be more progressive than the current system. As are, indeed, all the diferent variations being floated.
Leave a Reply to Tim NewmanCancel reply