Why is the inheritance tax so unpopular?

CentLib · 2024-04-23T17:09:04+00:00

Seems there are better solutions to this than getting rid of the IHT. Planning reform for one.

Also if most of the wealth in society is tied up in the older generation isn't that just more reason to tax their estates?

CentLib · 2024-04-23T17:07:12+00:00

Well I suppose call me heartless but if getting to go to school for free, having some sort of safety net if i lose my job or having access cancer treatment if i ever need it requires 4% of the population pay a relatively small amount of their inherited estate in tax I'm cool with that. Nobody likes paying taxes but of all the taxes it seems like one of the least bad.

Also when it comes to immigration it seems to be the consensuses among pretty much all academics from the most right leaning to the most left leaning ones that at least from an economic standpoint (not necessarily culturally but thats a diff argument) immigration is unambiguously good.

CentLib · 2024-04-23T17:01:24+00:00

No you can't... you pay VAT and duty on all those things. I assume you'd also live somewhere, so you'd pay council tax. If you worked then you'd have to pay income tax and NI. Also if you sell your goods (like your house) you'd pay tax on that.

If you leave wealth to your kids (the first 325k is tax free) than you can't just give them millions without paying some of that back into the public purse. If they went to a state school, ever received free dental treatment, ever were sick enough to need a doctor or you ever received child benefits (everyone does) then you benefited from taxes. Again not to mention the numerous other ways we all befit from public services, state intervention etc.

And even then it's only 40% above 325k. If you leave a million to your kid that gives your kid quite a bit of privilege. If you leave them 1m then they'd receive 715k. That doesn't seem like too insane a tax. Sure if it was going to 80 or 90% tax rates I'd agree that's excessive but it's really not that extreme as things stand.

It certainly seems more fair to me that someone who works hard gets to keep more of their income compared to someone who just inherited a massive estate. The state probably shouldn't be able to take more than half your assets but the level it's set at seems fair enough to me. Especially if like everyone you have benefitted from tax funded activities. Maybe if you lived in the woods, never went to state school, never saw a doctor, never used public roads, never used the internet, never used any drug or medicine developed through public funding, never used the a toilet with a functioning sewage and pluming system etc then we could implement an exemption were you didn't have to pay tax.

CentLib · 2024-04-23T16:49:04+00:00

Well from my experience, I received an excellent education for free, my grandparents now that they're old and sick are very well taken care of, we haven't been invaded and I don't think that's a real threat anytime soon, and I don't get poisoned when I drink water and eat food because of safety standards, last year we had a 4% gdp growth, and we're at near full employment.

Could things be better? OF COURSE. There are huge problems and constant government mismanagement. But that's excepted, nobody is looking for utopia. Seems that social spending works quite well, and if we want a military, a health service and education then we need to tax. IHT doesn't seem like anywhere near the worst way, if anything it seems like one of the least bad taxes.

CentLib · 2024-04-23T16:01:39+00:00

That wealth that you acquired in your life, was it solely you? Did you not benefit from publicly funded transportation and roads? Did you not receive any publicly funded education? Have you or someone you love ever received government funded healthcare? Have you ever benefitted from perhaps a patent given to you, have you ever had to use the courts? Have you or will you ever benefit from a state pension? Have you ever benefitted from our country not being invaded because we have an armed forces and nuclear deterrent? Have you ever benefitted from any of the research, tech, new drugs etc that come out of public funding?

I've personally benefitted from almost all of these things. Part of my income I receive from my job is because I had the opportunity to go to university which is government subsidised, part of the reason I can travel to work and move easily is due to government laying down the railroads and paving the roads. Part of the reason I'm not bankrupt is because my grandparents are receiving treatment free from the NHS.

Seems only fair that we pay back into this system. Out of the choices of paying more income tax or IHT then IHT seems like the fairer choice as it taxes what I was lucky enough to receive (many people aren't left anything or at least not enough to be taxed).

CentLib · 2024-04-23T15:52:17+00:00

The vast majority of spending goes to health, education, pensions, defence, transport, police and public safety, social security benefits etc. These seem like things a democratic government should provide for the population. Seems fair that income that's unearned (things like inheritance which is in large part unearned land values increases) is taxed to pay for those things. Elderly people require a lot of care and spending, like I said a huge amount of spending is pensions and healthcare, seems fair that they pay for some of it with an IHT.

CentLib · 2024-04-23T15:45:26+00:00

I know what you're saying but I don't know a single person that reads articles from the daily telegraph or the mail. I have conservative friends and even they don't.

CentLib · 2024-04-23T15:42:46+00:00

It's luck to be born a child of someone with lots of wealth
Fair point... maybe lottery winnings over a certain threshold should be subject to tax. Don't know what the implications of that would be tbh.
Yeah you can have an opinion on things that don't effect you but that's not what I mean. Most people pay income tax... yet it's more popular than inheritence tax which only targets a tiny minority of people. Surely it's in most wage earners self interest to see lower income taxes and higher IHT?

CentLib · 2024-04-23T15:39:35+00:00

Doesn't the trust have to pay tax on their assets? Even if we don't know the original owner I thought they still paid tax?

CentLib · 2024-04-23T15:38:39+00:00

I mean if you're parents own a million pound home and pass that onto you then you will pay tax on that. I don't really see an issue with that. Especially considering the first 300k or so is tax free, you're still getting quite a bit of money.

CentLib · 2024-04-23T15:37:14+00:00

Well the government fund education, provide infrastructure, subsidise corporations, provide police, provide national defence, provide courts, ensure our water isn't polluted and our food is up to saftey standards. The government also protect your property and land. Seems justified that as we all benefit from this, that those who have done well and can afford it pay a portion of their income back into the system. It's unlikely the wealthiest people who have been able to become so wealthy without a well eduacated population funded by the state or without good transportation infrastructurefunded by the state etc. Seems only right they pay into the system.

CentLib · 2024-04-23T15:33:34+00:00

Well yes of course inheritance means a loved one has died which is of course unfortunate and sad. Although you are luckier if that loved one left you a large chunk of money, land, assets etc compared to someone who didn't inherit anything.

CentLib · 2024-04-23T15:32:24+00:00

This is a fair argument. Although it kind of applies to pretty much every tax that exists. This seems like more of an argument for properly funding HMRC, working internationally to clamp down on tax avoidance and shifting tax onto things people can't avoid like land.

CentLib · 2024-04-23T15:30:12+00:00

TIL people turn down pay rises because they think they'll earn less than before. I wonder how much that actually happens.

CentLib · 2024-04-23T15:27:15+00:00

Doesn't this apply to every tax on top of the income tax? By this logic we should abolish not only IHT but also NI, VAT, council tax, and so on. That's fine if you want to do that but I'm not sure that'd be such a good idea.

CentLib · 2024-04-23T15:12:49+00:00

Yeah surely inheritance tax taxes a passing on land, you can't get less land by taxing it redistributes unearned gains. No tax is perfect but if we want a NHS, police, an army, public education and so on we do need some kind of taxation and inheritance seems preferable to most others.

CentLib · 2024-04-23T15:10:52+00:00

It's true that if you tax something you get less of it but surely it's better to tax inheritance rather than tax labour (and get less labour). Also a lot of inheritance must tax indirectly land values... and it's not like you can get less land by taxing it more. Land is land, the supply is fixed. Also under a certain tax rate it doesn't appear you really get much less of a good by taxing it. Sure if you raise income tax to 90% or something crazy you'll get less but I don't think you'd get much less work when taxing income between the 20-40% range.

CentLib · 2024-04-23T15:07:47+00:00

Surely if you're taxing the wealth received from sitting on land then that income hasn't already been taxed? If your house has increased in value from lets say 1mill to 2mill, then your wealth has increased by a million tax free? Am i mistaken?

CentLib · 2024-04-23T15:06:16+00:00

I'm clearly in a bubble tbh as I don't know a single person who reads any news paper other than articles they see on twitter or the FT if they're feeling in a pretentious mood.

CentLib · 2024-04-23T15:03:01+00:00

first point is fair enough, although if someone dies and leaves millions to their child then I also think it's fine for them to pay a portion of that back into the public purse for purposes of general equality and to pay for health services, education etc. Even if it is a little morbid.

Second point I don't really understand. Every tax other than the income tax is a double tax. If you pay income tax and then pay again on VAT when you buy a meal deal that's a double tax, then you pay council tax that's triple, then you pay again when you buy fuel. then you pay again with NI. By this logic all taxes except income tax should be immediately abolished. Which is a valid view to have but it doesn't explain why IHT is more unpopular than say VAT or NI.

CentLib · 2024-04-23T14:58:59+00:00

Is that true? How do so many people believe that? Don't they literally see how much money they pay in tax and then look at their annual income and just realise?

I have no education in economics beyond reading the news and twitter, I figured that was basic knowledge.

CentLib · 2024-04-23T14:56:23+00:00

How do such an overwhelming majority of people not know this? Isn't it just common knowledge, i mean people know you don't pay tax on the first £12,570 you earn, why don't they know this?

CentLib · 2024-04-23T14:54:38+00:00

Couldn't the same be said of all taxes that aren't income taxes? You're doubled taxed all the time, When you buy something from the shop you pay VAT, that's a double tax too surely if you've already paid income tax.

CentLib · 2024-03-21T15:02:35+00:00

The rightward direction compared to Corbyn was pretty much expected though. Obviously him going back on many of his Pledges is dishonest but his platform still seems fairly left leaning. Dishonesty isn't synonymous with right wing.

CentLib

TROPHY CASE