Monday, 7 March 2011

The Meek Shall Inherit the Earth

My, doesn't time fly when you're having no fun at work and no time to vent your angst online? Not long now until resumption of full blogging duties, I promise. Not much time for research this evening, so I'll knock this one out straight from the hip. Today's subject is tax, not the eleventy million pounds we pay the taxman every time we fill up our cars, but the cash we hand over to him when we die. Yup, today, a very quick one on inheritance tax, as you may have gleaned from the title. You may have read that last week the Office for Tax Simplification called for the treasury to overhaul the death duty system of tax reliefs. This would be lovely to hear if it were in line with the Tory pre-election proposal to vastly raise the threshold at which inheritance tax is paid, and hopefully get rid off it entirely in time. However, it was instead a call to tighten rules allowing people to avoid (not evade) paying death duties.

Now, this will be quite a quick one, because the bulk of my argument can be copied and pasted from either the fable of the Ant and the Grasshopper, or from my earlier post on paying for care of the elderly which ripped aforementioned fable off a treat. Ooh, split infinitive, I feel so naughty. So, for revision, feel free to peruse either text.

Let's start with my stance on inheritance tax, just in case you were in any doubt, before I even wrote a word. It is wrong. Totally. Why? Because it is wrong to re-tax those prudent enough to save. It is not because we pay a monstrous amount of tax, though we do, day in, day out. My stance would be the same if we were all taxed at 1% or 99%. The point is, it is yours once HMRC has taken his usually massive slice. We work, we make money (hopefully), we give some to the Government to take care of some services (army, doctors, school, prison, MPs' expenses etc) then see if we have enough left to buy the rest of the things required for survival. Fine. We'll get to levels of taxation another day, but as a system that seems to make sense. Re-taxing those who choose not to splurge their taxed cash on fast women and loose cars is economically and morally repugnant. At this point please refer to ant/grasshopper argument if clarification is required.

Inheritance tax makes no sense. On a moral level, there is nothing wrong with working to feather the nest of one's children; saving and not spending on yourself but preparing a brighter future for your offspring. Is this not what parenthood is about? It is entirely right to want to pass on assets, and fair that one should be allowed to do so. It is what we as a society should and indeed nature does wish us to do - support our progeny. It is typical leftist nonsense where to solve the problems of one end of the scale, one should seek to drag the other down until everyone is equal and therefore the problem solved. On an economic level, it gathers little money, yet encourages tax exiles and expatriation, likely netting a loss for the Exchequer. It encourages fast living on debt, because at least HMRC don't want a share of that. In essence, it promotes a worse society.

Ultimately, it is desperately unfair, anti-aspirational and targets a specific group. You will notice that it is ok to target this group - Labour and the Lib Dems think they are fair game for some more squeezing, the capitalist pigs. Making children sell their parents' house to pay some ludicrous 'duty' owed is apparently fine because they must be rich, because they own a nice-ish house or live anywhere in the south. Just don't take any benefits away from the clinically work-shy; that's victimisation. Remember, it's not targetting if you don't like them or don't think they would traditionally vote for you. Then it is making people pay their fair share. It also only catches the people in the middle who usually can't afford to pay without selling the main asset (usually the family home). Once you get into the super rich, they can generally afford to shuffle things around to pay less tax than Wee Jock Poo Pong McPlop. And I don't care - no-one should pay this tax.

If you and I earn the same but you buy a house and save money (good for our economy), and I spend it all on foreign holidays with time split evenly Flashman-style between bordellos, bookies and bottle shops (useless to our economy, good for someone else's economy), why are we treated differently at death? I would have nothing but a raging case of syphylis and a bloated liver, and you would have assets. We both chose to 'spend' our money on acquiring them, yet for some reason, the taxman thinks he's entitled to your savings but doesn't want any of my hepatic failure / curious itch.

If you want to counter with 'redistribution of wealth' arguments, you are a Marxist fool. We have a progressive tax system that does just that, but re-taxing savings and assets is not paying one's 'fair share', it's robbery. If you counter with 'they can afford it' look at the relative levels of inheritance tax threshold and house prices over the last 20 years. You will see many if not most of these people being taxed are not the super rich; simply owning a modest family home now forces many estates above a boundary that has not kept any kind of pace with inflation, dragging more and more people into its insidious net.

It may be an old law, but being around for a long time does not make it right. Let us hope that the Tories do a good job of the economy for the next 4 years. If they do, maybe then they can move to remove this envious and illogical tax in a second term once shorn of their Government partners who are so opposed to wealth, as if the concept itself were evil. That will perhaps be the real test of where David Cameron's allegiances really lie - once he has the Governmental majority and mandate to make Conservative policy, will he? If not, perhaps the meek shall one day inherit the earth, but they'll have to sell it to pay the tax.

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