Inheritance Tax: The Flip Side of Many Coins
August 16, 2016 § Leave a comment
A short rant prompted by the recent discussions over the Duke of Westminster’s inheritance tax payments and Tim Farron’s very correct call that we should crack down heavily on avoidance of this, one of the core wealth taxes in the government’s arsenal. This has predictably triggered numerous claims that it is somehow an “envy tax” or, even less understandably, that it is “illiberal”. These are claims that only see one side of a very much two sided coin.
Inheritance tax is one of the most liberal taxes there is; it is the way that we, as (on our good days) a liberal society, put a brake on the country’s wealth becoming progressively more concentrated in the hands of a very few in favour of some of it being spent more widely on the next generation. Someone inheriting an estate (and estates have to be far larger than most can aspire to in order to even incur inheritance tax, which for a couple’s allowance including a family home now has the first million pounds completely tax-free) is getting a huge gain in capital for no better reason than who their parents were; it’s right and fair that part of that goes to contributing to the education, healthcare and wellbeing of the large majority of the population who don’t have access to those sums of money. It’s nothing to do with envy, and everything to do with giving people across society a fair chance and a fair start in life.
This, you see, is the flip side of Hugh Grosvenor’s many, many coins. There are parents who’ve worked extremely hard for their families all their lives and never had the chance at anything like the kind of wealth the Grosvenor family has got because they never started with the capital to invest. It’s about giving them a chance too, so many parents – who won’t have thousands let alone billions to pass on despite a lifetime of hard work – can get their children to good schools and ensure they have decent healthcare. It’s not a question of “should parents be able to leave enough to give their kids a good start in life”, because leaving your children a million pounds (either in property or other assets/wealth) is a start in life many people can only dream of and, as noted above, families get that tax-free. The question here is whether massive transfers of capital above that should be fairly taxed so we can actually build a fair playing field for everyone in this country. Why should that capital and that wealth, passed down between generations, be in the hands of that particular person? It could be starting someone’s business, it could be paying for someone’s school lunches or getting them through university. It should surely be a point of pride for successful families that they can, having already contributed a great deal to the earning potential and wealth of their children, help raise the bar and improve the world for those who won’t get a fraction of that chance.
The Liberal Democrats are a party of democrats not a party for oligarchs, a party that believe that where people have relative wealth it should be something you can earn fairly in your lifetime not something you have a right to based on the circumstances of your birth. If you do believe that society should be a rigid class system where a class of landlords and owners call the shots and a class of renters and workers produce for them, then sure, you should oppose inheritance tax. But be in no doubt that that’s the logical conclusion of opposing wealth taxation; for much of human history, private and oligarchic interests have been just as much of a threat to individual liberty as an overreaching state, and that remains true today.
None of this in any way takes away from the grief of people losing family members, and people should of course be given the necessary time to sort out their parents’ estates in a reasonable and respectable manner. But it’s absolutely right and proper that the fortunate few in our society make their fair contribution rather than pulling up the ladder behind them, so that in the next generation people get the best chances to compete, to earn, to produce, to create, and to build a better society and better communities for all of us.
Bulidng a kinder society of course means giving people space to grieve, but it also means giving people a chance in life no matter who they are, where they come from, what they look like or who their parents were. Inheritance tax is an important part of that, and it’s a part I wholeheartedly support the removal of unnecessary loopholes and exemptions to.