The more this coalition government of the Fab Four – Dave, George, Nick and Vince – carries on, the more I despair. All that prevents me from crying into my horsemeat lasagne is the thought that the din would be worse if it were the Two Eds or that other high-class duet Salmond and Sturgeon. Give me Jedward or Peters and Lee any time.
The latest issue to get me reaching for the smelling salts is yet another U-turn, another broken promise from the Government – the decision to freeze the starting threshold for inheritance tax. I know a lot of people don’t think it’s a tax that matters, that if you become rich enough for your estate to pay it then you probably deserve it. Why worry about it, you’re dead anyway?
Well here’s why – because it is nothing other than, plain and simple, theft from the dead.
If I were to walk down the street and come across an old geezer that had collapsed and gone to meet his maker I would call the emergency services, I’d try to revive him – and if I couldn’t I’d cover his body with my jacket and treat him with respect. Wouldn’t you?
Same if it were an old dear tripping on a cracked Edinburgh pavement, falling over and breaking her neck. I would not rifle her handbag; I would not search her pockets.
And if I did I would expect to be locked up, condemned, and treated with the utter disrespect that my shameful behaviour deserved.
But yet we think it is perfectly normal for the state to lift that geezer’s wallet, rake through that old dear’s purse, and thieve 40 per cent of what they’ve left behind. Nobody blinks if it’s the Government that does it. That’s all right then!
That’s simplifying it, I know. But look at it this way – when we earn money we pay taxes on it. That’s a compact with government that we understand and most are generally supportive of. Even if we’d like the taxes to be lower, we still appreciate that we contribute a certain amount towards our public services that would be hard to finance individually. We also pay national Insurance that is meant to be our contribution to certain welfare benefits such as pensions.
So far so good. We also know that when we spend our tax-paid income we will usually contribute through consumption taxes in the form of duties and VAT. Again, we understand this but are prepared to put up with it.
But we also invest, we save and we gather some assets like property and these things are ours – they have been obtained in the most part through our own hard endeavours and we’ve bought or saved for these assets after paying tax. So why, when we die, does the Government think it can thieve 40 per cent of any value in excess of £350,000? It is our savings, our property (that often has to be forced into sale to meet the tax liability). Who gives government the right to steal from out of our tax-paid savings and assets? Why, government does of course.
We should be free to pass our property and our assets on to whomsoever we wish. If you believe in property rights – and they are the foundation of our society – then the Government should keep its fingers off.
The effect of all of this is that rather than create a meritocratic society where people can more easily improve, we actually make it harder. The super-wealthy will avoid the inheritance tax through careful tax planning with all sorts of trusts – so it doesn’t bring down the elite. But those that have worked hard, aspired for better things and have managed to put some wealth aside to leave to their children, or care for their later years are clobbered.
Instead of the savings or assets – what we might call capital – going to loved ones who can then use it to improve their lot, such as starting up a business, it goes into that government black hole and is never seen again.
This makes our country less entrepreneurial, less able to take risks, less likely to encourage business start-ups that create jobs and wealth. There’s lots of evidence that countries with low or no inheritance taxes have more dynamic societies where the wealth passed on through families creates new wealth and new work. So the tax damages our economy and perversely makes us more dependent on the munificence of the state.
It is also a direct attack on the family. For all the comments that politicians make about supporting the family, inheritance tax thieves from the dead instead of spreading wealth amongst relatives. It undermines the familial bonds of working for the future of one’s children or nieces and nephews.
George Osborne said that he would move the threshold upwards to £1 million. Instead, he’s freezing it where Gordon Brown left it. Is it any wonder people, even with modest savings, move abroad?
Forget the threshold, just abolish the tax. It’s legalised theft from the dead and it’s morally abhorrent.