If you support ‘hardworking people’ then oppose an inheritance tax cut

...who feel entitled to more of Mummy and Daddy's money

…who feel entitled to more of Mummy and Daddy’s money

A journalist observing the 2013 Conservative conference noted that:

In and of itself, there is no virtue in working, much less working hard. Tory ministers appear to disagree. The Conservative party conference was plastered with the phrase “hardworking” – “For Hardworking People”, the legend boasted from the platform – and a host of frontbench speakers milked the term for every last residue of rhetorical worth. This began a few months ago when George Osborne started his – God help us – #hardworkingpeople tweets. And it’s all been downhill from there.

Yet today the party announced that if re-elected:

….parents will be offered a new £175,000 allowance to enable them to pass property on to children tax-free after they die.

There’s clearly a contradiction here. If you wanted to reward work, your priority would be cutting income tax or boosting working tax credits. By contrast, an inheritance tax cut rewards people not for their effort or entreprenurialism but having the foresight to emerge from the right uterus.

Opponents of inheritance tax talk as if it is uniquely burdensome. In fact, what it is is particularly troublesome for the people they socialise with. As I’ve blogged before IHT has an enormous zero band rate (up to £650,000 in some cases), sweeping exemptions and can often be paid in installments. It should also be noted that it’s paid by just 4% of households. The advocates for whinging wealthy will protest that this percentage is higher in London and the South East. What they actually mean by that is that the people paying IHT in these regions are less of a minority than in the rest of the country. It also never seems to occur to them to explain why the fact that the upper middle classes of London now pay IHT makes cutting it a priority, when a big majority of households across the country pay income tax, national insurance and VAT.

George Osbourne claimed this new policy was ‘about values‘. I’m afraid I agree. Consciously or (as I suspect) otherwise, this reflects a worldview in which the interests of the affluent are paramount. What it shows very clearly is that the Tories are no more opposed to entitlement than Labour. Rather they embody the sense of entitlement of people angry at only being able to inherit £325,000. A party that claims to stand for self-reliance winds up prioritising people who think they need more of Mummy and Daddy’s money and concluding that lives already blessed by all the advantages of being raised by an upper-middle class family need a further boost. Beneath the focus group tested platitudes Cameron and Obsbourne use to sell this policy is a much clearer message: life has given us so much but we want even more.

It is a policy that is not merely weak but basically indefensible. It is profligacy in a time of austerity. Even more than that it is an insult to the majority of hard working people who this policy will do nothing for.

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3 thoughts on “If you support ‘hardworking people’ then oppose an inheritance tax cut

  1. If you wanted to reward work, your priority would be cutting income tax or boosting working tax credits. By contrast, an inheritance tax cut rewards people not for their effort or entreprenurialism but having the foresight to emerge from the right uterus

    No; it rewards people who have worked hard to buy a nice house for their family by allowing them to leave that house for their children to enjoy after they die.

    Remember, inheritance tax is a tax on the estate, not on the recipient.

    (Personally, I think inheritance tax should be abolished and legacies should be taxed as income; this would have several advantages, including encouraging rich people to spread their wealth as widely as possible in their will, and meaning that if the same amount is left to someone who is penniless and someone who is already rich, the already-rich one will have to pay more of it in tax and the previously-penniless one will get to enjoy more of it themselves, which seems fair. But until that happens, inheritance tax cuts are meant to reward the benefactor, not the beneficiary.)

  2. I feel that inheritence tax should not exist at all… Your family have been taxed all there lives to work for that money to pass on to their children. To then one last piece of the pie is absurd in my view.

    Nevertheless I think hard working people should be rewarded much more than they are now. I would like to see higher taxes for big corperations, the minimum wage should be much higher so a one income family can actually survive.

    • I would like to see higher taxes for big corperations, the minimum wage should be much higher so a one income family can actually survive.

      But that’s not really coherent, is it? If taxes for corporations are higher, doesn’t that mean they will have less money to pay their staff? (Well, unless you mean taxes on profits, ie, after wage costs, should be higher (rather than transaction taxes like VAT), but in that case (a) it has nothing to do with wages and (b) increasing wages will reduce pre-tax profits so even if you increase the rate they will end up paying less tax if they raise their wages).

      so a one income family can actually survive

      That depends on the job, doesn’t it? I mean, you wouldn’t expect every job to pay enough to raise a famil on as some jobs are entry-level jobs, the idea being that people at the beginning of their careers get them to get on the ladder, then move up into higher-paying jobs and then have their families. There’s no point in paying, say, the kind of job that’s intended for an undergraduate to do during the holidays, enough to raise a family on, is there?

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