The way we talk about inheritance tax is very odd

Earlier today the Conservative Party tweeted this:

This caused me to reflect that there’s something strange about the way people opposed to inheritance tax discuss it: it’s rather absolutist.

If you think income tax should be cut you’ll probably argue ‘it discourages work’ or if it’s VAT you are unhappy with you’ll probably say it ‘reduces consumption’. What you probably won’t claim is that the current levels of these taxes mean you cannot work or earn money at all. Yet that’s exactly what the tweet above and many other arguments against IHT do.

In reality, the couple most definitely can pass on something. A married couple can effectively pool their individual allowances. They would therefore be able to pass on £650,000 before having to pay a penny of IHT. That’s pretty clearly not nothing.

And indeed they can pass on an unlimited amount in excess of that. It’s just that at that point the recipients will start paying tax on it. This is no different from someone with a job earning more than £10,600 and thereby exhausting their personal allowance, so paying income tax. Few people at that point stop working. I don’t see why the existence of inheritance tax for estates beyond a certain size should not be thought of the same way.

Indeed, this strange way of talking seems to permeate all Conservative discussions of inheritance tax. Backing the party’s policy of creating another tax free allowance specifically for homes George Osbourne said that “We believe that your home…should belong to you and your family, not the taxman”. This leaves one wondering if the Chancellor believes that the VAT I paid on my laptop means it’s not mine but the taxman’s.

He went onto say it was about “the basic human instinct to provide for your children”. However, inheritance tax is pretty tangential to that. Parenthood is about a lot more than the estate you leave your children upon their death. And inheritance tax does not prevent passing on assets to them. There’s after all a difference between not being able to do something and not being able to do something without paying tax.

The dependence on emotive rhetoric that makes little sense when analysed is indicative of the weakness of this policy. It cannot survive rational scrutiny. It cannot be justified either in terms of efficiency or equality. So instead notions of parenthood are misdirected to support it. It is a feeble piece of pre-election pandering and it deserves to be roundly rejected.