Saturday, August 18, 2007

Inheritance Tax

Inheritance tax is an odd sort of tax to get worked up about. It is easily avoided and according to the government only 6% of estates pay it. (It raises about £4 billion a year, not a huge amount in terms of government expenditure. They spend more on bloody consultants). It is levied at 40% on estates of over £300,000 (due to rise to £350,000 by 2010). That obviously – especially given rising house prices – targets not just the super-rich but the comfortably-off. The raw politics of it is that, given the absolute pre-eminence of “Middle England” in electoral calculation, Brown will probably pinch the Tories clothes while they are bathing and either raise the threshold or abolish the tax. There probably is a case for raising the threshold, but personally I can’t get worked up about the plight of someone who, say, inherits a £500,000 property and is landed with an £80,000 tax bill; they are still £420,000 better-off, and this is through no efforts on their own (there is nothing “meritocratic” about inheriting wealth). I can’t see this as one of the greatest injustices in the world (the proportion of their income paid in tax by the low-paid strikes me as more scandalous). But then the middle classes are acutely sensitive to anything bearing on their own economic interests. As I say, the politics of it – the need to woo that great deity of our times, the middle-class vote – is what will decide this.

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