The news over the weekend announced that more people than ever are having to pay inheritance tax. It is a subject that invites strong opinions, with, apparently, very little in the way of middle ground.
I think that there may be some good arguments about what the threshold for inheritance tax should be, but other than that I don’t see there being any criticism of inheritance tax that doesn’t equally apply to other taxes. A popular complaint is the fact that with inheritance tax money is being taxed twice; but most peoples’ income is taxed the once only while it stays in the bank; it is taxed a second time the moment you go to the shop and pay VAT on your purchases. I have also read people attack inheritance tax because a bequest in itself is supposed to assist in social mobility, and so taxing it reduces this desirable outcome; but this is a counter intuitive argument if ever I heard one. Many supporters of the tax argue in favour of it for redistributive reasons; and whether or not you feel this is just, inheritance tax surely helps iron out some of the inequalities in wealth that can be passed down through the generations to those lucky (or unlucky) enough to have had rich (or poor) parents.
Personally I’ve never really seen the problem with inheritance tax. The government is going to have to take money off us at some point to pay for services; what better time than when we are dead, when we don’t know anything about it? It seems pretty painless extracting government revenue from me when I am six foot under, and once there are no longer any concerns about marginal rates of tax leading to a disincentive to work.
But I think most complainants about inheritance tax are not the ones paying the tax, but rather the ones planning on receiving the inheritance; or what’s left of it following the state’s “smash and grab”. Normally, if one were to argue against a tax that you don’t personally have to pay it would be a seen as a selfless act; but on this occasion it can seem entirely selfish and self serving, a grievance that the government is interfering with your projected revenue stream of the macabre.
For myself, I remember a few years ago my parents telling my brother and me that we needed to get together sometime with their financial advisor to arrange a trust fund to avoid paying the tax. My brother and I responded in the same way; ignoring the requests, keeping on changing the subject until it was eventually dropped. In short we thought that it was my parents’ money and they should do with it as they wished; if they wanted to set up a trust and needed something signing then we would do so, but that was about it. I don’t especially like thinking about my parents dying, but if I am around when it happens I’m pretty sure I won’t be thinking about the dosh. They can leave me something – or nothing – for all I care; I wouldn’t mind if it all went to the cats’ home.
It all reminds me of a news story a few years back about the tendency for retired people to be Skiers; Spending the Kids Inheritance. There was criticism in some quarters that retirees were having the nerve to spend their pensions on holidays and cars, when they should have been thinking of leaving a nest egg to their offspring. Incredible; surely the only reaction to the news that people in their twilight years are spending their own money on themselves is “good on you, have a great time, you’ve earned it”. All the kids should expect is a post card from St Tropez.
I can understand why some people resent giving money to the government, but not why inheritance tax specifically should be such a bogeyman. The reality about complaining that the government is taxing your inheritance is that you are looking forward to the day when your parents are deceased so you can grab their money; that you are frustrated that you won’t be getting your hands on even more of this unearned windfall from beyond the grave. It is an attitude that I find very, very odd.
PostScript: Two posts in two days! Welcome to the new look, frequently updated Obscurer? Not likely. I’m off to the Lakes for a wee break. No more posts here until Saturday, at the very, very, very earliest.