Inheritance tax should be raised to 100% for everyone born in the UK
Last updated: March 2, 2017
Ultimately one of the greatest sources of economic and social inequality in modern society is money passed from parents to children. I would therefore suggest that the state confiscates (or taxes if you prefer the term) all the money passed on by anybody born in the UK when they die.
Meritocracy is good
Secondly this creates an incentive to earn. Relying on inherited income from parents is impossible, which incentivises even the richest in society to work hard and be a productive member of society. It's objectionable to see well-educated, well-brought-up people who can't be bothered to work, because they don't need to.
Let's says for example a wife and a husband have a family. The husband, in this case, makes 100% of the money while the wife looks after home affairs. Does the fact the the wife has not earned the money mean she does not have a right to have and use it?
This can be applied to parents and children. The family earns money as a whole. If certain parents think that this is not how their family works or should work then they can write their children out of their wills.
It's better than income tax
Gradually increasing inheritance tax (ultimately to 100% if successful) would reduce the amount of money available to buy real estate and so make housing more affordable on average. It would also make it possible to reduce income tax (or at least avoid any need to raise income tax). If people wish to pass their home to anyone (e.g. an adult child carer), they could make that person joint owner.
In the current recession that we are in, we need people to invest ion banks. If everyone withdrew their savings to spend whilst they were alive, our credit crunch would be a lot more dramatic and disastrous.
Inheritance tax, like income tax, reduces the incentive for people to work and save. It increases their incentive to spend as they approach old age.
More tax money would be nice
Likewise better schooling, transport, cuts in existing taxes even more nukes to fend off the commies if that's what floats your boat.
Please note that the title of this debate is 'inheritance tax' not income tax. I agree that 100% income tax would be insane, since there would be no incentive for anyone to earn money. Money earned from a 100% inheritance tax would always be less year on year than that earned from current taxes, that means a 100% inheritance tax does not require raising the overall level of tax.
You'd have to be sure that the government will spend the money well. This is highly debatable. Governments (particularly the current one) have a tragic record of blowing cash on job-creation schemes.
Hard to get round
You also can't emmigrate to avoid the tax, everyone born in the UK gets hit. That's perfectly possible, US emmigrants still have to pay income tax to the US government, this would work in the same way. Admittedly leaving the country before you have children prevents them getting hit, but does anyone honestly have the foresight to emmigrate in order to decrease their deceased future children's tax liabilities. I thought not.
And yes, plenty of them do emigrate. I know of at least a dozen who have emigrated to Switzerland precisely for that reason.
Better to Collect from the Dead than from the Living
Since you have to collect tax anyway, it makes sense to collect first from the dead, then from the rich, then from the poor. That's the most progressive.
Also the above point. Why should the stay at home partner, the one who raised the kids and supported the working partner be cut out the loop? If it was just collecting from the dead then I would understand, but its not and it only would be in the rare cases.
Would promote getting money into the economh
This would then mean that there be more money moving around the economy which in turn would mean more jobs for everyone's children.
So greater enjoyment for parents, and a better economy.
Not everyone who passes on cash in their will is a millionaire
On the other hand I don't see why people who are are fortunate enough to have parents who 1) owned their own home and 2) died, are any more deserving than those whose parents live in rented accomodation and are still perfectly healthy.
People have a right to pass on the money they earned through hard work
Your argument seems to protect hard-earned money but not easy-earned money. In the case of inheritance, hard-earned money transforms into easy-earned money, which your argument does not claim to protect. So, nabbing the dough at the transition point or just slightly after (but before it reaches the pocket of the child) is allowable by your own argument.
Further, this argument requires judgment about how hard someone worked to gain money that he legally owns.
Who says the government will spend the money well?
Beneficiaries may leave the money invested wisely in the stock market, or they may choose to spank it on luxuries. Either way, private sector economic activity is the result.
The current government's track record of delivering value to society from every extra pound spent is less than impressive.
However this is not a question of private sector expenditure good, public expenditure bad. Rather it is a question of whether some, by virtue of birth to the right parents, rather than having worked for it, have an entitlement to greater wealth than others. If we accept that they should not, then any superfluous parental wealth must be confiscated at time of death (or before if in the case of gifting). The State, through taxation, already has a role in wealth re-distribution, and while it is a trusism to suggest that governements should be prudent in expenditure of public funds, the State would seem to be the best actor in this redistribution.
Inheritance tax is too high and should be lowered.
The money earnt has already been charged income tax and various other taxes so why should it be re-taxed again?
No explanation here of why it is too high, so we may as well assert it is too low and leave a rhetorical question along the lines of 'what right do their children have to their money, given that they didn't earn it?'
This point about the right to that money has been analysed up there.
It would have unintended consequences
You might try your hardest to spend all your money while you're alive - leading to irresponsible / unnecessary spending behaviour to the very limit of one's resources, and an increase in destitution among older people who get the calculations wrong and live longer than they expected.
Alternatively you might feel a strong sense of duty to gift your life savings to your children before you die, so that your children receive something rather than nothing. This could backfire on older people who are disappointed in their expectation that the children to whom they've just donated their life savings will be responsible enough to repay the favour and look after them. It could also cause great feelings of guilt in those elderly people who don't want to donate to their children during their life. At best, it just shifts the problem of 'unearned wealth' being inherited during the life of the giver rather than after their death.
You may think inheritance tax should be higher but it shouldn't be too high or it will change behaviour in the period before death in unwanted ways.
For this reason, a gradual increase in order to have time to empirically test for and devise policies to counter any unintended consequences would be adviseable.
Equally the implementation of any sharp increase in inheritance tax to future generations should go hand in hand with an equivilent increase in gift tax.
However, if there were unwanted consequences, these should serve as a deterrent to those who would otherwise cheat the process by gifting their family with their wealth while they live.
Destroys incentive to work
Secondly if people did retire early its because they have earnt the right to do so and therefore have contributed to society so why is it a negative thing?
To add to the above argument, there is plenty of unemployment at the moment, and jobs are sought for. If those who already have enough to survive quit their jobs, they make a place for somebody in greater need of work. Losing incentive to work, if you already have enough, needn't necessarily be a bad thing.