The news that has had all the lefties, Corbyn lovers and Guardianista’s fuming is the reports about the new Duke of Westminster and his inherited fortune, which through completely legal and above board tax laws, has ensured he has “avoided” £3.6billion in tax. Vast amounts of the family fortune are owned through trust structures, which operate from one generation of the family to the next regardless of family deaths and without the usual inheritance tax liability. Usually, when someone who is married dies, their estate passes tax-free to their spouse. Inheritance tax is only charged when the surviving spouse dies, and is normally levied at 40 per cent of the value of the couple’s estate above a threshold of £650,000.
Well known economist, I mean comedian David Mitchell gave his two pence worth in the Guardian lamenting how disgraceful it all was and had this to say
“in order to pay for public services, the government should take money out of the economy where it’ll be least missed, where its absence is least likely to plunge people into poverty or reduce con;sumer spending. The money of the dead is therefore ripe for taxation: the owner no longer needs it, and his or her heirs have been doing OK without it up to now. Inheritance tax doesn’t discourage earning, it discourages dying, which I think we can all get behind.”
Except David, like so many others has missed the point. Why should the Duke, me, you or anyone else have to pay inheritance tax at all?
That wealth amassed has already been subject to a lifetime of taxation on shopping, petrol, food, stamp duty, national insurance, income tax and much much more. The Government has for the entirety of your adult life taken in one way or another part of the fruits of your labour and spent it as it has deemed fit.
If we tax the rich hugely for dying we are simply cutting our nose to spite our face, the incentive for those with great wealth, or any at all will be for them to become frivolous spenders. Where will the investment for factories, hotels, machines and investments to improve technology come from? What effect does it have to the people that rely on the employment of those who have amassed great wealth?
The greatest incentive for so many is to be able to leave something for their family and loved ones, and with the cost of an average house these days being fraction of what it was 20/30 years ago it is not all that hard to become subject to inheritance tax.
If we clamp down in the way much of the left want to on inheritance tax the effect will be devastating for families and the economy. The economic and societal case for inheritance tax is flawed and it is about time we stopped being afraid to come out against it, it is our money and families lives that are directly affected after all.