Fund Welfare state with 100% inheritance tax

[Option5]

Just now, newbonic said:

A mate of mine restores 1970s motorcycles. One guy bought one (a fully restored iconic Kawasaki 2 stroke 500 triple) and just has it as a ornament in the corner of a room in his house (one that the Mail would invariably call a mansion I assume). There's £12k of wealth right there. It's value will fluctuate but it will never plunge in value like a new bike will.

Personally I'd enjoy looking at it a lot more than £14k's worth of pottery or painting. So there's that too.

Having had a Kawasaki H1 500 triple back in the day I'd suggest using it as an ornament is the safest way to treat it. Anyway the MPG would reduce your wealth drastically if you rode it.

[Errol]

16 hours ago, ThoughtCriminal said:

People in favour of higher taxes yet they don't voluntarily donate more of their wealth and income to the state.

Yes. Same as the odd people who support unrestrained immigration or letting in millions of refugees but then when you suggest that these same immigrants/refugees come and live in their area/house/town, disappear.

Edited July 26, 2017 by Errol

[Kosmin]

3 hours ago, Bruce Banner said:

We live, we work, we amass wealth, we die.

We want to leave that wealth to whomever we wish

Fair enough. Let's take that as given and see what alternatives there are if we remove inheritance tax:

1) Cut some government spending equal to IHT cuts. What would suggest?

2) Make no spending cuts. This amounts to a stealth tax through the increased borrowing.

3) Offset tax cuts with tax increases elsewhere.

 

There doesn't seem to be political will for spending cuts. If other taxes are increased, many people who currently face an inheritance bill will face higher taxes elsewhere. On average the burden of tax will be the same. Say there will be £100k IHT on your estate when you die. Would you be happier if this was reduced to zero, but you paid an extra £100k in other taxes? How about if it was an extra £150k in other taxes?

[CunningPlan]

5 minutes ago, Kosmin said:

Say there will be £100k IHT on your estate when you die. Would you be happier if this was reduced to zero, but you paid an extra £100k in other taxes? How about if it was an extra £150k in other taxes?

I think the general idea is that IHT is reduced to zero and someone else gets to pay £100k in other taxes.

That is normally how it works when people demand a change to the tax structure.
 

[Kosmin]

5 minutes ago, CunningPlan said:

I think the general idea is that IHT is reduced to zero and someone else gets to pay £100k in other taxes.

That is normally how it works when people demand a change to the tax structure.
 

If they were other people who could afford to pay the £100k taxes, perhaps they'd be leaving it to their children!

 

I don't know the personal circumstances of people posting, but say most only face a small IHT bill. Does it make much difference to them whether they pay in income tax instead? If they want to reduce their tax bill, wouldn't it make more sense to focus on reducing income tax?

[malk]

There have been some blinders in this thread. People avoiding inheritance tax by burying gold bars and buying vintage cars and bikes? Absolutely infallible suggestions! No one would notice dear departed mummy selling up before popping her clogs and poor inheritanceless muggins swapping kilo bars for £30k every now and then. Or maybe you'd swap them for a big garage to store the Brough Superior SS100 you recently "acquired" in?

Also those saying that it wouldn't all be collected are missing the point. Currently loads of productive value is stored in all kinds of pointless assets (or at least assets worth much more than their point) for the express purpose of intergenerational wealth transfer. This process would stop and that wealth would need to find somewhere else to go. Now where that is I don't know and I'm absolutely confident there would be loads of unintended consequences but what I am confident of is that it can't be a worse use than a handful of people sitting on it doing nothing.

Plus I literally cannot understand the brouhaha about passing it on to your "kids". It seems to be a self deluding phrase that evokes babies and school age children rather than the, in all probability 50 year old men and women who actually inherit. My parents have a nice detached house in a nice part of the country and a bunch of other assets (including some of the things mentioned in this thread). But they're only twenty odd years older than me and it doesn't strike me as a particularly clever life plan to wait until they toddle off this mortal coil before I get access to it. And that's without mentioning that I've done absolutely nothing to deserve it.

What would be useful is to pay less tax on my income now and since I've been earning and not have house prices that are ridiculous. I also think I'd benefit from the increases to the productive economy that would likely come from a few people not hoarding wealth like dragons.

If you think I'm jealous and just after "my" 1/60,000,000 of your million quid inheritance then you're sadly mistaken, I've got my sights set a little higher.

[Bruce Banner]

1 hour ago, Kosmin said:

Fair enough. Let's take that as given and see what alternatives there are if we remove inheritance tax:

1) Cut some government spending equal to IHT cuts. What would suggest?

2) Make no spending cuts. This amounts to a stealth tax through the increased borrowing.

3) Offset tax cuts with tax increases elsewhere.

 

There doesn't seem to be political will for spending cuts. If other taxes are increased, many people who currently face an inheritance bill will face higher taxes elsewhere. On average the burden of tax will be the same. Say there will be £100k IHT on your estate when you die. Would you be happier if this was reduced to zero, but you paid an extra £100k in other taxes? How about if it was an extra £150k in other taxes?

Easy.

Cut spending on the welfare state by whatever is necessary to balance the books. It is a travesty that those who don't work enjoy as good, or better, standard of living as those that do. Bang out enough kids and they're set-up for life, 60" flat screen TV and all .

God I hate socialism!

[Greg Bowman]

2 hours ago, Option5 said:

Having had a Kawasaki H1 500 triple back in the day I'd suggest using it as an ornament is the safest way to treat it. Anyway the MPG would reduce your wealth drastically if you rode it.

 or your lifespan not the best handling machine on the planet

[Kosmin]

Just now, Bruce Banner said:

Easy.

Cut spending on the welfare state by whatever is necessary to balance the books. It is a travesty that those who don't work enjoy as good, or better, standard of living as those that do. Bang out enough kids and they're set-up for life, 60" flat screen TV and all .

God I hate socialism!

Thanks for the answer.

Consider another hypothetical: There will be £100k inheritance tax bill when you die. In your lifetime you will pay £1m of income tax.

You are given the option of paying no inheritance tax, or halving your income tax bill. Which do you choose?

[Bruce Banner]

1 minute ago, Kosmin said:

Thanks for the answer.

Consider another hypothetical: There will be £100k inheritance tax bill when you die. In your lifetime you will pay £1m of income tax.

You are given the option of paying no inheritance tax, or halving your income tax bill. Which do you choose?

Neither! 

[Kosmin]

9 minutes ago, Bruce Banner said:

Neither! 

Given the choice between cutting your tax bill from £1.1m to £1m (no IHT case), or cutting to £0.6m (halving your income tax), you would choose neither? You would insist on no tax cuts?

[Bruce Banner]

1 minute ago, Kosmin said:

Given the choice between cutting your tax bill from £1.1m to £1m (no IHT case), or cutting to £0.6m (halving your income tax), you would choose neither? You would insist on no tax cuts?

Yup, pointless argument, never going to happen.

[Kosmin]

4 minutes ago, Bruce Banner said:

Yup, pointless argument, never going to happen.

Are you sure? I actually think a small cut (say 40% tax rate to 37.5%, or an increase in the tax-free allowance) would reduce the tax bill of many who will pay a small amount of inheritance tax.

[Kosmin]

7 minutes ago, Bruce Banner said:

Yup, pointless argument, never going to happen.

And meant to add: would be more palatable to cut income tax than to completely remove inheritance tax

[Errol]

1 hour ago, malk said:

poor inheritanceless muggins swapping kilo bars for £30k every now and then.

Gold can be melted down very easily. At home. It requires no special equipment. Simplicity itself to just melt the bar (if it was a bar) down into very small cubes/bits then just take the bits every now and then to different dealers etc.

If the inheritance was in small coins it would be even easier. You could even take a pocketful abroad to any country of your choice to dispose of. Simply book a holiday, put a handful of the coins in your pocket (let's say £5000+) and then enjoy.

Edited July 26, 2017 by Errol

[Calcutta]

Or we could just label everybody with assets, credit limit or savings over say ten grand as a parasite and force them to dig their own grave with their iPad.

[Option5]

35 minutes ago, Greg Bowman said:

 or your lifespan not the best handling machine on the planet

It was perfectly safe as long as you didn't try anything stupid.

 

 

 

 

Like stopping or going round corners

[Errol]

56 minutes ago, malk said:

Plus I literally cannot understand the brouhaha about passing it on to your "kids". 

It's the thing that has driven mankind forwards since the first cavemen started leaving their offspring their clubs/spears/caves etc. Leaving things to and providing for your offspring is an intrinsic part of being human.

[CunningPlan]

7 minutes ago, Errol said:

It's the thing that has driven mankind forwards since the first cavemen started leaving their offspring their clubs/spears/caves etc. Leaving things to and providing for your offspring is an intrinsic part of being human.

I will leave them a fantastic education, moral compass, life experiences and a desire to succeed. That costs money when they are young.

I would rather be able to do that than have them inherit a sum of money when they are sixty and they should have used what I gave them earlier in life to make their own way by that time.

I also note that the argument always trotted out to increase the inheritance tax limit is that 'It hasn't kept up with house prices' (or mad, unearned, untaxed gains as some would call them)

Well what a shame.

 

[malk]

2 hours ago, Errol said:

It's the thing that has driven mankind forwards since the first cavemen started leaving their offspring their clubs/spears/caves etc. Leaving things to and providing for your offspring is an intrinsic part of being human.

Tosh. This isn't about providing for your offspring it's about leaving them a pile of wealth after you croak. They're two different things. Anyway, just how effective do you think it would have been for Ug to leave ten thousand spears in a hundred caves for Ug Jr?

[malk]

3 hours ago, Errol said:

Gold can be melted down very easily. At home. It requires no special equipment. Simplicity itself to just melt the bar (if it was a bar) down into very small cubes/bits then just take the bits every now and then to different dealers etc.

If the inheritance was in small coins it would be even easier. You could even take a pocketful abroad to any country of your choice to dispose of. Simply book a holiday, put a handful of the coins in your pocket (let's say £5000+) and then enjoy.

This is brilliant! Just wandering through customs when... "What's that sir? Gold coins in your pocket? Maybe I'll ask the nice gentlemen from HMRC to pay a visit to your house...".

Plus young Hugh Grosvenor might struggle to convert all that land and property into 36 million gold sovereigns...

Could a few people avoid relatively small amounts of this tax? Sure. Could everyone avoid all of it via home smelting? Pull the other one, it's got solid gold bells on it!

Edited July 26, 2017 by malk

[Uncle_Kenny]

2 hours ago, Errol said:

It's the thing that has driven mankind forwards since the first cavemen started leaving their offspring their clubs/spears/caves etc. Leaving things to and providing for your offspring is an intrinsic part of being human.

This. The family is the primary economic unit, not the individual. People work for their kids, grand kids and great gran kids.

I just want to quickly point out that 100% tax on anything will result in zero being collected. Why work for nothing? Inheritance tax is one of the most destructive taxes because it encourages frivolous consumption. It is also straightforward to avoid, cash, gold, bitcoin etc. The saved income that people accrue over their lives would be best invested in developing the economy via the financial system, this won't happen with a 100% inheritance tax.

One more thing regarding inheritance. The practice of passing on one's lands to the eldest son is there for a very good reason. By sharing the land equally within a few generations everyone will have land the size of a postage stamp. The same applies even if the inheritance is an entire kingdom. Simon Schama says in "A History of Britain" (great show by the way) that this practice was introduced by the Normans but I'm sure he is mistaken. It is even mentioned in Genesis which are "prehistoric" stories. Some have speculated that Genesis was inspired by the course of human evolution itself, and the agricultural revolution. Extremely old stories. Passing on your wealth, lock stock and barrel to the eldest son and nothing to everybody else is about the oldest idea humans have.

[CunningPlan]

I wonder how many grumpy 80 year old parents would be abandoned by their kids if there was not going to be a nice inheritance?

[Uncle_Kenny]

1 minute ago, CunningPlan said:

I wonder how many grumpy 80 year old parents would be abandoned by their kids if there was not going to be a nice inheritance?

That's socialism for you, undermining the family.

[debtlessmanc]

4 hours ago, Kosmin said:

Are you sure? I actually think a small cut (say 40% tax rate to 37.5%, or an increase in the tax-free allowance) would reduce the tax bill of many who will pay a small amount of inheritance tax.

Put it all on VAT, with Brexit we could reassign all tax inspectors to the borders to stop smuggling and put VAT at 50%, make food and clothes exempt and hey -presto

others have seriously suggested this in the past and it pretty much mirrors taxation in the UK up to the napoleonic wars..