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Inheritance Tax - Results In A Meritocratic Society?

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Found a reasonable article that comments on the current campaign by certain sections of the Meedja to reduce or eliminate Inheritance Taxes.

http://www.taxation.co.uk/Articles/2006/03...perfect+tax.htm

Richard Madeley (TV presenter with slag troll wife Judy with the shrivelled saggy mammary baps who happened to suffer the original wardrobe failure) is currently campaigning to abolish inheritance taxes.

Summary of their wisdom:

‘This is money which has been used to buy the house, in many cases it has been taxed at 40% and you also have to pay stamp duty and then you get hit beyond the grave.’

I.e. we are baby boomers, please don't tax us. Take our parents pensions purchasing power through inflation, rob our children and enslalve them to astronomical debts but please don't even consider making us part with some of our unearned wealth after we are dead.

The rebuttal:

"It is, of course, not unusual to have to suffer tax on payments out of income that has already been taxed. Taxed income is used to buy goods and services on which VAT and duties are then charged. But more importantly, as the article itself acknowledges, the main reason more people are falling into charge is that the value of their main residence is increasing. This gain otherwise escapes tax entirely – not taxed as a gain on the only or main residence during lifetime, and given a tax-free uplift on death."

"However, the 1,000 or so estates of over £1 million paid just over a billion pounds of tax. So over two-fifths of the benefit from abolishing IHT would go to the beneficiaries of just a thousand estates each year – more than a million pounds per estate. IHT is a tax that is paid predominantly by those with butlers and Bentleys, not by Darby and Joan in Rose Cottage, Borsetshire."

So a national media campaign to get millionaires out of paying their dues, and thus give their talentless spawnings a helping hand. If it happens in the budget it will just be another sign of Nu Labour meritocracy in action?

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Found a reasonable article that comments on the current campaign by certain sections of the Meedja to reduce or eliminate Inheritance Taxes.

http://www.taxation.co.uk/Articles/2006/03...perfect+tax.htm

Richard Madeley (TV presenter with slag troll wife Judy with the shrivelled saggy mammary baps who happened to suffer the original wardrobe failure) is currently campaigning to abolish inheritance taxes.

Summary of their wisdom:

‘This is money which has been used to buy the house, in many cases it has been taxed at 40% and you also have to pay stamp duty and then you get hit beyond the grave.’

I.e. we are baby boomers, please don't tax us. Take our parents pensions purchasing power through inflation, rob our children and enslalve them to astronomical debts but please don't even consider making us part with some of our unearned wealth after we are dead.

The rebuttal:

"It is, of course, not unusual to have to suffer tax on payments out of income that has already been taxed. Taxed income is used to buy goods and services on which VAT and duties are then charged. But more importantly, as the article itself acknowledges, the main reason more people are falling into charge is that the value of their main residence is increasing. This gain otherwise escapes tax entirely – not taxed as a gain on the only or main residence during lifetime, and given a tax-free uplift on death."

"However, the 1,000 or so estates of over £1 million paid just over a billion pounds of tax. So over two-fifths of the benefit from abolishing IHT would go to the beneficiaries of just a thousand estates each year – more than a million pounds per estate. IHT is a tax that is paid predominantly by those with butlers and Bentleys, not by Darby and Joan in Rose Cottage, Borsetshire."

So a national media campaign to get millionaires out of paying their dues, and thus give their talentless spawnings a helping hand. If it happens in the budget it will just be another sign of Nu Labour meritocracy in action?

I support the idea of IHT, but hardly anyone I know does. I think it's an efficient way of raising revenue.

I always argue the case by saying " would you rather pay more income tax or VAT while you're alive, instead of IHT after you're dead?"

For most people, they're really arguing about the total level of taxation or government over-spending. I think you have to assume that the total tax take is appropriate, when debating the fairness of IHT

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As it's relativley simple to reduce IHT to negligable levels one has to ask "Why all the fuss" , especially that emminating from the media and politics crew? I have to wonder just how many of their parents don't bother to reduce IHT because the've effectivly been abandoned by these types in favour of a (perhaps childless) career in London, only popping up to see Mum and Dad on Xmas day (plus a card on their birthday if their secretary remembers)? No, if my kids were in that catagory I'd not bother with IHT planning either!

Edited by ILikeBigBoobs

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I support the idea of IHT, but hardly anyone I know does. I think it's an efficient way of raising revenue.

I always argue the case by saying " would you rather pay more income tax or VAT while you're alive, instead of IHT after you're dead?"

For most people, they're really arguing about the total level of taxation or government over-spending. I think you have to assume that the total tax take is appropriate, when debating the fairness of IHT

I prefer IHT to any other tax. Have done for years. One of the first things this Gov. did was to reduce IHT i was shocked :o Whats the point of paying higher taxes all ones life in order to recieve an inheritence when we are 65! can't have a child then now can we!

+ it encourages IOM and HPI so some lose it all in the long term anyway, as in HPC!

Edited by Janette

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Bl00dy Richard and Judy....

They support a campaign to abolish a tax just because it suits them.

Do they not realise that 90% of people are not in the bracket to get hit by IHT when it only kicks in at above £250K?

WTF would I care about IHT when it is not likely to affect me?

If there is any justice then GB will double IHT over £500K.

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Do they not realise that 90% of people are not in the bracket to get hit by IHT when it only kicks in at above £250K?

Ahh! But the 10% it does apply to are in a position to influence both the other 90% and the descision makers!

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‘This is money which has been used to buy the house, in many cases it has been taxed at 40% and you also have to pay stamp duty and then you get hit beyond the grave.’

This is nonsense, unless you bought your house with saved up income in the last 5 years, the vast majority of its value has come from untaxed capital gain (i.e. house price inflation). If you spent your income on interest payments to rent money from the bank over the years, that is your business, it is completely irrelevant to the fact that you have never been taxed on the capital gain from this asset.

The moaning about IHT is equivalent to "tax free house price inflation has made me rich without doing any work, please stop the government making my children, who also have not done any work for it, pay any tax on this money."

And they get 1/4 million tax free. Who needs an inheritance bigger than that?

frugalista

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IHT (and all the other increasingly sneaky taxes) should be completely abandoned and the government of the day should be judged solely on their income tax rates and the services they provide IMO.

Don't you think inheritance tax is fairer than income tax?

In the case of inheritance tax, you are taxing people on money they have done no work for, which they are getting solely by luck of having the right parents. In the case of income tax, people have worked for the money, surely they deserve more?

Historically, income tax is less than 200 years old, but inheritance tax goes back to the dark ages!

frugalista

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'Wealth cascading down the generations' or whatever the heck Major called it is, of course, not meritocratic at all.

The only problem as I see it, is that by massively taxing the proceeds ot Grandmas house sale, a mortgage-free property evaporates. This means when the property is sold, or the recipients of the will go and buy houses, once more, the banks take up ownership of more property.

In the 60s, the banks only owned about 15% of the nation's housing stock and by the 90s it was up to 40% and it's still rising. That's despite millions of people toiling away year in and year out to 'pay off' their mortgage.

Perhaps letting the well-to-do sell their grannies' houses tax-free is a lesser evil than allowing the banks to own all the houses?

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I agree with your last comment entirely, IHT does belong in the dark ages :)

Touche.

There is a perception that IHT is somehow 'fair' because it appears to fall on the wealthy but I think that IHT is being used by a canny chancellor to hide a more realistic income tax rate IMO - allowing him to mask the fact that he is totally incompetent.

It's not about the wealthy. The tax is 'fair' because the person who died cannot use the money and the person who survived did not earn the money.

I am in no doubt at all that most people would simply wish that their money could pass, without interference, to their offspring. It is natural to protect and provide for your children and this should not change just because you happen to die. However I look at it IHT, I just can't avoid the feeling that it's a greedy little cash grab thinly disguised as idealogy.

Yes it's natural for people to put their own children about everyone else. That doesn't mean it is morally or politically justifiable. People naturally want to give their children better opportunities, for example by getting them jobs via nepotism. Not ethically sound though, is it? "Natural" is not a basis for political philosophy.

FWIW I'm (very) unlikely to inherit anything from my parents so maybe I should just vote with my wallet and say that IHT is a very good thing and let the chancellor grab what he can so that he may spare me. After all, most people tend to be very 'pro' taxes that fall on other people :)

I'm also unlikely to inherit much. But I might end up leaving an estate when I die. If a big chunk of it gets taxed I don't care because I'll have brought my children up to take pride only in what they themselves have achieved through their own efforts as opposed to what lands in their lap by pure luck.

frugalista

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Whilst I appreciate the selfish motivation of people avoiding their obligations, I view avoiding IHT as relatively more repugnant than avoiding income taxes.

Inheritance taxes perform a different function as it is the only generational social leveler.

Otherwise those that work, as opposed to the idle rich, might as well sign themselves into feudal serfdom, with the elite gathering an ever rising share of the available capital.

There has to be a mechanismn to allow the renewal of the social contract.

This has been massively undermined by the implicit moral hazard of Labour policies, which fail to help the most needy, but ensure a permanent client base. Why should I contribute, if I know that I will get nothing back in return? Therein lie the seeds of destruction of a progressive society.

I find it repugnant that instead of trying to creating something for themselves, these greedy b*stards are waiting for granny to get ill so she passes on her detached house to sell so she can try and avoid inheritance taxes or having to contribute to her nursing bills?

All in my opinion of course.

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'Wealth cascading down the generations' or whatever the heck Major called it is, of course, not meritocratic at all.

The only problem as I see it, is that by massively taxing the proceeds ot Grandmas house sale, a mortgage-free property evaporates. This means when the property is sold, or the recipients of the will go and buy houses, once more, the banks take up ownership of more property.

In the 60s, the banks only owned about 15% of the nation's housing stock and by the 90s it was up to 40% and it's still rising. That's despite millions of people toiling away year in and year out to 'pay off' their mortgage.

Perhaps letting the well-to-do sell their grannies' houses tax-free is a lesser evil than allowing the banks to own all the houses?

inheritance tax is great in theory as it makes the country more of a meritocracy but in reality people with a lot of wealth can by all sorts of means (both legal and illegal) avoid it.

Edited by Michael

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The debate is easy to settle.

If IHT is abolished/reduced, which taxes would you like to be increased to compensate?

Yep. Totally agree. I always think that when people say tax isn't fair.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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