tag:blogger.com,1999:blog-21959228.post1919780990737330354..comments2024-03-28T09:14:52.110+00:00Comments on Sinclair's Musings: More on Inheritance TaxMatthew Sinclairhttp://www.blogger.com/profile/05948452770723874618noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-21959228.post-58798958736010746092007-10-17T17:28:00.000+01:002007-10-17T17:28:00.000+01:00Excellent Post!Excellent Post!CFD Edhttps://www.blogger.com/profile/14176957304124700156noreply@blogger.comtag:blogger.com,1999:blog-21959228.post-86527518773424079322007-10-14T21:45:00.000+01:002007-10-14T21:45:00.000+01:00Vino,You don't seem to have actually addressed any...Vino,<BR/><BR/>You don't seem to have actually addressed any of my arguments.<BR/><BR/>Your points about the amounts of tax taken being small miss the point. They may sometimes be small in terms of the size of the estate but many people have small incomes relative to their wealth. With illiquid assets that can cause substantial trouble paying.Matthew Sinclairhttps://www.blogger.com/profile/05948452770723874618noreply@blogger.comtag:blogger.com,1999:blog-21959228.post-34555387918505530202007-10-13T16:16:00.000+01:002007-10-13T16:16:00.000+01:00Matt, you are the one confusing absolute and relat...Matt, you are the one confusing absolute and relative measures. I always talk in relative terms. Social mobility is nearly always measured by the chance of a child born to a family in a certain income quintile moving to another. That is a relative measure.<BR/><BR/>On the post <A HREF="http://vinospoliticalblog.blogspot.com/2007/10/inheritance-tax.html" REL="nofollow"> on my own blog </A> I pointed out that other taxes are also unpopular and that a more useful qn would instead be to ask people whether they would be willing to see other taxes rise to fund an IHT cut.<BR/><BR/>You say that mentioning VAT as double-taxation is a 'clever' point. Its clever because it is true!<BR/><BR/>You refer to 'breaking' the finances of middle-class families. No ones finances will be 'broken' by gaining £350k in tax-free capital gain via inheritance and getting 60% of the remainder. This emotive language may sway floating voters but it is misleading - and I am concerned with rational argument not with propaganda.<BR/><BR/>And, if you are against IHT per se, rather than just in favour of raising the threshold, by far the biggest gainers will be the rich not the 'middle-classes'. I assume that you favour scrapping the tax entirely, not just raising the threshold as both Mr Darling and Mr Osborn have proposed (correct me if i'm wrong). It a a great rhetorical tactic (for those opposed to IHT per se) to ignore the issue of the size of the nil-rate band [the key issue for most people] and instead to talk about the tax per se [which is mainly paid by the wealthiest people in society].Vino Shttps://www.blogger.com/profile/00921732973648819318noreply@blogger.comtag:blogger.com,1999:blog-21959228.post-27930906470625430662007-10-13T09:49:00.000+01:002007-10-13T09:49:00.000+01:00Vino,Yourself and Gracchi are chronically confusin...Vino,<BR/><BR/>Yourself and Gracchi are chronically confusing the absolute poverty vs. relative poverty and social mobility debates. Social mobility, in the useful sense, is the ability of people to move from one socio-economic group to another. That is in decline. I would like to make it easier for people to move up. However, I see no function in making people move down whatsoever. Relative and absolute measures are a complete red-herring as the example I've given shows. The ability of people to do what my father's family did is in decline. What they did in no way required others to be socially downwards-mobile.<BR/><BR/>On selfishness. People who aren't likely to be the beneficiaries of Inheritance Tax are still opposed to it. There is no strong correlation between the percentage of people in a region or socio-economic group who will pay IHT and the numbers who oppose it. As such, the selfishness point must be rubbish.<BR/><BR/>Pointing out that VAT is a second tax is a clever response to the double-taxation point but actually quite insubstantial. Inheritance Tax is an additional tax that people pay on spending money on their children purely due to the misfortune of dying.<BR/><BR/>On equality. Do you really think that the best way of helping equality is to break the finances of a certain portion of unwise or unlucky middle class families each year? I think if equality has changed from being a concern for the poor (I've described why it isn't going to help their upwards mobility) to a desire to kick those who've done well then I see no reason to pursue it with any seriousness.Matthew Sinclairhttps://www.blogger.com/profile/05948452770723874618noreply@blogger.comtag:blogger.com,1999:blog-21959228.post-55211579369684395922007-10-13T08:51:00.000+01:002007-10-13T08:51:00.000+01:00Matt, you say upward mobility does not require dow...Matt, you say upward mobility does not require downward mobility, which means you are using an absolute definition. But, if so, why do you write in your article social mobility 'is declining'. Measured in absolute terms, it can't be declining, since most people are having year-on-year increases in their incomes. As such, you are eliding absolute and relative definitions of mobility - that is misleading.<BR/><BR/>Regarding whether opposition to inheritance tax is based on selfishness I am not really sure whether that is the main point or not. I think it is. You think it isn't. There is no way to find out which is correct and which is not since we can't go into the minds of the beneficiaries of the tax cut and find out what they think.<BR/><BR/>Anyway, I think the double-taxation point made by wm8c does, as Henry points out, reflect the fact that people are unaware of how much they are paying in VAT and other indirect taxes. That is how the Tories got away with doubling VAT in 1979-80 and yet didn't get much political fall-out!<BR/><BR/>As I have said before, anyone serious about inequality would reduce the regressive taxes first - not one of the most progressive taxes we have. Additionally, the British tax system - while taxing income and spending - hardly taxes capital at all. This is a big loophole and helps those who are already rich at the expense of ordinary people and of those who have only just started getting large salaries. Capital taxes are v. low - the CGT rate will now be 18% (which will be a rise from 10% in some cases and a fall from 40% in others). In addition, to there being a small and easily evaded capital gains tax, capital is not really taxed in any other way than IHT. To remove IHT would thus be to give capital a previleged status. Other countries have a wealth tax. At the very least, any loss in revenue from IHT should be made up by introducing such a tax.Vino Shttps://www.blogger.com/profile/00921732973648819318noreply@blogger.comtag:blogger.com,1999:blog-21959228.post-41795961116570389492007-10-12T19:41:00.000+01:002007-10-12T19:41:00.000+01:00Gracchi,That upwards mobility requires downwards m...Gracchi,<BR/><BR/>That upwards mobility requires downwards mobility makes sense in fixed-pie economics or taxonomical terms. It is pretty silly when you think about it in terms of actual people though.<BR/><BR/>I just need to think of my father's family - all of whom moved up socially. They grew up relatively poor but all of them managed to either climb the corporate ladder with great success, start their own business or get into a middle class profession like teaching. They all moved upward socially.<BR/><BR/>Do you seriously think that required some aristocrat to fall from grace? Of course not. There aren't a fixed number of 'spots' for any particular socio-economic station. The number changes with economic development and the middle class has grown massively in recent decades. In fact, plenty of people - in moving up - help others to move up too. Entrepreneurs do this most obviously by bringing others with them.<BR/><BR/>This doesn't really have much to do with an absolute vs. relative measure of poverty but yes - an absolute measure of poverty is definitely more sensible even if the basket of goods used to define poverty might need to change over time. I set out why <A HREF="http://sinclairsmusings.blogspot.com/2006/11/relative-vs-absolute-poverty.html" REL="nofollow">here</A>.<BR/><BR/>On fairness, I wasn't using the opinion polls to make that case. I was using them to make two points:<BR/><BR/>1) Opposition to the Inheritance Tax is not based on selfishness.<BR/><BR/>2) People do care about Inheritance Tax their children will have to pay.<BR/><BR/>As such, I don't think you've really undermined my case at all. I made my case that IHT should be prioritised on other grounds. If opposition to IHT is based on ignorance about other taxes it is still not based upon selfishness.Matthew Sinclairhttps://www.blogger.com/profile/05948452770723874618noreply@blogger.comtag:blogger.com,1999:blog-21959228.post-15812623113504695162007-10-12T03:52:00.000+01:002007-10-12T03:52:00.000+01:00Matt on the social mobility point- how can you hav...Matt on the social mobility point- how can you have upward social mobility without downward social mobility. Do you only have an absolute definition of poverty.<BR/><BR/>You don't seem to deal with the question that taxes may be more unfair- ie VAT- but less obvious as well because of the way that people pay them. Inheritance tax is obvious because you pay it in one chunk- VAT isn't. I can tell you how much inheritance tax I paid or didn't pay after the death of my father, I couldn't begin to tell you how much VAT I payed this year.<BR/><BR/>Last point I agree with you about enforcement, that is a huge issue and one which needs dealing with. But just because a tax is difficult to enforce, doesn't mean the principle behind it is wrong.Gracchihttps://www.blogger.com/profile/06344262838391424797noreply@blogger.comtag:blogger.com,1999:blog-21959228.post-62958120799429710822007-10-12T02:29:00.000+01:002007-10-12T02:29:00.000+01:00"Taxing inheritance therefore taxes their interest..."Taxing inheritance therefore taxes their interests and is a tax on the dead who earned their wealth rather than on the children"<BR/><BR/>Seems to me that this is just another way to suck money out of the taxpayers. An inheritance left to the children has already seen a full tax burden as you mention as "income tax" and it doesn't seem right that it should be able to be taxed again as inheritance <A HREF="http://www.lowerurtaxes.com" REL="nofollow">tax</A>? Seems to be double dipping to me unless the inheritance came from a 401K or similar nox taxable fund before the deceased didn't make it to the proper age to wihtdraw it. Just my two cents worth.wm8chttps://www.blogger.com/profile/05115037420014301953noreply@blogger.com