To disagree with inheritance as a concept

[HeadsDownThumbsUp]

Just that. I think it's odd that the concept of inheritance is barely questioned in our society.

I don't think that anyone can really talk about social mobility in a meaningful way, or interrogate the class system, while wealth is still inherited.

Inheritance IS the class system.

In my opinion, inherited wealth is incompatible with a meritocratic society. It is also add odds with entrepreneurialism, and more generally the notion that wealth is earned through hard work, and thus deserved.

Thoughts?

How about if we whacked inheritance tax up to 100%, but ring-fenced the proceeds to totally fund social and nursing care for the elderly? No idea how the maths would work out...

Alternatively, abolish inheritance tax completely, but tax the recipients as if the inheritance were income. So a low-income person inheriting a little pays nothing, a charity pays nothing, George Osborne has to pay 45% of the family millions. Would that work?

(Sorry, I see you mentioned the income tax thing.)

Taxing it as income makes sense to me. It is income, after all, and I don't understand why inheritance has its own special rate of tax, especially one that is much, much lower than the highest rates of income tax.

I would also be for more progressive taxation above the 45% threshold.

I guess the interesting question is that if Bill Gates was instead forced to hand over all his money to the government on his death whether that money would be used better by them or in the way that he has chosen? It is as much his choice to set up his foundation as it is to provide for his children.

I am not against socialist principles, but in practice when applied at the extreme they do not appear to be great motivators. Certainly not if you wish to encourage entrepreneurial which was your original position.

Killing off inheritance would destroy family owned businesses for a start.

Inheritance isn't income though, it is a one off gift. No other gifts are taxed.

'because you've spent much of this thread arguing that passing down wealth to our descendants is an absolute biological imperative, and that to do otherwise is unnatural and will destroy society and the family.'

I didn't say that at all. I think that is what the majority of us want. But I don't care what you do in your will with your money. I don't care if you decide to leave it to the government and not to your children.

I just don't want the socialist to be allowed to remove teh rights of millions of ordinary people to hand down their wealth to their families if they choose to do so. I don't want rukle by communists who in their own manifesto state that they want to abolish inheritance and abolish the family.

Ok, it's not income as defined by the current tax system - but according to the tax system it's not a 'gift' either, strictly speaking - it's inheritance. That doesn't mean that taxing it in accordance with income tax rates is a bad idea.

As I said earlier, I think there's a lot we could to do encourage philanthropy, and I wonder to what extent our attitudes towards philanthropy are bound up with conventions of inheritance. I just don't believe that anyone thinks Bill Gates is a crazed socialist hell bent on destroying society and the family because he has chosen to do some good with his money. Whether or not charitable ventures get better results than governmental spending is not clear, and again, another debate entirely. Perhaps if inheritance tax was higher then more people would be prompted to set up foundations.

I don't think that passing on a financial legacy has to be a key motivator for entrepreneurs - it obviously isn't for an entrepreneur like BG, giving 95% of his money away.

I believe in the principle of freedom for the people and not in the principles of the socialist.

www.dailymail.co.uk/news/article-487528/Exposed-How-Alistair-Darling-Tony-Benn-exploited-death-tax-loophole.html

Inheritance is not income.
It is a transfer of assets.
If I buy my child a house, that asset transfer is not taxed.
If I buy my child a car, that asset transfer is not taxed.
If I buy my child a laptop, that asset transfer is not taxed.

When IHT was brought in it hit the top 5% of Estates.
But house prices have risen faster than the limit and governments know that its a good way to extract tax from the middle classes.
The super rich hire accountants and almost never get hit by IHT.

I would not trust any government of any hue to look after my kids as well as I hope to.
That is my financial responsibility.
That is why I work and save.

If I cannot save, I may as well give up work and become a burden on the state.

'I just don't believe that anyone thinks Bill Gates is a crazed socialist hell bent on destroying society and the family because he has chosen to do some good with his money.'

A crazed socialist is one who wants to abolish inheritance and "disagress with it as a concept". Bill Gates doesn't do any of those, so I don't see how bringing this billionaire capitalist into the argument repeatedly helps your socialist argument.

Excellent post, Talkinpeace and that is how the majority of us think.

It is sad that we don't trust many of our rulers, but when we see some of the expenses fiddles and the other loopholes that they exploit while preaching to us and placing hurdles in the path of our progress, is it any wonder?

We do have the technology to allow for one-off things, like capital gains tax. It's more the principal of taxing the recipient instead of the estate, which does seem a more sensible way of going about it. To my mind.

Claig - you're still missing the point that ordinary people don't actually have wealth to speak of. Maybe some of the baby boomers do. Generation X aren't going to be leaving a lot... except debts.

It's a gift when you receive it though. The tax is on the estate not the recipients. If essentially you are against wealth being transmitted across generations then you would have to make all gifts as taxable/illegal, as otherwise all that would happen is that wealthy people would give their children their worldly good a little bit earlier. Which is what inheritance tax planning is about, and I think you have already disparaged that.

I don't know why you are suggesting that anyone thinks Bill Gates is anything in particular. He is following a path set in the States by a number of significant industrialists who then set up significant charitable funds. I expect their motivations varied. He hardly left his family destitute, and in any case he isn't actually dead yet!

"I guess the interesting question is that if Bill Gates was instead forced to hand over all his money to the government on his death whether that money would be used better by them or in the way that he has chosen?"

I think the biggest waste of money on the planet was Gates giving a billion pounds to the UN. Trebles all round.

Bill Gates has not "given away" any money.

He has transferred a great deal of his wealth to a charitable foundation over which he and Melinda operate VERY strict control.
The donations each year mean that he and Melinda minimise their tax bill.

The money that is left in the family is more than enough to make their children super rich, but without the stupidity and inanity of the children of the Hilton and Ecclestone families.

Or a transfer as Talkinpeace says.

BoulevardOfBrokenSleepWe
we do have the technology to allow for one-off things, like capital gains tax. It's more the principal of taxing the recipient instead of the estate, which does seem a more sensible way of going about it. To my mind.

You need to read more tax law

Talkinpeace - well, at the very least its a transfer of assets which is taxed above a certain threshold at the moment. How would you define income?

But inheritance tax still only affects the top 3% of estates or so. The vast, vast majority of people never pay inheritance tax, so how can you say that "governments know that its a good way to extract tax for the middle classes". It very obviously isn't.

Claig - please explain how allowing taxing the top 3% of estates at a rate lower than the top rate of income tax benefits the "little people".

I have a very queasy gut reaction to anyone who wants to dictate what individuals can do with their money and property - which is, if I have understood you correctly, HeadsDown, is what you are suggesting. It smacks of a paternalistic attitude - 'we know better than you what should be done wi your money and property'.

If an individual chooses to live frugally, in order to save money to pass on to their family, that is their right - it is their money. Equally, if they choose to spend it all on a yacht and live on that yacht, cruising round the Caribbean for the rest of their lives, then that is their right too.

I always think that if you actually accept the need for taxation, then the best people to start with are the dead. The only reasons for arguing against inheritance taxes are greed and entitlement.

Talkinpeace - you may benefit from a study of HMRC rules on transfer of assets. You also might like to consider that my meager salary is not income but a transfer or assets from my employer to me. Looking after your kids when they become adults is their responsibility, not yours.

I know where you're coming from SDTG, but "It is their money, none of your business" isn't a valid reason as to why something can't be discussed. A lot of what individuals can do with their money and property is dictated by our taxation and legal systems. I'm interested in where and why the lines get drawn.

'you're still missing the point that ordinary people don't actually have wealth to speak of'

But would you deny their children what little they have, while the socialist on high exploits loopholes and provides for their family?

We don't have what Tony Blair has, but the little something we do have, we want to give to our children and grandchildren.

When my grandmother died she left very little, but each grandchild got something small, and each one appreciated it, and I am sure it made my nan very happy to think that she could leave some small thing to help each one of us.

HeadsDownThumbsUp
But inheritance tax still only affects the top 3% of estates or so

That is where you are wrong : the IHT limit for a couple upon the second death is £700,000 : which means that many, many baby boomers who bought their London Houses over 30 years ago and have ISAs and other savings are looking at handing over 40% of everything over that limit.

The high value estates already have planning and trusts in place so they pay nil.

Remember that the top 10% of earners pay 60% of all income taxes ....

transfer of assets which is taxed above a certain threshold at the moment
No its not.
Gifts in lifetime of whatever value are untaxed.

Redbindy
you may benefit from a study of HMRC rules on transfer of assets
Which bit?
I have the HMRC manuals permanently open in another tab.

Heads, you say the system as it is is not in the interests of ordinary people, and I disagree with that. Lots of ordinary people benefit from a modest inheritance. I know plenty of ordinary people that have received something reasonably significant from parents and grandparents, and they are perfectly ordinary, they just managed to have a new car, or a special holiday that year, or pay a chunk off their mortgage. They are lucky to have been able to do that, but it's nothing out of the ordinary.

What you seem to mean is that the system we have doesn't help the poor as much as you think it should.

Or are you only applying this to the super wealthy who already pay what they owe to the system?