Single tax rate proposed

[Xenia]

www.google.com/hostednews/ukpress/article/ALeqM5ifFvHAcJMXsx54rwIVBum8nj31Ww?docId=N0212261337479067198A an in the Times p4

2020 Tax commission and IoD propose

one rate of income tax (30%),

abolition of stamp duty and national insurance,

public spending to reduce to a third of national income (been over 40% of last 30 years)

Replacing corporate and capital gains tax with 30% tax on dividends, interest and rent

Scrap air passenger duty

Fule duty cut by 5p a litre

Would mean a £3400 tax cut for a two earn erhousehold on £28,000.

Says would lead to 8.4% increase in GDP after 15 years.

Sounds very good. Might even get Cameron re-elected if he adopts the plan.

On the whole it is though. Most people don't die at that stage. The vast majority die in their 70s or 80s and can plan to ensure they don't pay the tax.

and any mumsnetter over IHT levels who has as life insurance policy can put that in trust at virtually no cost so that the proceeds do not fall into the estate to keep that out of IHT too.

dreaming it wouldn't disincentivise them if a) they knew their heirs would have to pay tax if they inherited the house anyway (so they might as well sell now, pay the tax now and at least get the rest of the money) and b) if it was introduced in stages - in fact that would provoke a rash of people selling now before it was brought in.

Xenia I also disagree about the IHT tax planning thing. My parents have no idea whether they will live into their 70s, 80s, 90s or beyond. They have no idea whether they will be hale and hearty and then die suddenly, or whether they will have eg a stroke or dementia and need expensive daily care. When exactly do you propose they hand over their money?

I think inheritance tax is abhorrent, why should some one pay tax when they've died instigating the process of passing down their money and assets to whoever they wish, why does the State think its entitled to any of it?

my father died when he was 59 of a heart attack, after he got home from work... and my mother is now in a home and can't give her money away because of gov regs

aedes it isn't the person who dies who pays inheritance tax, it's their heirs. The heirs haven't earned any of that money.

Personally I think it's much more justifiable for the state to take a share of unearned money (like inheritance) than a share of earned money (like income).

aedes - why does the state think they are entitled to money i've worked hard to earn? i'd much rather pay inheritance tax on money i'd inherited, since i'd done nothing for it

cross posted dreaming

I know its technically the heirs that pay the tax but why is the state even interferring in the passing on of wealth, the money and assets have already had taxed paid on them. It seems to me to be an awfully cynical revenue grab by the State. If people wished the Government to have some of their wealth on their death they'd decree so.

Tax has not necessarily been paid on an inheritance. Many properties have increased in value significantly, and no tax has been paid on them.

A property will often make up a large proportion of an inheritance.

Why does the State interfere with employers paying wages aedes (i.e. income tax)? Why does it interfere with people buying goods from shops? (VAT). Why does it interfere with people buying property (stamp duty)?

Why does the State interfere in anything? Because it needs the tax to pay for state services. It's simply a question of where it should get that money from. IMO it's better if it gets it from "unearned" wealth - eg inheritance and property gains - than "earned" wealth i.e. income.

It's a bit bizarre to say "if people wished the Govt to have their wealth on death they'd decree so". I could say the same about income tax: "if I wished the Govt to take some of my income I'd hand it over to them". That's not how tax works...

"People could move into a house costing £100k and give the balance away to their children and avoid IHT. Plenty of children care for their parents too in many cultures in the UK"

Where, exactly, are all these houses that are £100k that older people will be desparate to move into, the very people who have assets in excess of IHT levels ie are probably used to living in rather nice houses? Only around 8% of estates on death are worth more than £325,000, and only 2% are worth more than £650,000.

This report paints a delightful picture of how taxes could be reduced for all (but especially for the better off) by huge cuts in public spending.

It has a lot to say about how the lovely tax cuts could be devised and introduced.

It has nothing whatever to say about how the associated reductions in public spending would be achieved or what the consequences might be.

It therefore has no credibility whatever, except as a sort of Hayekian wet dream.

Oh, and it's turgid and badly-written too.

if in heritance tax were stopped the money would need to come from somewhere, so I wouldn't mind betting the money I earn through my job would be taxed more instead.

Would I be happy about paying more income tax, so someone else could inherit a load of money with no tax? NO

Rubbish. IHT is usually due because of ludicrous rises in property prices - totally unearned.

Hmm. Perhaps then I should not have taken the risks I did starting my own business, working umpteen hours longer than most, providing jobs for other people and then have the money I had made which had already been taxed, taxed again. Nor should I have bothered to save so that we would not be dependent on the state, the taxpayer or others of goodwill.

Xenia I agree with you on lots of issues money and business wise but I don't see why my success in business should be penalised by making us move into a pokey little place (which is what a £100K house would be in my neck of the woods) and rely on the state or my lovely kids (who would actually do anything for us). As an entrepreneur (something you seem to admire) I believe in relying on myself, looking after my family (which my hard work has helped us do) and not being forced to impoverish ourselves to prevent a greedy Government taxing the same money twice.

"Perhaps then I should not have taken the risks I did starting my own business, working umpteen hours longer than most, providing jobs for other people"

grimble your heirs did none of this. And they are the ones who pay inheritance tax. For them, the money is simply a windfall.

minipie

1. that does not make it moral for a Government to tax the same lot of money twice

2. the windfall of which you speak will enable one of my heirs to buy a specially designed place for a severely disabled child and put money by for that child when he grows up to be taken care of when his parents die, thus saving the taxpayer many many thousands of pounds. It will also mean another heir whose several health problems mean they cannot work not having to rely on disability payments, thus (guess what?) saving tax payers thousands and thousands of pounds.

But I guess looking after one's family is no longer seen as the right thing to do if it involves (shock horror) a windfall.

And none of 2) makes it right for a Government too tax the same amount of money twice. It is unethical and immoral.

It is unethical and immoral in your view. Personally I think it's more ethical than taxing the earnings of someone who only makes £12k a year.

If the government took a greater slice of inheritances they could use it to help ALL disabled/sick people. Why should some disabled/sick people be better off than others simply because they had rich parents?

grimble - would you have preferred to have paid a higher rate of income tax instead? Personally i would prefer my children to pay inheritance tax

Inheritance tax is ridiculous, it prevents hard-working families from building up legacies to ensure their future.

We drastically need to reform tax in this country, because people are sick of paying the current amounts when we get absolutely piss-poor public services and so many people are getting rich working for the public sector.

Josephine, who are these rich public sector workers of whom you speak?

Because I actually know an awful lot of people who work in the public sector and none of them are rich.

josephine - i believe people should have lots of money because they have worked hard for it. Inheritance gives people access to things that the general public don't have, eg private education and just re-inforces the class divide (and i say this as a torry voter who will one day hopefully inherit). why should someone who works their guts out, pay extra tax to subsidise someone who has done no work towards inheriting loads of cash?

In general I am very strongly in favour of this idea and agree with MrPants that the Personal Allowance should be set at or just above the level of National Minimum Wage. It makes no sense to me why people on NMW pay tax or NI.

Making it worth working is surely a good way to encourage people to take a job where there is one available. Also giving peple on low wages more money to spend stimulates the economy.

My only caveat is that I think the tax rate would have to be set higher than 30% otherwise we would have a huge budget deficit and I want to see top earners have all the special schemes removed that allow them to avoid tax. If there is a flat tax we all have to pay it not just low and middle income earners while top earners carrying on avoiding it.

Its a quid pro quo.

Completely agree with the idea of a flat rate of tax, everything woudo be much fairer and simpler that way.

I disagree that inheritance tax gives access to things that the general public don't have. Most inheritances are just not that big. And the ones that are that big have probably involved some form of sacrifice by the whole family, not just the one high earner. Apart form the very small minority that have generations of wealth, people have to work hard to provide an inheritance for their children and that often means they have sacrificed time with them.

If I earn my money and pay tax on it, I don't see why I shouldn't be able to do whatever I want with it after that. It's my money, and if after I have paid tax on it I want to give it to my children, why shouldn't I? Whether I'm dead or alive is almost irrelevant, because of the fact that when that money was earned, it was taxed.

And when my children spend it, on a house or a car or a holiday or whatever, it will be taxed again anyway.

As someone said above a tiny % Of people have enough money to pay IHT. IHT is not a main part of this plan to simply tax and NI to the reduced rate of 30% for all. Plenty of people choose to hand wealth to children well before they die. Others want to leave it to the cats home and lots are happy the state takes 40% of it as IHT. My point was that for many it is a choice. They can put assets in trust, they can give it away or they can pay the tax. However many who pay it don't think about it and end up paying it when they might otherwise not have done. There is no tax on gifts. I am just about old enough to remember capital transfer tax which was a tax on gifts which is no more.