...a blog by Richard Flowers

Tuesday, July 30, 2013

Day 4587: A Liberal Tax versus The Problem of Inheritance


The arrival of a BABY* who is going to receive the entire United Kingdom in spite of not even writing a FAMOUS DIARY begs the question: is it RIGHT that so much of the wealth of this country is bound up in a few families and handed down generation after generation?

The PROBLEM isn’t whether this is SELF-EVIDENTLY WRONG (it is) but that the people who HAVE all the wealth have a VERY GOOD trump card when anyone dares to suggest taxing them:

“People who’ve worked hard for their money should be allowed to give it to their children!”

It’s a CLEVER and TRICKSY argument, which tries to hide the fact that very often these people have NOT worked “very hard” for their money, but have – like the young princeling – merely got it because of who they were born... and from people who merely got it because of who they were born... who got it from people who… Laziness, cascading down the generations. Instead they CO-OPT the hopes and aspirations of millions of people who DO work hard for their children to provide cover for their own enormous unearned benefit.

However, I have a suggestion that would neatly get around this: the Inheritance Tax rate should be ZERO for all money earned, but 100% on all money inherited during your lifetime.

That way, people who DO work hard, and improve on what they start with – whether that is a fortune or nothing at all – will have money to leave, but those who receive great good fortune and fritter it away or even just sit on their laurels, will see the taxman claim the lot of it.

Inherited wealth and privilege are strong barriers to equality of opportunity, and as such traditional Liberals should be opposed to them instinctively. Additionally, economic Liberals will tell you that wealth bound up in portfolios of property and stocks is money that is not circulating in the economy and therefore losing us opportunities for growth. Keynesians will say that the receipts from such a tax can be used to pay down the national debt or invest in capital assets. And Christians will tell you that this is 100% in keeping with the Parable of the Talents.

*Meanwhile, a Happy NOTHINKTH Birthday to George Alexander Louis – named for three emperors... or did your parents secretly want a G.A.L?

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