The case for 100% Inheritance Tax

Taxation has been, and will continue to be, a major topic of discussion for politicians and commentators in the wake of the worst financial crisis since the Wall Street Crash of 1929. With a huge budget deficit and a general election looming, the case for increased taxation will be debated by the two major parties until all of us listening shrivel and die of boredom. Yet, in spite of this, one of the most serious issues that faces this country, inequality, and the one method of taxation that could make a real dent in the deficit while causing no harm whatsoever to the person that earned the money, the inheritance tax, remain inexplicably neglected.
Well, not so inexplicably, as it happens. Inheritance tax is not a vote winner, and the self-serving politicians of today, just like the self-serving politicians of yesterday, are far more concerned with prolonging their own political careers than tackling in earnest the problems facing this country. This applies to this Labour government in particular, under whose watch the inequality gap has widened further than even Margaret Thatcher could have imagined and the taxing of estates has declined. In 1997, when Tony Blair’s brave new era began, the inheritance tax threshold was £215,000. It is now £325,000. The inheriting of money, however much or little, has become one of the major causes of economic and social inequality in this country.
This idea is undoubtedly radical. It would also undoubtedly be seen as an assault on the rich. This is why my proposal is that this tax would apply to all, regardless of the size of their estate. The idea that a person’s incentive to work would be diminished by the fact that they would not be able to pass their accumulated wealth on to their children is, in my view, untrue. The incentive would still be there- to do the best you can for yourself and your family while you are still alive. The 100% tax rate on the estates of deceased citizens would merely be a method of levelling the playing field. No more would unskilled or lazy people be able to stay ahead of the more deserving and capable simply as a result of their inherited wealth and status. A person’s incentive to work would be increased: with the ability to fall back on inheritance removed, one would have to work harder to succeed. Government’s role, in my eyes, is much like that of a ruling body for sporting competition: to set the rules of the game and make sure that nobody manages a head start due to artificial means. A 100% tax on inheritance would go a long way in denying anybody an unfair advantage, resulting in a fairer, more equal and meritocratic society.
The benefits to the Government would be immense. With less incentive to save, people would spend more, thus reigniting a stagnated economy. Revenues would be significant, and allow for large scale investment in public services as well as, yes, cutting the budget. Clearly safeguards would have to be put in place to ensure that this money was used for such positive ends, rather than unwinnable wars and lining the pockets of our elected representatives. The public would not stand for anything else. The move is unlikely to be popular- nothing regarding increased taxation ever is- but it would be easier to implement and provide more of an incentive to work than increasing income tax would. To put it crudely, it is an awful lot easier to prise tax dues from the fingers of the dead. It is also easier to enforce, with rigid rules regarding the ‘unloading’ of wealth as a person’s death appears imminent.
This appeal will almost certainly fall on deaf ears. But current taxation methods are not satisfactory. The 40% rate of taxation of estates worth £325,000 and over is not enough. A brave move on inheritance tax goes some way to realigning our divided society while providing much-needed revenue to a Government brought to its knees by economic mismanagement. It’s a pity none of our political leaders, primarily drawn from the middle and upper classes, have the gumption to do it.