Wednesday, 20 February 2013

Inheritance and Mansion taxes


A couple of items that have been hotly debated in the press of late are the modification of taxes on personal assets, most notably expensive houses. The liberal democrats have long been in favour of a mansion tax and their policy has been replicated for the good of his party by Ed Milliband, whilst debate still rages over the threshold levels of inheritance tax.

Let me tell you right now that I'm totally opposed to the mansion tax, for the simple reason that the ownership of a large and expensive property does not necessarily equate to the possession of wealth or liquid assets. Indeed, one only has to consider the forgotten many across the rural landscapes of England who have come into the possession of large farmhouses beset by debt, crumbling mansions plagued by damp and neglect and sprawling estates burdened by the long lost ghost of the family names. These people don't have cash, savings or investments. In fact, very often they don't even have any education or life skills on which to draw. And if a load of envious and bitter socialists (who have probably never set foot in the countryside) have their way, they won't even have a home to live in either. 

As for inheritance tax, I'd rather burn all my assets and squander my cash rather than see the taxman get his grubby mits all over it.

The arguments in favour of these sorts of taxes tend to fall into two brackets. the first is that at such times of economic hardship, of cuts and squeezes, it is only fair that everyone shares the burden, especially those with wealth. The second argument is that any form of inheritance, be it a house or liquid assets, favours privilege over aspiration. To that end, we are quoted the many cases of omboxious Tarquins and Clarissa's who never have to work, never know any form of social hardship and who will simply waltz through life without ever having to face the challenges of life that to the majority of us are mandatory. 

So let me answer these two. As for the issue of taxing wealth, it is the generation of wealth that I believe should be taxed, not the aged relics of it. Taxing an old teapot that was made in the halcyon days of the Indian Empire might make readers of The Daily Mirror feel good, but it isn't a sustainable way of bringing in tax. It makes far more sense to raise the levels of top end income tax, VAT on super-luxury goods and especially stamp duty on the purchase if homes over the value of £2m than it does to rifle through the empty pockets of failed country estates. We are taxed the minute we are conceived, our every want and need drawing fresh opportunities for government benefit, right through to our adult life and beyond to retirement age and ultimately to our funeral. Life is one long succession of taxes, yet despite this I am advocating that if funds must be raised and corners must be cut then tax us some more whilst we earn it. But if we are taxed throughout life then for pities sake let's avoid taxing us in death.

As for the accusation of privilege, I think that the mistake that most people make is to see the right for a dying person to bequeath their their worldly goods and chattels to their chosen recipients as an unfair advantage for those that benefit. Surely it remains the right of that person to make that choice without the threat of it being pilfered by the taxman? Where I do share sympathy is in my hatred of the "oh yar" set who receive all the benefits without the effort. However, this is something that occurs in the normal course of the daily routine - private education, horse riding, lifetimes bonds, stocks, shares, a holiday home in the south of France, a Swiss Chalet, and a guaranteed apprenticeship with JPMorgan. So the promise of receiving the family jewels is not especially a deal-clincher in the whole aristocratic converter belt for Lord Snooty and his pals. So lets come up with ways to make their lives slightly less easy and reduce the dubious ways in which they can hide their stashes from the taxman before we invent evermore spiteful policies with which to make ourselves feel better.

Just remember, the aspiration of aspiration should be passed down as well as up.