Inheritance Tax

Maria · Post by **Maria** » 09 Oct 2007, 09:18

This seems to be in the news a lot lately. David Cameron proposes to abolish it and now it is anticipated that Alistair Darling is going to offer some sort of reform.

I listened to a woman being interviewed on Radio 4 a couple of mornings ago. She was so upset, poor soul, that Mummy had died leaving only a 'little something' for her and her siblings. Mummy had been very 'selfish' and gone on a spending spree in her old age, instead of thinking of her daughter's inheritance. The daughter and her siblings had all had been put through private school, raised in a house with a swimming pool, had their first cars bought for them, had lavish 21st parties etc. but were deprived in the end by the selfish actions of her mother; someone she 'probably ought to have had declared mentally unstable'.

Had she had to care for her mother at all in her declining years?
No, her mum was independent till the end.

Had the mother herself inherited money?
No, on the contrary her mother was one of 8 children born into a poor family.

Why then did this woman think she deserved to come on national radio and pillory her dead mother? The answer is sheer greed. It was horrible to hear and I was even more appalled to hear folk 'phone in to sympathise with her.

If I was Chancellor I'd reform the system by introducing a 100% inheritance tax. Just think of all the new schools we could build and the hospitals we could fund by doing away with an iniquitous system that permits the rich to get richer and the poor to get poorer. However, can't see many voting for a party who proposed such a tax. Shame

edit - corrected typo error

seashell · Post by **seashell** » 09 Oct 2007, 09:56

Wasn't it Andrew Carnegie, the great Scottish philanthropist, who said that it is a sin to die rich?

Have you left your house/flat/money to the state instead of family and friends, Marya?

Maria · Post by **Maria** » 09 Oct 2007, 10:10

seashell wrote: Have you left your house/flat/money to the state instead of family and friends, Marya?

Haven't made a will Seashell and as my son is still young it is probably something we should do. I'd be more bothered about who raised him though rather than how much dosh we were leaving him.

seashell · Post by **seashell** » 09 Oct 2007, 11:33

You can nominate guardians for your children in a will. It's fairly easy to organise.

Still, I would imagine that in actuality you would rather leave your money/house etc to your son than to the state?

Sandra · Post by **Sandra** » 09 Oct 2007, 12:07

seashell wrote:You can nominate guardians for your children in a will. It's fairly easy to organise.

Still, I would imagine that in actuality you would rather leave your money/house etc to your son than to the state?

Yes I agree, sure that's what you will do.

Maria · Post by **Maria** » 09 Oct 2007, 12:08

I know we should nominate guardians, just never got round to asking or agreeing on the folk we'd want to stand in for us.

As for leaving our assets to our son, well, that depends on various things:

Firstly, puberty might turn him into a monster and we may want to disown him.

Secondly, we might live to a ripe old age and need every penny ourselves. In fact, he might have to support us!

Thirdly, if euthansia was made legal I'd certainly not want himto benefit from my will just in case he was tempted to pull the plug on me.

Seriously, though, if everyone left their assets to the state then I'd have no problem with doing the same.

Remember it was inheritence tax that brought the National Trust into being. All those big estates and beautiful houses would otherwise be out of bounds to the smelly public.

seashell · Post by **seashell** » 09 Oct 2007, 12:19

Remember it was inheritence tax that brought the National Trust into being.

Oh Marya, when you look at inheritance tax thresholdthese days and then compare with house prices, you will see that it is not the same situation at all as back in the 1950s.

It js not just wealthy people who are suffering through inheritance tax, but ordinary folk who have worked hard, paid tax on their earnings, paid a mortgage for years and then see their children will have to pay oodles in inheritance tax. Sorry, but I cannot see the justice or logic in that.

Still, I do note that you do not seem at all inclined to leave your own estate to the masses. Not quite so easy as talking about things in the abstract and then being pinned down to commit, is it?

Andrew Carnegie not only talked a game - he lived in practice.

Maria · Post by **Maria** » 09 Oct 2007, 12:44

The person who has worked hard etc. won't be suffering at all - they'll be kicking up the daisies. The taxman won't be bothering them. The only people wringing their hands are their offspring, who feel that they are somehow entitled to money they haven't earned. I do accept, however, that if someone has given up time, house space or maybe even their job to care for an elderly relative then they should be compensated.

I agree that rising house prices have brought many more into the bracket for inheritance tax (though folk tend to forget that you are only taxed on the amount over the threshold and not on the total amount inherited), but soaring house prices can also be seen as a product of allowing offspring to inherit. Those who inherit can afford to pay much more over the asking price making it even more difficult for those who inherit little or nothing to make their way in the world.

I've already said I'd have no problem with any assets remaining on my death going to the state and not my family, so long as that was the norm.

I'm flattered to be put into the same bracket as Carnegie but don't think there is much comparison! Did Carnegie leave his daughter destitute then?

seashell · Post by **seashell** » 09 Oct 2007, 13:34

I see you refuse to acknowledge that many people would be strongly averse to their hard-earned money, on which they had already paid tax, should go back to the state upon death.

soaring house prices can also be seen as a product of allowing offspring to inherit. Those who inherit can afford to pay much more over the asking price making it even more difficult for those who inherit little or nothing to make their way in the world

.

What an original and unusual argument this is! Do you have any idea of the proportion of house sales that are sales by executors? I can tell you that it is not enough to have an appreciable effect on the market. The fact is that some people are more wealthy than others for a number of reasons and are therfore able to pay more for many things in life, not just houses.

You clearly know that Carnegie made provisions for his daughter, seeing you know that he only had one child! For the sake of clarity, I stated that while you reluctant to lave your money to the state, while advocating 100% inheritance tax, he actually did what he said and gave his money away for charitable purposes.

As the child of elderly and dependent parents, I can tell you that assets (including property) are consedered by the state when an elderly person goes into care - thus the very reverse of your theory that they should be compensated. Just like inheritance tax, many people see this a incredibly unfair.

Maria · Post by **Maria** » 09 Oct 2007, 13:55

seashell wrote: Do you have any idea of the proportion of house sales that are sales by executors? I can tell you that it is not enough to have an appreciable effect on the market. The fact is that some people are more wealthy than others for a number of reasons and are therfore able to pay more for many things in life, not just houses.

If people don't have to sell houses they inherit then they must be able to afford to pay inheritance tax! Of course, house buyers rely on more than one source of income, but in these days of smaller/planned families inherited wealth is being concentrated in fewer hands, which takes me back to my first argument that the poverty gap will continue to grow. I doubt this is a good thing for anybody.

You clearly know that Carnegie made provisions for his daughter, seeing you know that he only had one child! For the sake of clarity, I stated that while you reluctant to lave your money to the state, while advocating 100% inheritance tax, he actually did what he said and gave his money away for charitable purposes.

He gave away his money after making provision for his daughter which isn't quite the same thing. And I'm not reluctant to leave my money to the state I just want you to do it too.

As the child of elderly and dependent parents, I can tell you that assets (including property) are consedered by the state when an elderly person goes into care - thus the very reverse of your theory that they should be compensated. Just like inheritance tax, many people see this a incredibly unfair.

I don't have a problem with assets going to the state if we expect the state to look after us. I said that I don't have a problem with family members being compensated if they are taking on the role of primary carer. If the state is fulfilling that role then what's so unfair about it being paid?

seashell · Post by **seashell** » 09 Oct 2007, 13:58

If you have a child who is living in residential care, you do not pay.

But an elderly person, who has worked for many years, paid taxes and national insurance has to?? I don't think that's fair at all.

I have no intention of leaving my money to the state - none at all! It will go to what *I* consider to be worthy causes, as I believe in free will - even after my death!

Maria · Post by **Maria** » 09 Oct 2007, 14:15

seashell wrote:If you have a child who is living in residential care, you do not pay.

But an elderly person, who has worked for many years, paid taxes and national insurance has to?? I don't think that's fair at all.

OK point taken. Suspect the only solution for good quality, free care for all, would be if we all paid much higher taxes during our working life and that hasn't exactly proved to be a vote winner.

I have no intention of leaving my money to the state - none at all! It will go to what *I* consider to be worthy causes, as I believe in free will - even after my death!

I'm waiting for a flood of posters, all with "worthy" causes to come a-calling Seashell. Watch out for all those Dog and Cat home volunteers who post on here

Myself, I rather like the idea of being a

SKIer

SoupDragon · Post by **SoupDragon** » 09 Oct 2007, 14:50

A Skier.
Good idea.

I , Soupdragon , being of sound mind have spent the lot on chocolate and booze

I hadn't really thought about updating our will until we were going on holiday ( what if the plane crashed etc) and it occurred to me the kids wouldn't know where the insurance policies etc were
I suppose we better get it all set down officially if only to make it easier for them at present. Suppose its easier to claim child benefit for your siblings if you are official guardian
Mind you I plan to live a long long time and wear out my purple hat

Epykat · Post by **Epykat** » 10 Oct 2007, 16:13

I think if you've worked all your life, paid your taxes, scrimped hard to be ripped off by the Standard Life et al, and finally managed to pay off your mortgage, you should be able to leave what you want to whom you want without them having to pay the State anything!

However, if you die and haven't left a will, then the whole lot should go to the State since you obviously can't be bothered making provision for your family.

It's also ridiculous that people, like my Dad for the last two years of his life, have to pay every last dime to be kept in Residential Care, whilst the person sitting next to him could easily not have worked a day or paid any tax in their life and are sitting there worry free. In fact, when my Dad died we OWED the home money

Sandra · Post by **Sandra** » 10 Oct 2007, 21:52

Epykat wrote:It's also ridiculous that people, like my Dad for the last two years of his life, have to pay every last dime to be kept in Residential Care, whilst the person sitting next to him could easily not have worked a day or paid any tax in their life and are sitting there worry free. In fact, when my Dad died we OWED the home money

Totally agree with you Epykat, its a crime.

kipling · Post by **kipling** » 11 Oct 2007, 10:52

Labour should have been making the case for inheritance tax, because it's a strong case. To inherit wealth destroys the incentive to work, and encourages a “something for nothing” state of mind. You should ask yourself why Bill Gates and Warren Buffett, two of the world's richest men, are active campaigners against the removal of inheritance tax in the US. As Gates said recently: “It's a question of fairness.” Inherited wealth means the rich get richer as money is passed from generation to generation. Inheritance tax, on the other hand, promotes social mobility. If you believe that taxation is necessary at all (and I do), a tax on inherited wealth is one of the fairest.

I accept that the accumulation of private property is a just reward for hard work, and that it's only natural to want to provide for your children. But only up to a point. As things stand, much of the revenue from inheritance tax represents a redistribution of unearned wealth from people lucky enough to have climbed onto the property ladder a few years ago. Your children do not deserve a windfall just because you live in a house in a time of soaring house prices. That's not a reasonable definition of "hard work".

If there were more forced house sales on death, there would be more affordable housing. I'd be only too happy to pay a fair rate of inheritance tax (i.e. more rather than less).

Gordon Brown is no different to Blair in his amoral pandering to the Daily Mail/Daily Telegraph constituency. By making populist tax concessions like he's just done, Brown has fuelled the house price boom, and is helping to entrench a new property-owning aristocracy.

ceejam · Post by **ceejam** » 15 Oct 2007, 14:56

One pays income tax on what one earns, stamp duty when one buys a house, interest on any savings one is able to make, VAT on anything one spends and when one dies the revenue take another cut of what's left.

I wonder what percentage of income one is left with after death and taxes!!

seanie · Post by **seanie** » 15 Oct 2007, 17:54

It varies but if you base it on household income then total taxation has tended to be in the 35-40% bracket for a number of years. And a shift from the late 70's onwards away from direct and progressive to more indirect and regressive taxation, has meant that the wealthiest tend to pay a smaller % of their income in tax than the rest of us although, given the massively unequal distribution in wealth, the top 20% or so contribute the lions share of the tax take.