I like inheritance tax

by Ed Bowsher on 13 November 2009  |  16 comments
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Inheritance tax is the second most hated tax in Britain, according to our latest lovemoney.com poll, but I disagree.

45 per cent of lovemoney.com readers think that inheritance tax should be scrapped, according to our latest poll, and a further 50 per cent think the threshold should be raised. In fact, it's your second most hated tax behind council tax. 

I disagree. Inheritance tax is my favourite tax. That's because I think it spurs economic growth, unlike all other taxes. 

Think about it: if you won £10 million in the lottery, you'd probably work less hard, and you might even retire completely. Obviously, most of us aren't going to inherit that much cash, but I do believe that inherited wealth encourages people to work less hard. 

It's not just me who thinks this. The world's most successful investor, Warren Buffett, is a strong supporter of estate duty, the US equivalent of inheritance tax. This quote from Buffett is bang on the money: 

"I love it when I'm around the country club, and I hear people talking about the debilitating effects of a welfare society. At the same time, they leave their kids a lifetime and beyond of food stamps. Instead of having a welfare office, they have a trust officer. And instead of food stamps, they have stocks and bonds." 

The strongest argument against inheritance tax is that it's relatively easy to avoid if you employ a fancy accountant. But that doesn't make the tax morally wrong. It just means that civil servants need to work harder at closing loopholes. 

Just to be clear, my parents are reasonably affluent, so I stand to gain from the Tories' plan to raise the inheritance tax threshold to £1 million. But I still think the Conservatives are wrong. 

If you're rich because you've worked hard and played by the rules, I congratulate you. But I see no reason why someone should lead a life of luxury just because their father or grandfather was successful. It's not fair and it doesn't make economic sense either.

Video: Britain's most hated tax!

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