100% inheritance tax? 100% wishful thinking

Ben Pringle
Jul 25, 2017 · 3 min read

In an article for a section of The Guardian that was described as “Utopian Thinking”, Abi Wilkinson proposed an inheritance tax of 100% with the idea of using the money to fund the welfare state. The word Utopian means a state in which everything is perfect. This idea would require a lot of separate things to perfect at the same time. Funding services in the UK and the welfare state is something that is high on my agenda but by implementing this policy we would achieve a case of services further struggling for funding.

Those who are born into wealth have clearly been very lucky and the opposite is true for those who haven’t, however if you want to redistribute wealth from the wealthiest in society to the poor you need to be progressive and not regressive. Implementing a 100% inheritance tax would mean that individuals would do the following A) destroy wealth through the act of over-consumption, B) Leave the UK with their wealth or C) Use accountancy tricks to move wealth on before death (there are always holes in legislation that clever accountants make their money finding!) This state of affairs would mean that the state wouldn’t just raise less money on the back of an inheritance tax; they would also raise less money through other form of taxation off the back of individuals leaving the UK. Wilkinson does note that people retiring early could help youth unemployment but the result of this tax would mean jobs are destroyed as well as the welfare state.

I am not suggesting that wealth is an indicator of success in life or that we shouldn’t aim to redistribute wealth but we should also not seek to destroy wealth. For example a policy looking at the supply of housing (open up the greenbelt!) and planning laws or disincentivise those who are 2nd home owners would be a lot more radical and beneficial to the poorest in society.

Wilkinson also asks “where is the evidence that suggests people without children are less productive?” This is not solely about productivity (although I’d argue this policy would affect that), it is also about extra consumption that such a policy would encourage. Consumption rather than investment would be most unwise in a country where the investment climate is already on a cliff edge due to the Brexit negotiations.

Finally I would add that this isn’t a tax that is attacking the top earners in society, it would be an attack on anyone in the UK that has been sensible/hard working with their money and wants to leave something for their family. The claim that people don’t work hard in order to leave something behind for their families in my opinion is ludicrous and shows a lack of understanding of incentives. Margarat Thatcher once argued that we were an individualistic society when she said “there are individual men and women, and there are families”; this policy goes further than that by challenging the notion of family.

The left needs to realise that you can’t in a globalised world raise wealth in ways that previously may have had some success, progressives need to look for new ways of taxation and new ways of putting an end to rentier capitalism. Individuals shouldn’t be getting rich off the back of extracting wealth through property and taking advantage of the less well off. Look for new policy ideas rather than harking back to failures of the past.

*Abi Wilkinson is a fantastic young journalist who gets some unfair abuse which a lot of the time is based on sexism rather than a fundamental disagreement of opinions. *

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