Inheritance tax

You are right, that's the definition used in many countries in income tax regulation. Therefore they had to create additional taxation regulations (e.g. inheritance tax) to cover the other "ways to receive funds/property". But from an economic view it is all income. Even welfare benefits are income. It is "income" for the beneficiary since he did not own it before.

The silly thing is that there is no convincing answer to the question: Why is normal to tax income from business, which arises from taxed money spent by your customers, even if the customer is your father? And why should it be normal not to tax income arising from inheritance, donation or the like?

I would prefer a low uniform flat tax of about 20% for all kind of income including interest, capital gains, inheritances, donations, etc. - and absolute no exemption. All men are created equal, all income should be taxed equal

Yes, I can see that can't see.

You are sliding/obfuscating with the "some countries" nonsense - this is irrelevant since in the UK the estate is taxed.

The first tax was on the deceased's original income. The 2nd tax is on 'his' estate.

I'm trying to fathom what sort of rational being would support double taxation and tax on capital in particular.

If you gift an asset which has sustained gain, other than to a spouse, then you pay CGT, and then if you fail to survive for seven years, you

Deciding whether to gift is a gamble, since if you hadn't given the gift, but had left the asset in the estate until death, then IHT would have applied *instead of* CGT.

This is the point JB touched on earlier, when he said

IHT is just a Capital [gains] tax applied at death and can easily be incurred by those who have paid no income tax in lifetime.

(at least I assume the omission of the word "gains" was an oversight).

I do think, though, that in the majority of estates the bulk of the value is accumulated taxed income, not untaxed gain, especially if you take the deceased's main residence out of the equation.

I think most people would find IHT a lot fairer if the exempt amount were split, so that instead of having an overall limit of £275k, this were changed to make one's main residence at time of death completely exempt up to a more realistic limit designed to take the vast majority of estates out of the net, say £500k. But the remainder of the estate would enjoy a much reduced limit, of say £100k.

It is irrelevant whether the estate or the heir is taxed. In both cases the result will be a one-time deduction of taxes. "Taxing the estate" is a simplified way to tax the heirs.

he is dead. It is no longer "his" estate, but it is or will become income for the heirs

How about VAT? The first tax is on your income. The 2nd tax is VAT on nearly all you buy with your income

By the way: I am not sure whether it makes much sense to use rational thinking when discussing taxation issues.

In practice, there is no difference. In principle there is a huge difference. The intellectual dishonesty here is defining inheritance as "income". It is not.

As a society you need to decide whether you want capital in private hands or public hands. If you want to transfer it to public hands by whatever means - honest or dishonest then you are a socialist. If you believe that capital is better employed in private hands then you are a capitalist.

Seeking "simplified" ways to thieve a family's capital indicates that you're a socialist. Fine - so why don't you address the issue that the wealthy are escaping inheritance tax through trusts and that it is unfairly catching the middle class in the net? How about the fact that through bracket creep (through officially non-existent inflation), the inheritance tax will end up transferring the lion's share of the

On the contrary, maybe you're a capitalist and quite content with a system that allows the wealthy to escape the tax through trusts but captures the entire middle class in its net.

It is not income. It never was. You are defining it as "income" so that you can create the (dishonest) right to annex it.

It is a family capital, accumulated when accumulating wealth was the incentive which made Britain great. Annexing capital and transferring it to the public is just theft.

Paradoxically, it is the average person (not the wealthy, who protect themselves through trusts) who is being hoisted by this socialist petard.

Sure. Are you arguing that since double taxation occurs in other instances, then this instance is okay? This is aka "slippery slope"

In message , Ronald Raygun writes

No it was deliberate. CGT & IHT are handled by the Capital Taxes Office. IHT is a tax on Capital. (Full stop). Even if you had made a huge capital loss, you would still suffer IHT on what was left.

I take issue with some other points throughout the thread, in particular the assertion that the majority of the capital taxed on death arose ,mostly from the retention of taxed income. In my experience this is not the case. The major asset is the domestic home and at the moment the majority of domestic homes that fall within the grasps of IHT have shown a very substantial gain indeed having been bought for a fraction of their probate value.

Similarly, savings have increased substantially, often three or more times than their acquisition cost, and even then their purchase may not have been funded from income but from transfers of capital. Another contributory source is life policies which have not been written in trust, the sum assured is often a large multiple of the premiums (which will have been paid out of taxed income).

So, IME, the majority of middle sized estates subject to IHT do NOT suffer double taxation.

The intellectual dishonesty here is defining income (something you did not own before) as "no income" to evade taxation.

Let us lower income tax rates for working people so they have a chance to accumulate capital in their private hands. And to balance the effect of said lower tax rates let us increase rates on capital which is without own work in private hands. This would be a zero-sum game, but a more fair one.

Lazy heirs are no useful capitalists, they are worse than socialists. A useful capitalist is a self-made man who is used to make his own life.

"Taxing the estate" is a simplified method because only "one person" (the estate) has to be taxed.

"Taxing the heirs" like in certain other countries is much more complicated since there can be many heirs with different individual tax rates etc. Means a lot of different tax declarations and much more work for the taxman.

usually taxation relates to individuals or one generation of a family (married couples) but not to grandfather-father-son. Your father's property is not your property. You have to make your own life. If you believe you are not an individual but some kind of extension of your ancestors then you also had to accept all the negative implications. If it turns out that your grandfather was a thief then you would have to serve his sentence, etc.

And you are arguing that since escaping inheritance tax occurs in some instances, then inheritance tax in general is not okay.

Garbage. The precendent of wealth being passed from parent to child has existed for centuries. Defining inheritance as 'income' is only a recent invention. Tax is a non-decreasing phenomenon.

The core, fundamental principle of capitalism is that people are incented to create wealth (and jobs) by the prospect of leaving something for their heirs.

The idea that the state can/should annex this family wealth is sheer & utter nonsense *and* ineffective, since it effectively results in the transfer of capital from efficient employers to inefficient bureaucrats.

And anyway, why should the game be 'zero sum'? Tax rates should be reduced anyway. The public service is pure overhead - and every good business trims overheads regularly.

This attitude is the typical socialist 'we know better' attitude, i.e. "we'll tax someone else and give you benefits".

Translation: we'll tax *you* with your own money

Either way, it is theft

Now 'family' is defined by taxation???

No I am not. I am pointing out the hypocrisy of your position.

just like e.g. Black Death, torture, death sentence, etc.?

just like automobiles, airplanes, computers, modern medicine, etc.?

right

wrong I can assure you I made some money in my life and I am absolutely not interested in leaving something to someone. Tout au contraire. If I had children I would expect them to make their own living like I did.

By the way: I made my money on the stock exchange. And I owe most of my profits to wannabe capitalists (i.e. stupid heirs) who thought they understood what capitalism is and how it works

Seems you ignore that many capitalists make their fortune due to government contracts given to them by inefficient bureaucrats and paid by taxpayers

well said. Good business is founded on people who can make their own living and who do not need daddy's money.

Not much different from your attitude: Tax someone else but not me.

Is that the best you can do?

None of these things was created by bureaucracy. Western society invented most of these things using private capital - but the era is over - it won't happen again because anyone with any sense will now invest in countries which respect capital creation.

Your personal preferences are of no interest or relevance to this discussion. FWIW, so would I, but I am not so arrogant as to impose my will upon others who wish to do with their hard-earned capital as they please.

Exactly. Capitalism thrives upon 'stupid heirs'. Why legislate to hand it to bureaucrats when natural forces willhand it to people better equipped to employ it anyway? But the 'we know better' brigade has/must decided to annex it for themselves, er 'benefits' aka political promises.

You condone inefficient distribution of capital? Don't answer - we already know that because you support inheritance (double) taxation.

I agree but I think that it is my right to decide that. I do not appreciate bureaucrats claiming the right to annex my after-tax capital with hypocritical claims about the efficiency of the economy. The economy is better off without bureaucracy and minimum taxation.

Why tax anyone? Implement an across-the-board 20% VAT and abolish all other income and (especially) capital-gains tax and britain will be great again. Continue robbing capital and savings and you will continue going down the tubes.

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