I have not particularly studied anything about Inheritance Tax (IHT), so this is coming purely from my own thinking about this. Yesterday, the Daily Mail predictably spouted off about the Labour Party’s designs on IHT:
Lovely language. The right always seem to want to protect inheritances. Once we look at what they are, we might understand why, and then we can see if they are incoherent with other ideals that the right, for example The Conservative Party, might have.
Here, inheritance is the passing on of material wealth to one’s offspring (or some others of choice). Let’s simplify it to one’s offspring for sake of argument, and let’s not consider donating to charity here.
A person might work really hard all of their lives and earn, through merit, a large sum of material wealth. They might, on the other hand, inherit a large amount themselves, and use this to maintain their richness. Let’s take the first case.
Let’s take the first case. Here, someone has merited the wealth they have earned. Perhaps they have worked really hard, had great ideas, invented some stuff, or whatever. We can assume they genuinely merited getting this material wealth. Let’s look at what present Conservative PM, Theresa May, recently said:
When I stood in Downing Street as Prime Minister for the first time this Summer, I set out my mission to build a country that works for everyone. Today I want to talk a little more about what that means and lay out my vision for a truly meritocratic Britain that puts the interests of ordinary, working class people first….
I want Britain to be the world’s great meritocracy – a country where everyone has a fair chance to go as far as their talent and their hard work will allow.
I want us to be a country where everyone plays by the same rules; where ordinary, working class people have more control over their lives and the chance to share fairly in the prosperity of the nation.
And I want Britain to be a place where advantage is based on merit not privilege; where it is your talent and hard work that matter not where you were born, who your parents are or what your accent sounds like.
Let us not underestimate what it will take to create that great meritocracy. It means taking on some big challenges, tackling some vested interests. Overcoming barriers that have been constructed over many years.
Strong words, indeed. It all sounds wonderful: people should be able to merit and aspire to material wealth, through “talent and hard work that matter not where you were born, who your parents are or what your accent sounds like”.
This should come back to haunt May. It won’t, but it should. Because it is utterly at odds with her and her party’s views on IHT. The Tories have been planning to cut IHT to the tune of £1billion to the public purse. Jeremy Corbyn’s Labour plan to reduce the threshold on IHT.
So what is IHT? Well, it is the government, like any tax, getting their hands on hard-earned money for the benefit of everyone in society.
But what is the real point, philosophically speaking, of IHT? Well, I see it as a redistribution of income that balances the equality of opportunity for individuals in a country.
Take this as an example: I have two million pounds and I walk down the street and find two children, I randomly select one child and give the money to them and say, “There you go here is some money to give you a leg up in life.” To the other I say, “Tough luck, mate.”
Would the second child feel justified in this being unfair? Yes, by the notion that the first child did nothing to merit being given that money: they received it on point of fact of luckily being in the right place at the right time. This child then has the privilege of having money, through no merit, and has a much better chance of succeeding in life than the second child.
Let’s apply this analogy.
One child is lucky to have been born to parents with money. The parents die and that child inherits the wealth. Through no merit of that child, they are privileged over an above the next child who is born to poor parents. It is the parent(s) who merited that wealth, not the child (and if it was old money, then they would not have merited it either). What inheritance clearly does in maintain privilege. Very clearly. That privilege is assigned on the luck of birth.
What IHT does is try to reduce the privileged playing field and reassign wealth to the rest of society to give its members equality of opportunity (I would argue that income from IHT should be used to explicitly do this rather than be directed into the general government coffers).
When you see Theresa May’s words that meritocracy should reward “talent and hard work that matter not where you were born, who your parents are or what your accent sounds like”, then you can quite obviously see the blatant contradiction in ideals with IHT and meritocracy – they are diametrically opposed.
The Conservatives, though, are a party full of old money and inherited privilege, so this comes as absolutely no surprise.