What extra taxes would you volunteer to pay?

aj23_2

Uxb wrote: »

Nope - this is the usual misconception with IHT
Most of that due in IHT is on wealth obtained through rises in the deceased's own property and their investment portfolio.
One's own house is not subject to capital gains tax on sale at any time and many share/OEIC investments have not been sold/re bought so again have not been subject to being CGT'd.
So neither of these things have ever been taxed
An expensive work of art kept in the family would be another example of something who rise in value has never been taxed but would be taxed by IHT (all assuming the estate is over the IHT threshold)

In fact IHT is one of the very few taxes where a lot of the tax is due on indeed "things" that has never been taxed before. Unlike normal day to day tax such as VAT, insurance premium tax, council tax etc which are all levied on your post tax income accumulation.

It's not because you've already paid taxes on your money in order to have what you are leaving. That is being taxed more than once on money that has been taxed already.

Herzlos

aj23 wrote: »

It's not because you've already paid taxes on your money in order to have what you are leaving. That is being taxed more than once on money that has been taxed already.

At the value you paid for it, without any CGT.

Say you bought your family home for £5k in 1950, and then left the same house, now worth £1.5m to your kids in 2018. You've not paid any tax on the growth in value.

You could also argue that IHT is a tax on those least likely to suffer from it, being that they aren't here anymore. It might encourage people to spend money (good for the economy) instead of hoarding it.

aj23_2

Herzlos wrote: »

At the value you paid for it, without any CGT.

Say you bought your family home for £5k in 1950, and then left the same house, now worth £1.5m to your kids in 2018. You've not paid any tax on the growth in value.

You could also argue that IHT is a tax on those least likely to suffer from it, being that they aren't here anymore. It might encourage people to spend money (good for the economy) instead of hoarding it.

And extreme example which is presently extremely unlikely.

Malthusian

Herzlos wrote: »

Say you bought your family home for £5k in 1950, and then left the same house, now worth £1.5m to your kids in 2018. You've not paid any tax on the growth in value.

You paid tax on the earnings you used to buy the family home. If it wasn't you who earned the money, the person who did paid tax. Right or wrong, it is double taxation.

If you paid tax on earnings and used your earnings to buy non-PPR-relievable investments on which you pay CGT and income tax and then leave those to heirs with IHT applying, that's triple taxation.

westernpromise

Malthusian wrote: »

You paid tax on the earnings you used to buy the family home. If it wasn't you who earned the money, the person who did paid tax. Right or wrong, it is double taxation.

If you paid tax on earnings and used your earnings to buy non-PPR-relievable investments on which you pay CGT and income tax and then leave those to heirs with IHT applying, that's triple taxation.

There has been nil capital growth in the value of the house in that example anyway. That's not growth, that's inflation. The instant you tried to sell your house for £1.5 million and buy another for £15k, you'd find the replacement cost was the same as what you'd just sold for. If that were growth, it would be possible to sell and replace and have money over.

All these arguments why other people should pay more tax falter on either or both of two things. One is that these tax-is-good-as-long-as-it's-on-other-people arguments never stop to consider whether the state has any duty to minimise what it needs to spend in the first place. It's always just a given that the state should take as much as it feels like.

The other problem is the logical fallacy that government spending is necessary, therefore taxation is necessary, therefore any tax is always justifiable because of that obvious truth. This one is always wheeled out to excuse any level of expropriation. As an argument it fails, firstly because it says nothing about what level any specific tax should fairly be, and secondly because those who advance it always do so in the expectation that other people will pay it. So income tax is very popular because 10% of the taxpayers pay 59% of it, which lands well with the other 90% who pay little or none of it. IHT is popular because 6% of estates pay it so the other 94% are easily persuaded that it's a good thing.

The same people often then argue vociferously that things like VAT are bad because they're "regressive", which in these debates always means "levied on me instead of everyone but me". Personally I am moving towards a position where I think the tax burden needs to be distributed a lot more widely, otherwise you risk creating a society where a large chunk pays nothing for anything, which is a blueprint for a completely !!!!less and irresponsible populace.

Herzlos

aj23 wrote: »

And extreme example which is presently extremely unlikely.

Change the numbers to any you want, I didn't feel them relevant to the actual point.

Malthusian wrote: »

You paid tax on the earnings you used to buy the family home. If it wasn't you who earned the money, the person who did paid tax. Right or wrong, it is double taxation.

If you paid tax on earnings and used your earnings to buy non-PPR-relievable investments on which you pay CGT and income tax and then leave those to heirs with IHT applying, that's triple taxation.

You pay at least double tax on everything: Taxed when you make the money (IT), when you save the money (IT), when you spend it (VAT). Sometimes you even pay tax on the tax (VAT on fuel duty).

lisyloo

Money_Muppet wrote: »

Car tax should be inverse to local public transport provision. City center living with plenty of public transport and car tax should be high. Rural living with poor public transport; tax should be lower.

So you'd penalise disabled people who can't walk to the train or bus station?

I can go for taxing discretionary luxuries where theres a choice, but there are plenty of examples of where there is no choice.

Thrugelmir

aj23 wrote: »

And extreme example which is presently extremely unlikely.

Not as extreme as one might think. My late mother bought her house in Surrey in 1972 for £28k. Currently we negotiating with the HMRC a six figure IHT bill on the property.

Along with LL's selling their property and incurring CGT. IHT is a windfall for the Exchequer at the moment. With values being so high.

Money_Muppet

lisyloo wrote: »

So you'd penalise disabled people who can't walk to the train or bus station?

No. Where did I say that?

GreatApe

I haven't thought this through enough but would say a much higher VAT on cars help the UK economy?

Say cars had a VAT of 100% what would the result be?
Presumably there would be a shift towards more economical models eg a buyer decides to go for a ford rather than a BMW and we would likely keep existing cars on the road maybe a couple of years longer. There would also be a small reduction in the stock of cars say we go from 32 million cars to 30 million and perhaps a small uptick in the number of miles done by foot bike and public transport

This would clearly be a negative for the Germans and luxury car makers but would it be a net positive for the UK economy?

Just trying to guess the figures. Roughly
2.6 million cars sold for £18k before VAT average each
Let's say it falls to 2.3 million cars sold annually and the price falls to £15k average as people switch to cheaper brands and models.

Could save about £12 billion a year in imports
If that was spent domestically it would ASD about 0.6% to GDP

VAT receipts would also jump about £25 billion a year which could be used to reduce taxes elsewhere.