I am bemused by the Observer's Cash section. This week they launched their campaign against Inheritance Tax with the headline:
'Wicked tax' that hits the bereaved
I wrote for 'Cash' for some time. I know those who are writing this stuff. I have argued with them about it. And I can find no substance to their reasoning. I conclude it's cynical pandering to the British middle classes at their worst.
Even their own former editor, Will Hutton can find nothing to support their argument. He wrote this weekend about (quoting his headline):
The case for keeping inheritance tax
Unlike the Cash team, whose only line is that the tax is unfair on co-habiting siblings, which requires a minor change in the law, not a description of it as 'wicked', Hutton is in possession of facts and arguments. Take this:
Only about 6 per cent of the value of inherited property in Britain is paid in tax; less than in most other countries, much less than we paid even 25 years ago, and much less than in feudal England. This should be a cause for concern, not for lowering it still further.
Rather, the take should be raised and the loopholes closed that let much property to be held offshore.
The economic benefits are clear. More property would have to be sold on death to pay the tax, easing house-price inflation and giving people the chance to buy property that otherwise would not come on the market. Farmers in my grandfather's generation won the chance to buy farms after the war when estate duty was high and land came on the market. No more.
Neither has any economic study managed to associate light inheritance tax with innovation, entrepreneurship or high business start-ups. Rather, the story is the opposite. Easy access to unearned wealth destroys the incentive to work and to experiment.
Put simply, if you believe in an enterprise economy, Inheritance Tax is a good thing. I agree.
The trouble is the British believe in privilege.