The first of these claims will be that everything subject to inheritance tax has already been taxed once already.
That is total nonsense. Inheritance tax is, in part, a tax charge on untaxed capital gains, which are cancelled on death. These gains have not, by definition, been taxed in any other way already.
And nor is the value of most estates made up of previously taxed savings. Most are made up of the value of homes – and these are never otherwise taxed at all.
We do not tax gains in principal residences in this country. OK, fair enough, we don’t.
So why should we at death?
For example, the basic personal allowance is frozen this year. It should have gone up by about 10% because of inflation. That increase should have been about £1,250, which would have given a £250 tax cut to most taxpayers in the UK. All 33 million of them.
The cost of that would have been a bit above £8 billion – near enough the same as the cost of abolishing inheritance tax. But the vast majority of those getting that £250 would have spent it straight away, unlike the person getting the gain from inheritance tax, who would have saved it.
D’ye recall when Spud was so against raising the personal allowance? I do – he spent a decade shrieking that most of the benefit went to higher earners.
And then this is just gorgeous:
The difference is really important. Spending the money keeps it in the economy. Each person’s spending is another person’s income. It is as simple as that when we think about the economy as a whole.
What that means is that the person getting a £250 income tax cut uses it to boost other people’s income – meaning that the recipient of their spending also pays tax on it, as does the next person who gets it, and so on, giving a real boost to us all – and the Exchequer.
If you told Spud that he’s supporting the Laffer Curve he would deny it, absolutely. And if you told spud that he’s supporting dynamic scoring of tax changes he’d deny it, absolutely. And yet that’s exactly what he is doing there. Sure, of course tax changes (up or down) have dynamic effects. And we must account for them on revenue collected. Certain tax cuts will ripply through the economy and the final tac revenue loss will be less than the headline and first order one. Sometimes that effect will be so large that final tax collection will be higher than the oroiginal before the tax cut – the Laffer Curve taxes paying for themselves.
But if you said to Spud – Laffer Curve, tax cuts, higher revenue – he’s say no. Because, umm, well why?