Better this, or 100% Inheritance Tax?
Better this, or 100% Inheritance Tax?
So, the majority owner of Fisherman's Friends has bequeathed £41,000,000 or so to the town where they came from, Fleetwood.
https://www.bbc.co.uk/news/uk-england-l ... e-59003006
An alternative would be that the £41M would go to the Treasury to be absorbed into the national budget to be distributed across the entire UK (or to pay off some immediate national debt obligations).
https://www.bbc.co.uk/news/uk-england-l ... e-59003006
An alternative would be that the £41M would go to the Treasury to be absorbed into the national budget to be distributed across the entire UK (or to pay off some immediate national debt obligations).
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ETA 5/8/20: I've been advised that the result was correct, it was the initial interpretation that needed to be withdrawn
Meta? I'd say so!
ETA 5/8/20: I've been advised that the result was correct, it was the initial interpretation that needed to be withdrawn
Meta? I'd say so!
Re: Better this, or 100% Inheritance Tax?
At that level of wealth they would've had the ability to hide it offshore if they felt compelled to fund stuff they didn't agree with. Donating it to a civic cause of their choice is a better option than that.
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Re: Better this, or 100% Inheritance Tax?
If I were UK resident for tax purposes, the half of my estate that I'm leaving to charity wouldn't be liable for inheritance tax. The other half would be, and the residue would then be distributed to my other beneficiaries. I'd be OK with that.
I think there might be something to be said for a sliding scale of tax on bequests to charity, such that a large sum given to one charity would incur some tax at a lower rate than the usual 40%. If the half of my estate were large enough to trigger that, I'd be OK with that too.
Where I'm now resident, though, death duties were abolished altogether in 1993, and nobody will be surprised to read that I'm OK with that too.
I think there might be something to be said for a sliding scale of tax on bequests to charity, such that a large sum given to one charity would incur some tax at a lower rate than the usual 40%. If the half of my estate were large enough to trigger that, I'd be OK with that too.
Where I'm now resident, though, death duties were abolished altogether in 1993, and nobody will be surprised to read that I'm OK with that too.
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Re: Better this, or 100% Inheritance Tax?
I've no problem with this use of a Foundation to distribute money to good causes. However, it isn't hard to imagine (or even recall) similar sounding 'charitable foundations' whose purpose was to redistribute wealth among family/friends/lawyers.
I presume that the Lofthouse Foundation allows local charities and community groups to ask for funds which they could get from government, but the business cases they'd have to submit would be more heavily scrutinised (as the BBC story mentions: floodlights at the local football club, a lifeboat for the RNLI and public artworks such as the "welcome home" statue for the families of fishermen). So in this case, it's a bit like the money is going to the Treasury but ear-marked for Fleetwood.
I presume that the Lofthouse Foundation allows local charities and community groups to ask for funds which they could get from government, but the business cases they'd have to submit would be more heavily scrutinised (as the BBC story mentions: floodlights at the local football club, a lifeboat for the RNLI and public artworks such as the "welcome home" statue for the families of fishermen). So in this case, it's a bit like the money is going to the Treasury but ear-marked for Fleetwood.
"My interest is in the future, because I'm going to spend the rest of my life there"
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Re: Better this, or 100% Inheritance Tax?
Agree 100%.
Money is just a substitute for luck anyway. - Tom Siddell
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Re: Better this, or 100% Inheritance Tax?
I'd say the fairest system is no tax on estates, but a tax on inheriting money.
Spread the wealth around. If somebody's unearned windfall crosses the capital gains threshold, tax it. I don't like the idea of taxing charities, to be honest - they're often overstretched at it is.
Spread the wealth around. If somebody's unearned windfall crosses the capital gains threshold, tax it. I don't like the idea of taxing charities, to be honest - they're often overstretched at it is.
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Re: Better this, or 100% Inheritance Tax?
I think this means that elderly people will buy up property if they think they are on their last legs, when they die the property gets passed on to the next generation, who then sell the house for the tax-free cash.Bird on a Fire wrote: ↑Sat Oct 23, 2021 12:35 amI'd say the fairest system is no tax on estates, but a tax on inheriting money.
This also benefits real estate agents as they get two commissions! (And ties property up, presumably used as renting, while the elderly are not yet dead and/or the next generation argue over the property.)
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Re: Better this, or 100% Inheritance Tax?
Yeah fair enough, I should have said "a tax on inheriting" - be it money, property, art, stocks, wine, comics or an attractive jawline.
We have the right to a clean, healthy, sustainable environment.
Re: Better this, or 100% Inheritance Tax?
I agree with a tax on inheriting, it's not even like it'd need a huge amount of regulatory change. Simply absorb it into capital gains tax, perhaps allowing the recipient to stagger the tax implications over say 5 years so they don't have to stump up the lot all at once. I do think the state has a claim on some of the money and I am in favour of spreading large amounts of money across as many recipients as is possible. Our tax system, in my opinion, should reward "sharing the wealth" which would therefore allow tax breaks for smaller amounts eg inheritances under £100,000 could be tax free while £1 million or morewould be3 subject to escalating percentages, gradate it well and it could be a wonderful social equaliser while still not being punitive to the very rich and would be very beneficial to the middle and lower middle classes.Bird on a Fire wrote: ↑Sat Oct 23, 2021 12:55 amYeah fair enough, I should have said "a tax on inheriting" - be it money, property, art, stocks, wine, comics or an attractive jawline.
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Re: Better this, or 100% Inheritance Tax?
To be a meaningful way to reduce inequality Britain would need to also re-introduce a capital transfer tax. At the moment people can completely avoid paying inheritance tax by giving away their assets seven or more years before they die. Up until the mid-80s, gifts over a certain threshold were also taxed.
Re: Better this, or 100% Inheritance Tax?
For sure, some serious redistribution of wealth is desperately needed in the UK. It's shattering the country.
Time for a big fat one.
Re: Better this, or 100% Inheritance Tax?
The US has a gift tax, charged on gifts valued at over ~$15k dollars. It's charged on the donor rather than the recipient. The exclusion for gifts under $15k applies to each recipient per year.Woodchopper wrote: ↑Sat Oct 23, 2021 2:25 pmTo be a meaningful way to reduce inequality Britain would need to also re-introduce a capital transfer tax. At the moment people can completely avoid paying inheritance tax by giving away their assets seven or more years before they die. Up until the mid-80s, gifts over a certain threshold were also taxed.
The above thoughts on taxing income from inheritance as income or capital gains can apply just as well to gifts before death.
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Re: Better this, or 100% Inheritance Tax?
I have mixed feelings about inheritance tax. If it's money you've worked for and already paid tax on it seems unjust to have the money taxed again to give it to a family member who you effectively gave money to during your life by supporting them from your salary so it's just a continuation of that. Perhaps a higher threshold would be more equitable so that people who bought homes for very little money in the olden days that are now worth considerably more aren't penalised. The super-rich might disagree.
Re: Better this, or 100% Inheritance Tax?
Inheritance to a spouse or partner isn't usually affected by inheritance tax, which covers one aspect of this. Of course, domestic partners usually do uncompensated work that supports an individual's ability to earn a salary - this is something that divorce law and inheritance tax law often recognizes.Tessa K wrote: ↑Sat Oct 23, 2021 3:38 pmI have mixed feelings about inheritance tax. If it's money you've worked for and already paid tax on it seems unjust to have the money taxed again to give it to a family member who you effectively gave money to during your life by supporting them from your salary so it's just a continuation of that. Perhaps a higher threshold would be more equitable so that people who bought homes for very little money in the olden days that are now worth considerably more aren't penalised. The super-rich might disagree.
In the US tax system, there's the concept of dependents, which could be set up to allow non-spouse dependents to avoid inheritance tax (dependents allow for larger tax exemptions for heads of household filing tax returns). Adult children who file their own tax returns are not dependents, but e.g. a disabled adult child who's unable to work could be.
If an adult child has their own income, and files tax returns*, then they aren't dependents, and that's precisely the intergenerational transfer of wealth that needs to be taxed at some level to combat inequality. Exemptions and thresholds allow smaller transfers to happen without tax, while still catching larger wealth transfers.
*or PAYE, etc.
Re: Better this, or 100% Inheritance Tax?
Oh, and the "money that tax has already been paid on" thing is completely bogus. If I pay you to paint my house, I've already paid tax on that money. You still have to pay tax on your profit from that work. If I buy goods with my post tax money, I pay VAT on it
Most taxes are paid on transfers of money, not on money. Wealth taxes and property taxes being the exception to that.
Most taxes are paid on transfers of money, not on money. Wealth taxes and property taxes being the exception to that.
Re: Better this, or 100% Inheritance Tax?
By this argument we should just tax each pound once on creation, and then do away with all downstream taxes. (EDIT: Cross-posted with the last post that makes the same point)Tessa K wrote: ↑Sat Oct 23, 2021 3:38 pmI have mixed feelings about inheritance tax. If it's money you've worked for and already paid tax on it seems unjust to have the money taxed again to give it to a family member who you effectively gave money to during your life by supporting them from your salary so it's just a continuation of that. Perhaps a higher threshold would be more equitable so that people who bought homes for very little money in the olden days that are now worth considerably more aren't penalised. The super-rich might disagree.
In general, we tax transfers of wealth (although as mentioned above the seven year rule makes a joke of this). It makes no sense that we can receive untaxed windfalls on the deaths of family members. Some level of threshold makes sense to care for dependents, and for funeral costs, but the current UK thresholds are ridiculously high.
Re: Better this, or 100% Inheritance Tax?
Beat me to it.dyqik wrote: ↑Sat Oct 23, 2021 4:08 pmOh, and the "money that tax has already been paid on" thing is completely bogus. If I pay you to paint my house, I've already paid tax on that money. You still have to pay tax on your profit from that work. If I buy goods with my post tax money, I pay VAT on it
Most taxes are paid on transfers of money, not on money. Wealth taxes and property taxes being the exception to that.
The alternative is that money should only be taxed once. Which is frankly ridiculous.
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Re: Better this, or 100% Inheritance Tax?
ditto
I'd love to see people who make this arguement make the case for themselves not paying VAT 'cos they've already paid income tax on it ...
I'd love to see people who make this arguement make the case for themselves not paying VAT 'cos they've already paid income tax on it ...
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Re: Better this, or 100% Inheritance Tax?
Additionally, wealth and property taxes are usually paid multiple times - annually etc. (one off property taxes used to be a thing, but they're out of favor now). You don't get to avoid council tax next year because your house was already taxed this year.
Re: Better this, or 100% Inheritance Tax?
Most of the discussion above really comes down to "what is the size of the taxable entity" for each kind of tax, with the tax being assessed on transfers between taxable entities.
A "household" consisting of married partners and dependents is the unit used in US income and gift taxes (you can also file income taxes separately if you are married, although there's usually no reason to). I think it's pretty much the same for inheritance taxes, although I'm not sure about that.
A "household" consisting of married partners and dependents is the unit used in US income and gift taxes (you can also file income taxes separately if you are married, although there's usually no reason to). I think it's pretty much the same for inheritance taxes, although I'm not sure about that.
Re: Better this, or 100% Inheritance Tax?
The super rich can avoid inheritance taxes with offshore trusts because the costs involved in setting them up and running them are dwarfed by the amount of wealth saved. Inheritance is also much less of an issue for estates worth less than 500k in the UK because of the various allowances.Tessa K wrote: ↑Sat Oct 23, 2021 3:38 pmI have mixed feelings about inheritance tax. If it's money you've worked for and already paid tax on it seems unjust to have the money taxed again to give it to a family member who you effectively gave money to during your life by supporting them from your salary so it's just a continuation of that. Perhaps a higher threshold would be more equitable so that people who bought homes for very little money in the olden days that are now worth considerably more aren't penalised. The super-rich might disagree.
I agree with what others have said about it being taxed twice; we do that with lots of things. I understand it's sad if it forces somebody to sell an expensive home that has loads of treasured childhood memories to pay a tax bill.. but unfortunately a lot of people currently struggle to afford the standard of living their parents enjoyed. We'd be better off harmonising taxes on capital gains and unearned income (up) with wage-income and regressive taxes (down) to let low-asset workers catch up (especially the young).
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Re: Better this, or 100% Inheritance Tax?
I take all your points. For me, it's the fact that property values have increased so much in the last 50 or 60 years so that small, modest family homes are now over the IT threshold in value in some areas where no one really wanted to live back then but they do now.
Re: Better this, or 100% Inheritance Tax?
So if my dad's estate was worth £425,000 because he'd been lucky enough to buy a house at the right time I shouldn't have to pay £40k to the govt, and they should raise the money they need from the pay packets of nurses and taxi drivers instead?Tessa K wrote: ↑Sun Oct 24, 2021 8:31 amI take all your points. For me, it's the fact that property values have increased so much in the last 50 or 60 years so that small, modest family homes are now over the IT threshold in value in some areas where no one really wanted to live back then but they do now.
I mean, imagine poor me being penalised for my dad's good fortune in the housing market and having to inherit only £385,000. How would I cope?
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Re: Better this, or 100% Inheritance Tax?
You know that's not an either/or. Getting big companies to pay tax would raise far more.jdc wrote: ↑Sun Oct 24, 2021 1:21 pmSo if my dad's estate was worth £425,000 because he'd been lucky enough to buy a house at the right time I shouldn't have to pay £40k to the govt, and they should raise the money they need from the pay packets of nurses and taxi drivers instead?Tessa K wrote: ↑Sun Oct 24, 2021 8:31 amI take all your points. For me, it's the fact that property values have increased so much in the last 50 or 60 years so that small, modest family homes are now over the IT threshold in value in some areas where no one really wanted to live back then but they do now.
I mean, imagine poor me being penalised for my dad's good fortune in the housing market and having to inherit only £385,000. How would I cope?
Re: Better this, or 100% Inheritance Tax?
Let's just tax companies then. Works for me - I don't see why people should be penalised for earning money and you've come up with a way to avoid that.Tessa K wrote: ↑Sun Oct 24, 2021 2:37 pmYou know that's not an either/or. Getting big companies to pay tax would raise far more.jdc wrote: ↑Sun Oct 24, 2021 1:21 pmSo if my dad's estate was worth £425,000 because he'd been lucky enough to buy a house at the right time I shouldn't have to pay £40k to the govt, and they should raise the money they need from the pay packets of nurses and taxi drivers instead?Tessa K wrote: ↑Sun Oct 24, 2021 8:31 amI take all your points. For me, it's the fact that property values have increased so much in the last 50 or 60 years so that small, modest family homes are now over the IT threshold in value in some areas where no one really wanted to live back then but they do now.
I mean, imagine poor me being penalised for my dad's good fortune in the housing market and having to inherit only £385,000. How would I cope?