Tuesday, October 02, 2007

No Millionaire Left Behind

The Tory proposals to raise the threshold for paying inheritance tax to £1 million have been presented, even by opponents, as a tax cut for the 'quite rich', with Middle England being the main beneficiaries. People who think that have been fooled.

Most middle class people (as well as everyone else who won't inherit at least £300,000, soon to be £350,000) would make more money if there was a 1p cut in the basic rate of income tax, or if, say, the government reduced the amount of tax on the motorist by £3 billion/year. Or cut council tax.

If you want to know who benefits most from this Tory wheeze, look at the man who announced it. George Osborne will certainly inherit more than £1 million. This means that he, personally, will get an extra £240,000 which would otherwise have been spent on schools, hospitals, the armed forces and all the other things that he now claims to care about so much. To be clear, no middle class family will benefit by as much as George unless they inherit over £1 million.

But it's not just George who will benefit. David Cameron is another who is likely to receive a tax free windfall with his inheritance. Boris Johnson is another. The owners of the Daily Mail and Express will benefit from this as well. To be fair, not every member of the Shadow Cabinet will necessarily benefit, there are probably some of them are so wealthy that they don't see what the fuss is all about because they've arranged to dodge inheritance tax altogether.

There's been plenty of criticism of the Tory plans because they don't add up, but even if they did, tax free handouts for millionaires would be wrong when people working on the minimum wage or pensioners struggling to pay the council tax bill gets nothing.

This isn't about personal corruption, for all I know George Osborne is one of those who will avoid paying any tax at all when he inherits, as many of the super rich do. What it does reveal is that leading Tories are so out of touch with the majority of people that they believe that it is right that the people who should benefit most from any tax cuts are millionaires.


At 5:13 pm , Blogger Tim Worstall said...

I think you've slightly forgotten something in your analysis here.
It's estates that get taxed, not recipients.
Thus, any estate that Gideon Osbourne inherits from will pay £240k less tax. That doesn't mean he will gain that much: depends how many people are inheriting from the same estate.
Minor point, I know, but perhaps worth mentioning?

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