20 August 2007

To the right? Heaven forfend!

"Why do we believe so passionately in public services? Because they are what community is all about. They bind us together. ... Public services will never be just another customer service."
Tony Blair

Chris Dillow writes

Rising house prices … are no argument for scrapping IHT. And the fact that the Redwood report seems to cite this as the only reason to do so shows just how weak IHT's opponents are.
Chris seems to be implying that it shows just how weak the arguments against inheritance tax are. Well no, the fact that the Redwood report does not mention any other reasons is more likely to indicate the fact that certain arguments have become morally taboo. E.g. that people should be allowed to do what they like with what they have managed to save out of their taxed income, even if that involves permitting inequality, and the transmission of inequality to the next generation.

And media reactions to the report confirm this. Daniel Finkelstein, for example, hastens to defend the Tories from accusations of lurching to the right.
stability will always come before tax cuts … this does not mean ruling out the Redwood ideas. But it does mean being very disciplined.
Even the Adam Smith Institute seems to think that the strongest possible argument against IHT is that
most of the super-rich at whom the tax is aimed don't pay it on huge amounts of their income as they are able to make use of trust funds, foundations and clever tax breaks to ensure that wealth continues to cascade down the generations.
Cutting taxes for its own sake has, it appears, become philosophically indefensible. It requires reducing some aspect of state activity, and any such activity — being of a ‘public’ nature — is automatically presumed to be ‘a good thing’.

Chris also says
it's theoretically possible — though I know of little empirical evidence — that inheritance tax deters business formation and hard work, as providing for one's children is a major motive for both.
Well, it seems highly likely, given what we know from evolutionary biology, that this motive is indeed important. But it is difficult to imagine the ESRC funding a project to provide evidence for such an ideologically incorrect hypothesis.

There is an interesting selectivity at work here: it is generally thought (on equally little evidence) that the sexual drive provides a significant share of male motivation for work and achievement. Yet the desire to provide your children with advantages is not similarly recognised as a legitimate drive. Rather, it is seen as something that deserves to be opposed.

1 comment:

Sir James Beiggelschwarz said...

...inheritance tax deters business formation and hard work...

Scarcely the point, even if it were so.