h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Inheritance is a poor system of passing down wealth to the next generation. People who inherit too much and never have to work rarely do, any contribution they may have made is lost. Equally people who inherit too little and have to work to survive (and thus not have time for education and the like) will rarely be able to reach their potential and much of the contribution they may have made is also lost.

Inheritance tax is a stopgap measure to try to make things a little less unfair until someone can come up with a superior system. It should be optimised to get as much money from people who are inheriting too much to people who are inheriting too little. If it goes to high people start finding ways around it, if it drops to low then it doesn't have the desired effect. I'm not an economist or a social studies person (whats the word?) so I wouldn't like to say whether it's too low or too high. I feel it's too low, but uninformed emotion is not a good way to set a budget.

On an unrelated note: This year the govornment charged me twice as much as I earned. Then again I suppose they also paid for keyhole surgery

I'm guessing that there are actually relatively few people who inherit sufficient at an early enough age to afford not to work. With people living longer, many of us will not inherit until we are around retirement age. I think there is an increasing trend for pensioners to spend their money rather than let the taxman grab a large percentage of it.

My feeling is that inheritance tax is unfairly severe. If people have had a good income (paying taxes) & been prudent with it (paying tax on savings), why should they not be able to pass that on to their offspring?

I notice the difference in feeling here is in the two different approaches to the issue:
Why shouldn't people be able to pass on their wealth?

versus

Why should some people benefit based on who their parents were?

I wonder if it depends on whether you view human nature as an obstacle to moral action or a guide as to what it should be.

Wealth represents rescources. There is a finite amout of rescources - if you increase the amount of currency in a system the value of each unit of currency drops. Given that there are a finiate number of rescources available in a system any rescource that somone has but doesn't need, is a rescource that someone who needs it doesn't have.

I wonder if working the system so that inheritance tax is very low up to a point and very high beyond it would be better?

Hm, thinking some other things too, but I need more time to communicate them properly.

That might work, although you'd still get some 'the wrong side' of the dividing line, who'd complain bitterly. I think the application of inheritance tax needs addressing too. Perhaps the person's residence should be taxed differently from other assests.

I'm thinking about large houses where perhaps the whole family live together - because of the value of the deceased's estate as a whole, their offspring may face crippling bills & be unable to maintain their home.

Seeing how Prudence, in a fit of redistributive pique, has taken and continues to take, massive ammounts of money away from pension funds, we will have to spend our hard earned assets to survive when we retire.

Also with increasing means testing it will not pay to have any savings. With good planning and a fair wind when Mrs WA and I go there should be just about enough left for a good piss up for the mates.

I think if your using a dividing line appraoch you need to tax the assets from the inheritors point of view, not the deceased. So an inheritance of property, goods and money worth X passed down to Y people only pays the higher tax if X/Y > the dividing line. (Assuming an equal split)

Of course this does mean that the people in the house may not be able to keep the house going if they have no income themselves, but assuming that they can and choose not too this could be seen as fair. There is also the situation where theres an accident and the inheritors are children or otherwise unable to have a decent wage but this is what hardship funds are for (Which, like the tax, are also too low and ill-distributed)