I argued with a Tory about inheritance tax; this is what I learned

Well, everyone in Tory heartland is, to be more honest. Rishi Sunak has set hearts-a-flutter across south-east England where people now hope that they might be able to leave the "family home" to children who will promptly flog it and split the cash. After tax, that is.

It is that "after tax" bit that so upsets the Tories. They hate inheritance tax.

I took part in a radio broadcast this week in which a Tory railed against inheritance tax, calling it "legalised theft". I politely pointed out to him that this tax was introduced in 1984, by Margaret Thatcher. He was temporarily derailed, but not for long. Even her involvement in this tax did not give it the credibility that all else she did probably has in his eyes.

Then he claimed that it is immoral that the amount that this tax is collecting is going up to record levels at present. He did not seem to appreciate that this is because Sunak fixed the tax-free amounts made available to those liable to this tax in 2020 and has said there is no intention to raise them again until 2027, by which time there will have been considerable inflation. If the inheritance tax take is growing, it is, like the very existence of the tax, all the Tories’ fault.

This was still not enough to calm his fury. His claim was that very soon every working-class person will be paying inheritance tax. In fact, most working-class people do not have assets worth up to £1 million at the time of this death, which inheritance tax now allows in some cases before tax is charged. Many, and most especially those who do not own their own homes, have a tiny promotion of that sum.

That is why inheritance tax is paid by fewer than one in 25 people on their deaths in the UK as a whole, and by many fewer than that in Scotland, which enjoys lower house prices than London in most locations.

READ MORE: Majority ‘against lowering inheritance tax threshold’ – poll

In fact to out the Scottish data in context, in the year to March 2021, which is the most recent for which we have data available, just 1340 estates were subject to inheritance tax, compared to 5650m in London and 4800 in the south-east of England.

This, then, is not a Scottish issue, but the loss of the £7 billion paid in inheritance tax if it was to be abolished would be, because the cost of that will fall on working people and those on benefits, without a doubt.   

So what is it that gets Tories so worked up about inheritance tax? I suspect there are four things.

First, there is greed. This is the human emotion that the Tories now worship, quietly forgetting all that has ever been taught on that subject by all the great wisdom traditions.

Then there is the widespread Tory belief that they, and they alone, are responsible for making their own fortunes and, as a result, everything that they have is their own to do whatever they want with, and how dare anyone interfere with that right? The fact that most of those fortunes were simply created as a result of being born at the right time and by buying a house in the place where property price inflation has been highest does, apparently, have nothing to do with this claim that all that a Tory owns is the result of their hard work and that no one has the right to take it.

Thirdly, there is, the Tory hated of all things to do with the Government. No matter what the Government might do, according to a Tory it is either wrong, or could be better done by the market. That this is obviously untrue in the case of tackling inequality, which is a major motivation for this tax, makes no difference. That, along with everything else any politician might wish to do, is unnecessary according to a Tory and therefore to be despised.

Fourthly, there is the politics of envy. Tories are the real victims of this. They often project the claim onto those of left-wing persuasion, who are (as I always am) confused by the accusation that they suffer from an envy that is totally alien to them. In reality, this affliction is one only Tories suffer from because they alone live in terrible fear of losing their status whilst simultaneously seeking to climb the greasy pole of wealth and the status that they think comes from it. They hate inheritance tax because it makes them think that unless they do something to avoid it they might, in the final race in life, slip further down that pole than their rivals as a result of paying too much inheritance tax. This is what motivates the whole inheritance tax planning industry.

READ MORE: Rishi Sunak silent on speculation to slash inheritance tax

So let me offer an alternative opinion. Inheritance tax is the only wealth tax we have. It is fair. It does not usually tax anything previously taxed. Most of it is charged on capital gains untaxed in life. The unfairness comes from the loopholes the very wealthy can exploit, especially with regard to business and agricultural property. We should block those. And to be candid, we need more taxes on wealth to be paid to address the gross inequality in our society.

I just wish more politicians had the courage to say so.