Just who would benefit from Cameron’s Tax cuts ?
The tragedy of a a person being hit by a train in the Harrow & Wealdstone area, thus suspending all trains in and out of Euston Station gives the unexpected silver lining of me being able to resurrect my much neglected blog.
I’m interested today by the Cameron Gift Calculator on the front page of the Labour Party website (the content will doubtless change in coming days). The little gadget there allows you to type in the value of your estate and find out how much you will benefit from the cuts in inheritance tax that David Cameron’s Conservative party are proposing.
Well my house, in South Bedfordshire is worth around £225,000 – I have a mortgage of around £100,000 but this would be more or less paid off with life insurance should I or my wife die.
So how much would – benefit ? – Well I wouldn’t – nothing, zero – I’m not wealthy enough to get a present from Dave.
No surprise perhaps. After all according to the same Labour website neither would 96% of the population. It’s what I should expect no doubt.
But here’s the rub – I’m a Headteacher – a London Headteacher and I earn well above median earnings. In fact my salary of around £78,000 is (according to this July 2009 BBC article : Just what is a big salary? ) not just above average, but puts me in the top 5% of earners – comfortably in fact, with the cut off figure for the 95th centile being £58,917. Yet despite probably being in the top 4% of earners, I’m no where near the 4% of people who’d benefit from these Tory tax proposals.
So in case there’s anyone out there thinking the Tories’ tax cuts would benefit the high earners out there – forget it. It’s old money we’re talking out – people who had the money from the day they were born – or at least the promise of it when Mummy or Daddy popped their clogs.
Lest anyone’s in any doubt – the inheritance tax cuts would not affect anyone with estates of less than £700,000 – and then not massively. But if for example you had an estate worth £5, 000, 000 then you’d stand to benefit by £520,000 (or your heirs would). As if you’d need it !
As Gordon Brown observed in Parliament today, Cameron and Osborne “will know by name” almost all of the people who will benefit from these measures – and adding “Is this what the Conservatives mean when they say ‘we’re all in this together?’
So before you go off and vote Conservative in the general election – ‘just for a change’ – remember what kind of people they are : They are really greedy people who just look out for themselves and their own kind !
UPDATE : PLEASE READ MY COMMENTS POLICY – MY BLOG MY RULES !
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Or maybe they’re just stopping the following: My grandparents had a house on the Isle of Wight for over 50 years. They weren’t rich, but looked after their finances, saved plenty of cash, and made sure their children did the same. When they had both passed away the value of their estate came to somewhere over £600,000. The house they had wanted to pass on had to be sold. It’s just a tax on thrift, those really rich people you want to see pay-up never do as they employ any number of methods to avoid paying it. You pay tax once already, why pay it twice? The amount of revenue it raises isn’t worth the impact it has and it should be abolished completely. It could have been if the government had the backbone to try and reform the tax system in the last 12 years.
I don’t know when they passed away so perhaps the relative values have changed with time – but £600,000 today would give them no benefit – it’s not the thrifty or even relatively wealthy that stand to benefit – it is the super-rich. We could argue all night about the relative merits of punitive taxation – and don’t assume that because I’m a Labour Party member that I automatically am opposed to people accumulating wealth – but in a time of severe economic recession – largely seen to have been caused by super-rich bankers acting irresponsibly, for all the Conservative criticism of Labour’s measures to address the financial cris, this is the only measure they’ve specifically come up with themselves. It’s a measure that makes the already very rich considerably wealthier. I’m not sure the general public realise that – I think many of them would find it offensive.
Thanks for reading my blog and thanks for your comments. Politics would be very boring if we all agreed about everything.
I don’t know when they passed away so perhaps the relative values have changed with time – but £600,000 today would give them no benefit – it’s not the thrifty or even relatively wealthy that stand to benefit – it is the super-rich. We could argue all night about the relative merits of punitive taxation – and don’t assume that because I’m a Labour Party member that I automatically am opposed to people accumulating wealth – but in a time of severe economic recession – largely seen to have been caused by super-rich bankers acting irresponsibly, for all the Conservative criticism of Labour’s measures to address the financial cris, this is the only measure they’ve specifically come up with themselves. It’s a measure that makes the already very rich considerably wealthier. I’m not sure the general public realise that – I think many of them would find it offensive.
Thanks for reading my blog and thanks for your comments. Politics would be very boring if we all agreed about everything.
Inheritance tax should be scrapped entirely. It’s a tax on money on which tax has already been paid, and a punishment on people whose family homes happen to be worth a lot of money – money which is not actually available to them unless they sell the house.
Yes, people born into mansions are most obviously affected, but why do they deserve to lose their family homes any more than someone in a bungalow?
And it’s not just old money who lose out.
The house I grew up in was bought for £37,000 in 1983. My parents sold it for an awful lot more in 1997, and it’s probably worth more than half a million now, simply because of where it is.
It’s a terrace.
It’s not hard to imagine someone who moved house in the early-1980s on a modest income, and wants to leave their house to one of their children to live in, only to find it’s now worth too much money and they have to sell.
In fact, they might lose out more often – the old money will likely be more aware of the issue and present the house to their children as a gift well before they die, avoiding any inheritance tax on it at all.
But again the Tory proposals wouldn’t touch this
Yeah, that’s what I don’t get.
The current threshold is £325,000.
The Tories say they will “raise the Inheritance Tax threshold to £1 million”.
So how does this only benefit people with £700,000 or more?
If I’m fair about this I’m accepting the Labour line on this and using the gadget on their website – a little subjective I admit. Rattled this off at Euston Station waiting for severely delayed trains – I’m not 100% on details of this.
I still can’t see though how this can be a priority – I don’t want to bleed the rich (some would argue that I’m one of them) – but the logic of easing their difficulties at the expense of those suffering greater hardship, in a time of economic difficulty for many seems very strange – and very unfair – to me.
It’s also unfair to keep it. It’s a deeply unfair tax and is not directly related to ability to pay. There’s no reason you can’t scrap this one tax and at the same time increase tax revenue from those who really can afford to pay. I think most people would accept that.
Also, think I’ve figured out the £700,000 – that’s assuming that it’s a combined married couple’s allowance.
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Phil H, I think you’re overlooking an important aspect – inheritance tax is the most egalitarian tax of all. There is a big difference between wealth and earnings. Inheritance tax is the fairest of all.