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Artillery Row

Against inheritance tax

Familial bonds and continuity should be encouraged

Death, to use T.S. Eliot’s phrase, is one of the Permanent Things about the human condition. As Daniel Defoe in The Political History of the Devil put it “Things as certain as death and taxes, can be more firmly believ’d”. Yet does that mean that the two should be linked?

The great Edmund Burke provided us with a succinct articulation of a core understanding of society. According to Burke, society is a partnership between the dead, the living and the unborn. Thus, a core purpose for individuals, society or a country is to continue that partnership into the future. This means passing on your inheritance, be it cultural, spiritual or property, from one generation to the next. Doing so is a good thing in and of itself, but it is also a main source of social and political stability.

If I may use a sporting analogy here, we are in a relay race without a finish line and the aim is to pass the baton onto the next runner without dropping it and ensuring that the baton is in a good condition, so that the next runner can do the same. Unfortunately, we have a tax whose function is to ensure that the baton is not handed on without friction. Indeed, inheritance tax is designed to do the exact opposite of what conservatives desire and this type of tax can jeopardise both social and material prosperity. Thus, I believe, an inheritance tax is incompatible with conservative aims as it is a penalty on the exchange of property from one generation to the next. This is a penalty that is aimed at the fundamental right to property, which is the right to transfer your property to your children friction free. 

It is also a tax that reduces the likelihood of continuity

It is also a tax that reduces the likelihood of continuity, which is fundamental to any sustainable society. Simone Weil, the French political thinker, reminded us in her book The Need for Roots that we need objects to call our own and by owning property it can be an extension of oneself. This assists us to put down roots and renew our social nature and attachments, which stops or alleviates our feelings of isolation from others around us. We, therefore, should be ensuring that property is easily transferred from one generation to the next and not adding barriers to the process as private property is necessary for us to assert our full individual freedom embedded in a place and a culture. On the other side of the coin, the Conservative Party ought to be doubling-down on the concept of a property-owning democracy as conservatives ought to assist those without independent wealth to own property and to put down roots of their own. Moreover, inheritance also brings some measure of personal responsibility. This is a responsibility of conservation, creation and the duty not to destroy. Indeed, owning property brings duties as well as freedom and we should desire that more of our fellow citizens embrace these duties by owning property.

I believe that conservatives should reject such notions that J.S. Mill advocated, such as the confiscation of property at your death. Mill believed this should be the case because no one else was entitled to it. Conservatives must fundamentally reject this notion as your children are entitled to it, due to their existential tie to you and the transcendental bond. Rather than taxing people back down the track in the relay race or even worse back to the starting line in the name of an unachievable conception of equality, conservatives should be providing the tools for more people to succeed in acquiring the baton (property) and passing it on. This is fundamental to any conception of a conservative society. 

The ability to pass on property and one’s possessions is a prime motivating factor for many of us and this leads us to work hard and to make the sacrifices that are required of us to enable us to pass on our achievements to our children and grandchildren. Nevertheless, due to substantial fiscal drag more and more people are being dragged into paying inheritance tax. This type of tax can destroy the habit of saving on which our economic system should depend on and it can also undermine the rights of property and security of contract. These are fundamental institutions that enable us to engage in economic activity. 

Yes, property and the family go hand in hand. Joseph Schumpeter, the Austrian political economist and sociologist, warned us in Capitalism, Socialism and Democracy, of the decay in the essential features in our social and institutional framework that underpin our private property-owing market economy, such as the loosening of family ties and inheritance. This loosening unfortunately weakens the motivation to accumulate and then to pass on. As Winston Churchill noted “you don’t make the poor richer by making the rich poorer”. We must not destroy the motives of the wealth-creators because doing so, we shall all be poorer due to the lack of investment in our businesses. Kirk, in a chapter called Conservatives and the Family, provides us with an example of how reforming inheritance tax can lead to positive outcomes. He noted that in the early years of Ronald Reagan’s administration, Reagan introduced radical reforms in the US federal inheritance taxes. Reagan remarked that he made these reforms to reduce the financial strain when the family enterprise was passed onto daughters and sons, and they would not need to sell the business to meet the tax demands of the Government. This does not mean that one is on the side of the so-called “downtrodden rich” as Reagan put it, but, I suggest, facilitating continuity and the flourishing of our market economy.

Abolishing the inheritance tax would be a fundamentally conservative thing to do, but this needs to be part of an overall policy package that has at its core increasing property ownership for all and increasing state capacity in supporting families in creating roots, passing on their culture and property to the next generations. At the very least the Conservatives should ease the fiscal drag by raising the thresholds. Passing on the baton for the next generation to run with is crucial for a prosperous society.

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