[1] could fund $80,000 Basic Capital grant to everyone

1
Gross, J. (2017), “Inheritance is evil
and should be abolished”.

2 DebateWise.
(2018). “All taxes on inherited wealth
should be abolished”.

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3 Reynolds,
M. (2018). “Abolish IMMEDIATELY’ Calls
for inheritance tax to be SCRAPPED intensify”.

4
Merriam Webster Dictionary

5
Monthly house price inflation, calculated using data from Land Registry, Registers
of Scotland and Land and Property Services Northern Ireland.

6
Ackerman and Alstott. (2000) The
Stakeholder Society.

It is difficult
to say whether justice demands a significant tax on inheritance, however, the idea
that justice is “the quality of being just, impartial or fair” suggests that the
taxation of inherited wealth, however small, does promote justice. For example,
the money taken from inheritance can be put to good uses that benefit all of society
rather than just the recipient, it also gives the recipient the opportunity to productively
invest their money which in turn is better for the economy, suggesting that a significant
tax on the intergenerational transmission of wealth is the most just thing to do.

Another
argument for taxing inherited wealth is that it seems there is an inconsistency
in the way current taxation works. For example, someone can work hard, earn
£50,000 and have to pay a 40% rate of tax whereas someone can inherit £250,000
and not have to pay anything, this is not fair, and it has been proven that the money taken from an inheritance tax can be put to good use as was found by Ackerman
and Alstott. They found that a 2% wealth tax in
the US could fund $80,000 Basic
Capital grant to everyone at the age of 186.
In the UK, Gordon Brown introduced Child Trust Funds for any child born between
2005-2010, the idea was for successive governments to periodically pay money into these accounts until the children reach adulthood in order for them to be
able to put themselves through university or put a deposit on a house. These examples
show that taxation, even at a low level could shift the distribution of
wealth in order to open up opportunities more broadly in society. With regard
to whether justice demands a significant tax on the intergenerational
transmission of wealth I have to refer back to Rawls’ idea of justice which includes
the idea that inequalities in society must benefit everyone. In that case, the
idea that significantly taxing inheritance could provide someone with the means
to pay for a university education or put a deposit on their first house allows
me to agree with the title statement.

One argument
for a significant inheritance tax is that it is preferable for the burden of taxation to be placed on
inheritance rather than being placed on
things like income as this would provide a disincentive for people to work and earn money if they knew the majority of what
they earned would be taxed whereas a significant inheritance tax could
provide an incentive for people to put
their wealth to good use. For example, if I had an inherited million pounds in
the bank and knew that a large portion of that would be taxed, most people
would want to productively invest that money in
order to generate a return which would, therefore, increase the circulation of
that wealth throughout the economy and allow people to ‘keep’ more of their
earned income.

Inheritance
tax is often criticised as it can be considered a form of double taxation, meaning,
the person leaving the money pays income tax whilst working hard to earn as much
money as they can, therefore, the already
taxed money should not suffer again from an inheritance tax. One counterpoint to this is that double taxation is
quite common. For example, we pay income tax on the money we earn and then pay
VAT on the products we buy with this money. It can also be said that the
Government is just trying to raise
revenue from a variety sources, this is not uncommon so a significant tax on
inheritance should not be considered unjust. It is also unsure whether
inheritance tax can be considered double taxation as the inherited wealth
mostly comes in the form of housing. If the house price has increased during the recipient’s lifetime, they
have not worked for this added value and in turn,
have not paid tax on this gain. The house price index for the UK in
October 2017 released by the Office for National
Statistics stated that “the average UK house price was £224,000 in October
2017. This is £10,000 higher than in October 2016.5”. Recipients
will not have paid tax on this increase in value
and therefore, a further inheritance tax cannot be considered unjust.

The concept
of justice is found to mean the “quality of being just, impartial, or fair”4. John
Rawls states in ‘A Theory of Justice’ that justice requires two elements: each
person having an equal right to the most basic
liberties (The Principle of Equal Liberty) for example, freedom of speech. The second
element can be split into two parts: The Difference Principle and Fair Equality
of Opportunity. The Difference Principle focuses on unequal rewards for work, stating
that social and economic inequalities should be arranged so that they benefit the
least advantaged people in society, for example, it is appropriate for a
brain surgeon to earn more money than most because the service they provide
benefits all members of society. Fair Equality of Opportunity allows
opportunities attached to offices and positions to be open to all under
conditions of equality of opportunity. When looking at Rawls’ theory of
justice, it would appear that a significant taxation of inheritance would be
considered ‘just’ due to the fact inheritance,
in general, does create inequalities in society as some people inherit more
than others which, in turn, creates a larger gap between the rich and poor.
According to Rawls, inequalities can be included in his notion of justice as
long as they benefit both the high and low earners. If we do not tax inherited
wealth, this does not benefit the low earners and therefore, introducing a
substantial tax on inheritance would be considered ‘just’.

The
taxation of inheritance has divided public opinion and is among the most
unpopular taxes in many countries, although only a minority of people have to
pay it. In the UK, there is a 0% tax rate on inheritance amounting to £325,000
(or £650,000 for couples). Anything above this incurs taxation of 40%. I will
consider the role of intergenerational transmissions
of wealth in today’s society and whether it would be considered ‘just’ to
demand a tax on this wealth. The taxation of inheritance is often criticised, being said to create “oligarchies and
aristocratic classes1” and
“infringe individual rights to personal property and free will2”
by forcing people to have 40% of their inheritance taken away if it exceeds the
£325,000 limit. The tax affects people in different ways, for example, Baroness
Ros Altmann stated that “many families will end up paying significant sums in
tax which would not be due if their loved one had just lived a little longer or
in a different part of the country where house prices were lower.3”
suggesting that the tax is already unjust as it depends on circumstance, therefore, to increase it significantly would
be absurd. To contemplate this issue, I will explore the definitions of
justice. Following this, I will consider the UK’s
current situation regarding the taxation of inheritance and finally, I will discuss both the criticisms and
the supposed benefits of inheritance tax in order to determine whether to
achieve justice means demanding a significant tax on the intergenerational
transmission of wealth.

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