100% IHT - "For The Greater Good!"

Whenever I hear the phrase "for the greater good" I instinctively reach for my sick bag.

Wrt 100% IHT, this would be nothing less than state sanctioned theft of assets that had already been taxed during the hapless deceased's lifetime.

Can you imagine the consequences were this absurd policy to be enacted?

People would dispose of everything they had pre death, a recipe for chaos and disaster!

Economic Disincentives

One of the primary arguments against a 100% inheritance tax is the economic disincentive it creates. If all wealth is to be confiscated upon death, what motivation would individuals have to save, invest, or even work hard throughout their lives if they know their heirs will not benefit from their efforts?

• Savings and Investment: High inheritance taxes, let alone 100%, could discourage savings. People might prefer to spend or invest in riskier ventures, knowing they can't pass on their wealth. This could lead to a decrease in capital available for long-term investments or business start-ups.
• Entrepreneurship: The prospect of losing all accumulated wealth would severely hamper entrepreneurial spirit. Many successful businesses are family-owned, where the continuity of ownership is crucial for long-term strategic planning and stability. A 100% tax would break these chains, potentially leading to less innovation and business continuity.

Ethical Concerns

• Freedom to Dispose: The right to decide how one's property is distributed after death is a fundamental aspect of personal liberty. A 100% inheritance tax strips individuals of this freedom, suggesting that the state has a greater claim over personal property than the individual or their chosen beneficiaries.
• Moral Hazard: There's also a moral hazard where individuals might hide assets or engage in tax evasion more aggressively to circumvent such draconian measures, leading to a culture of distrust towards government and perhaps even corruption.

Social and Psychological Impacts

• Family Bonds: Inheritance is not just about money; it's about legacy, family continuity, and emotional support. Abolishing this through taxation would sever one of the few tangible connections between generations, potentially weakening family structures and the sense of familial duty or responsibility.
• Cultural Heritage: Much wealth includes cultural artifacts, family businesses, or land with historical significance. A 100% tax could lead to these assets being liquidated or mismanaged by the state, potentially losing cultural heritage.

Practical Implementation Issues

• Administrative Nightmares: The logistics of enforcing such a tax would be unprecedented. Valuing estates, preventing asset hiding, and managing the flood of assets into state hands would require an enormous bureaucratic apparatus, likely inefficient and prone to corruption or mismanagement.
• Economic Distortion: The government would suddenly own a vast amount of property, which could lead to inefficiencies in asset management or disposal, not to mention the distortion in real estate and financial markets as government becomes the largest property holder overnight.

Conclusion

A 100% inheritance tax is not just an economic policy but a statement on wealth, legacy, and personal freedom.

Tax does have to be taxing.

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