Monday, April 12, 2010

I've Always Wanted to Fisk Johann Hari...

Johann Hari had always played fast and loose with what he calls "Facts". Facts to him are assertions with which he agrees. He uses the word to suit himself. In Friday's Independent, he wrote a diatribe against David Cameron, accusing him of developing policies to promulgate a class war. No, really. I really can't be arsed to rebut the whole article because it is so preposterous, but to give you a flavour let me just fisk one short paragraph...

Here are the facts.
Brace yourselves.
He will give a £1.2bn inheritance tax cut to the richest 2 per cent in Britain – with most going to the 3,000 wealthiest estates (including his wife's).
Wrong. In fact the cut means that ONLY millionaires will pay inheritance tax.
Then he promises to end the 50p top rate of tax, giving another £2.4bn to the richest 1 per cent.
No, he has never promised to do this. He said it would be an aspiration at some point in the future.
Then he has pledged to cut taxes on the pensions of the richest, handing another £3.2bn to the same 1 per cent.
Has he? This is a new one on me. Source please.
Then his marriage tax relief policies will give 13 times more to the rich than the poor.
No they won't. The tax relief is targeted at only those with an income of less than £44k. Are people on £44k rich?
To pay for this, he will slash programmes for the middle and the skint, like the Child Trust Fund, SureStart and state schools.
Wrong. The CTF will indeed be abolished, but SureStart will not.

And to think, Hari has won awards and gets paid for his columns. Some people have all the luck.


R Mutt said...

Are people on £44k rich?

According to the IFS calculator, a couple with a combined income of £44,000 paying an average council tax of £1,078, is richer than 91% of the population.

So, they're not very rich, but this certainly isn't a benefit aimed at the poor.

Now, if the benefit was aimed at children or parents I could understand it. But as a single man working with two-income-no-kids co-workers, I'm not sure how it's justified that my income is to be redistributed to them. Their lower cost of shared living already gives them a more lavish lifestyle than I can afford.

Andy DM said...

Iain, you're a smart guy. If you raise the IHT threshold from the current £325,000 to £1,000,000 then the most savings will be given to £1m+ estates.

If you left £375,000 then you would have had to pay £20,000 (40% of the amount over the threshold), under the Tories nothing (because you'd be under the threshold). That saves you £20,000.

If you left £1,000,000 then you would have had to pay £270,000 under Labour and none under the Tories, that would save you £270,000.

Everyone with estates worth over £1 million would save £270,000 under the Tory plans. That's all well and good but where's that money going to go?

Is that going to come from cutting services, is it going to come from extra taxes on the poor. Don't you see that putting VAT on food and cutting millionaire's taxes will shift the burden of taxation to those who can least afford to pay.

Sean said...

I did try "define:fisk" on Google which is pretty good at finding word definitions. Fail.

However, a subsequent search turned up "fisk: point by point rebuttal".

If the first paragraph is any indication, this could take a l-o-n-g time.

Stepney said...

I'm afraid the Hari is yet another of the liberal metropolitan meeja elite who simply make it up as they go along.

They write utter crap, re-read it to give themselves a warm glow and then press send.

Facts? Troublesome; don't touch them with a bargepole.

Anonymous said...

With a car parking bollard I hope!

Shinsei said...

Hari can be extremely good when writing about social policy or some of his exposes of foreign policy (and he actually does the investigative journalism himself) but he is truly hopeless when it comes to economics.

He's one of those commentators who often confuse debt and deficit, and yet still feel able to comment on economic matters when they don't even understand the basics.

Similarly he believes that because he can find one left wing academic economist (usually Krugman) who agrees with his politically-inspired economic policies then they must necessarily be right.

Hari would justifiably laugh at a right wing commentator whose entire knowledge of the Middle East was garnered from one neo-con in a US right wing think tank, and who confused his West Bank and his Gaza Strip, yet he feels able to pontificate on economic matters with the same degree of ignorance.

jon dee said...

Hari should respond, but cheer up with this laugh out loud moment this morning from Ed Milliband.

" Everything will be tightly costed."

Some say, theres a first for everything, but surely not for this.

Chris said...

I think the first couple of comments here pretty much prove you wrong, Iain.

The "are people on 44k rich?" just typifies the Tories. Completely out of touch. I was going to write the same thing as the other comment here- it's not super rich, but pretty well-off.

Fenrir said...

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100; if they paid their bill the way we pay our taxes, it would go something like this:

- The first four men (the poorest) would pay nothing.
- The fifth would pay £1.
- The sixth would pay £3.
- The seventh would pay £7
- The eighth would pay £12.
- The ninth would pay £18.
- The tenth man (the richest) would pay £59.

So, that's what they decided to do; the ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner gave them a discount. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20". Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free, but what about the other six men; the paying customers--how could they divide the £20 windfall so that everyone would get his fair share?

They realised that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. The bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

Now the fifth man, like the first four, now paid nothing (100% saving).

- The sixth now paid £2 instead of £3 (33% saving).
- The seventh now paid £5 instead of £7 (28% saving).
- The eighth now paid £9 instead of £12 (25% saving).
- The ninth now paid £14 instead of £18 (22% saving).
- The tenth now paid £49 instead of £59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

"I only got a pound out of the £20 saving," declared the sixth man, he pointed to the tenth man, "but he got £10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, ladies and gentlemen, journalists and government ministers, is how othe tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

Matthew Dear said...

I think you mean "propagate" a class war?

golden_balls said...

The Tories just don't get it.

His feeble attempt to "fisk" the article failed better luck next time.

Alan Douglas said...

"those with an income of less than £44k. Are people on £44k rich?"

Iain, is this marriage tax relief to a person or to a COUPLE ? Cuz £ 880 per week, while not rich, seems quite comfortable to me for a single, while £ 880 pw shared by TWO is pretty feeble.

Alan Douglas

Pedant said...

Indy circulation in Feb 2010 183,547.Telegraph 700,923 six months to Jan 2010, Times 521,535 during roughly the same period. Doesn't that say all we need to know?

Devil's Kitchen said...


"Are people on £44k rich?"

A personal income of about £45k puts you in the top decile, I believe. A household income of £44k does not.

DM Andy,

"Everyone with estates worth over £1 million would save £270,000 under the Tory plans. That's all well and good but where's that money going to go?

Is that going to come from cutting services, is it going to come from extra taxes on the poor"

IHT raises the whopping sum of £4 billion. This is absolutely stuff all in the context of a government spending near £700 billion. Seriously, it's so tiny that it doesn't even count as small change.

You want to shift the burden of taxation away from the poor? OK, cut corporation tax.

Every single study of corporation tax shows that the majority of the incidence of that tax falls on employees' wages.

"Don't you see that putting VAT on food and cutting millionaire's taxes will shift the burden of taxation to those who can least afford to pay."

That's one way of putting it. A less sensitive but far more accurate way of putting it would be to say that you are "shifting the burden of taxation to those who benefit most from those services"—which is, in fact, far fairer.


Wallenstein said...

Is it true that Cameron said of his wife: "The papers keep writing that she comes from a very blue-blooded background", [but] she is actually very unconventional. She went to a day school."

Mick Turatian said...

Everyone with estates worth over £1 million would save £270,000under the Tory plans.

Correct but keeping the tax thresholds constant while incomes and property prices increase is sneaky and the stealth tax par excellence.

Announcing, as the Labour manifesto does this morning, that Income Tax will not be going up is another nasty Labour wheeze designed to deceive by informing.

Alas for Labour, the electorate may not be so easily gulled at this reprise and the pledge might serve to remind people of past duplicity and sleight of Mand.

Roger Thornhill said...


What you need to do is not play on their distorted, framed pitch.

One does not "Give" when one stops taking (quite so much), so stop trying to defend first, just reframe it back into the real world and then see how preposterous and "gimme gimme" it sounds.

One can understand why they do it as "the Tories are not going to take quite so much from the rich..." barricades, man, it does not.

DespairingLiberal said...

But your own relationship with facts is also an interesting one, isn't it Iain? So for example, on your LBC programme with Ken, you said (I think I recall it correctly) that Britain was now "on a par with Iceland and Greece in terms of debt-to-GDP ratio". You emphasised that it is this ratio that matters.

This is a very particular interpretation of "on a par", since on current OECD figures, UK external-debt-to-GDP ratio is 68%, whereas Iceland and Greece both come in at over 90%. Hmmm.

Anonymous said...

@golden balls. The same delusion. Hari is a prat and labour apologist. He writes in Huffington Post and it is full mof half-truths and innuendos. My reply was conveniently ignored and it is a blog. There are still Brown's supporters here liking the masochism of Brown and Labour. The 13 years shameful record of Labour.

Anonymous said...

Thank you Fenir.

Will somebody help me - is DM Andy thick or what?

You raise the IHT threshold to £1million and everyone below £1m benefit. Everyone above £1 million does not - certainly they do not benefit exclusively.

And this is the point Mr Thicko - The article (and labour) are suggesting that only 3000 people benefit. A thicko assumption since there is no popular vote winning point to it - which clearly there is, thats why Labour are lying so blatantly about it, and why Labour immediately copied it in the budget.

The other point is that everyone - everyone - who has a reasonable estate is currently vulnerable, right now at this very moment, to this tax since they may die at any time, maybe at a time when their tax affairs are not in order.

Janner said...

@Despairing Liberal

Doies your debt figure include thew off balnce sheet debts that Labour's Enron-accountants are so fond of

PFI, public sector pensions etc

Steve C said...

So I work 10 hours a day to earn £22k per annum and my wife earns the same annual wage from her job.

We have our mortgage to pay, our children to feed and cloth oh and rather than put her in a home we look after my 80 year old disabled mother with the associated food, clothing, care, & utilites costs.

We do not feel rich and, while certainly not poor, only someone whose politics meant they have a closed mind could call household income of £44k rich or even close.

People who earn more than you do seem to be rich by definition -
sounds like the politics of envy rearing its head again to me.

@DM Andy - you miss the point because you want to. NO-one will pay IHT under the Tories unless they are 'asset' millionaires. So millionaires pay - but non-millionaires don't - sounds fair enough to me and I am no-where near an assett millionaire but would benefit from this change - again, like Chris, politics of envy stuff it sounds like.

@Devil's Kitchen - good for you. Some pretty effective 'fisking' of your own.

Andy DM said...

@Trevorsden - To answer your question, I always assume that I'm thick and have more to learn. If you can convince me I'm wrong I'm happy to say so.

I don't think anyone's saying that only millionaires benefit, but it is correct to say as Johann Hari does that only millionaires benefit the most from the Tory proposals.

@Mick Turatian - Good point, or it would be if it were true. The IHT threshold when Labour came to office in 1997 was £215,000, if it had gone up with RPI inflation (which is standard for allowances, duties and benefits) then it would be £293,000 now. Instead it's £325,000 which would indicate that Brown as Chancellor and Prime Minister has been more generous than he needed to.

That is admittedly less generous than the Tories in 1979-97. Within a year of Thatcher taking power, the IHT threshold was doubled from £25,000 to £50,000, paid for by VAT going up from 8% to 15%. It's history that makes me question where's the funding for this tax cut coming from.

@Devil's Kitchen - As usual a very good argument which I don't have time to reply to. It's ridiculously busy at work this week. I've got some ideas that you might like to argue against and will try to get round to it.

jon dee said...


It is unsurprising that your amusing sketch goes undenied.

Perhaps it does'nt fit the class-hatred line or endorse the disapproval of aspiration or maybe, it's not being understood.

DespairingLiberal said...

Starfish, I happen to agree with you that PFI is a bloody joke - apart from dubiously keeping debt off-book, it also costs the taxpayer a huge amount more in the longer term and maintains inefficient, badly run private companies in "no-release" contracts that featherbed their over-priced ways.

However, sadly, the OECD do not include off-the-sheet debts in their GDP/debt ration calc - although by that measure, I have no doubt at all that both Greece and Iceland would also get a boost.

I really think Iain should consider staying off economic policy mattters altogether, since he nearly always gets himself in a muddle. He also mentioned Ireland in the LBC programme (just listened to it again), apparently not understanding that Ireland's public debt/GDP ratio is actually very low, less than 25%. Ireland's woes stem from different causes.

Penfold said...

The Indie is irrevelant and dicks like Hari will be out of work soon.

80k Indies sold daily, only rabid supporters will read it and swallow guff as Hari composes.

A pox on him, he's a likable statistic when he has to get onto Job Seekers Allowance and navigate thye DWP that is Gordo's legacy.

DespairingLiberal said...

Steve C - I agree, you are not "rich". All these things relate to expenditures as well - a family with 3 kids and a total household income of, say, £50K may feel worse off than a single person earning £35K.

I quite like property and inheritance targeted taxes as they are much harder for the genuinely rich to evade, even "non-doms" who for some strange reason spend most of their time in lovely houses in the UK have to pay them. The cutoff amounts have to be pitched right though - I don't have much problem with million-pound limits.

Best of all though are the good old luxury taxes on things like yachts and helicopters. A painless way for the rich to give us all a helping hand up!

Jimmy said...

Isn't the point of fisking that the "fisk" should bear at least some slight relevance to the original text?

Chris said...

@Steve C
How on earth do you know how much I earn?! Ridiculous thing to say! It doesn't do well for your argument when you make completely random assumptions.

You wouldn't let me win either way anyhow.
If lefties are poor- it's envy.
If lefties are well off, it's hypocrisy.
It's a good job some people will stick up for the less well off...

Steve C said...

The assumption I made was that if you were, in your terms, 'well off' or 'rich', you would have bolstered your own case by saying that your household earns more than £44,000 pa and you consider yourself to be rich and you don't want to be taxed less.
The fact that you didn't say this led me to think that you didn't earn this much and were envious of those who did. Either way my point still stands that household income of £44k a year is not rich, it's not poor, but rich it ain't.

Despairing Liberal has it right. £44k for a single person is very different to £44k for a family of 5 or more.

As to your last comment. So you are the self-appointed champion of the poor are you? Blimey!!
Why do you think it is that social inequalities have increased under a Labour government - independent studies, not opposition propoganda - time for a change!!

Mick Turatian said...

@DM Andy
The IHT threshold when Labour came to office in 1997 was £215,000, if it had gone up with RPI inflation (which is standard for allowances, duties and benefits)...

... Brown as Chancellor and Prime Minister has been more generous than he needed to [be].

1)Cunning of you to choose the RPI as your yardstick. If house prices had increased in accordance with the RPI that would be justifiable. They didn't. It isn't.

2)What percentage of the electorate do you believe might think that Gordon Brown is generous? And how large the subset who hold that he is more generous than he need be?

You could find yourself part of a tiny elite!

Chris said...

@steve c

I agree with you in being critical of inequality in terms of the gap between rich and poor. Labour has clearly failed on this.

Not too sure conservatism is the answer though. Bit like trying to put out a fire with petrol.

(and I'm not a LibDem- just in case you accuse me of trying to promote them!)

wild said...

D.M. Andy,

Saying that millionaires will benefit most from eliminating inheritance tax from estates below one million pounds (conveniently) ignores the fact that the number of estates worth exactly one million pounds will be (approximately) zero.

ALL estates in excess of 1 million pounds however will be taxed at 40%.

To object that people who die with estates worth just below one million pounds will not pay Inheritance Tax (which is all your argument amounts to) is simply another way of saying that you approve of people richer than yourself being forced to pay 40% of the value of everything they own once they die - even though they have paid taxes on everything they have earned and owned while they were alive?


Because D.M. Andy (and people who agree with you in the Labour Party) are envious of their success – even though that success has contributed to the prosperity of the country?

Because D.M. Andy (and the people who agree with you in the Labour Party) feel they know better how to spend their money – even though the Labour government are notorious for their waste and inefficiency?

Because D.M. Andy (and the people who agree with you in the Labour Party) want to spend it on yourself (by directing money to middle class Leftists [such as yourself]) or (with the sort of generosity that comes from spending other people’s money) because you want to spend it on those who you think may vote you (or those who agree with you) into a position of political power – so that you can redistribute (via taxation) even more wealth and power to yourself and your friends in the Leftist establishment?

None of these arguments (envy, arrogance, & greed) has any connection with justice.

When you are dead you are not, needless to add, in a position to object to the injustice of it (an ideal time to steal from somebody as all thieves agree) and I am sure you sincerely believe that redistributing money into your pocket (as the provider of State "services") is thieving in a good cause, but if you believe in helping and redistributing power from individuals to the State (even if your friends in the Labour Party are not in power) on the grounds that you believe that politicians are more just, and know better than we do how we should live our lives, allow yourself the possibility that maybe you are wrong.

Imagine for a moment that a just society is a society in which people (who pay tax on everything they own and earn during their lifetime) have the right (and incentive) to pass that money on to their families (and the causes and charities they believe in) so that they (and this indeed may be the motive for them earning the money in the first place) they may be protect their families from the harshness of the world and have happier lives because of it (and support organisations and charities whose activities are not determined by the decisions of politicians but are part of the freedoms that come with a Civil Society).

But you are not the slightest bit interested in a society that is free or just or prosperous. All you have is your envy. If the price of that is a less free, less just, and less prosperous society, you care not one jot. Indeed a free, just, and prosperous society is PRECISELY what you are against. If anybody doubts that look at the sort of societies Leftists create if they gain absolute power. They are unfree, unjust and poor, which is what you get when your political philosophy is motivated by nothing more than envy and hate.

Chris said...


" If anybody doubts that look at the sort of societies Leftists create if they gain absolute power. They are unfree, unjust and poor, which is what you get when your political philosophy is motivated by nothing more than envy and hate."

Ridiculous comment. Not all leftists are communists. That's like me trying to discredit conservatism by banging on about fascism.

Like I said in my previous post- people who campaign in favour of greater equality are either jealous (if poor) or hypocritical (if rich). They can't win.

Englishman said...

McLabours lapdogs at Sky isnt News, presented by Red Kay Burley are interviewing some of McLabours incdoctrinated useful fools masquerading as 'young first time voters'.

You know the type "i'll be voting Labour cos me Dad always voted Labour innit!"


"Oh Labour for me" Why? "I dont know anything about Politics really ya now"

Lets face it, on many levels we deserve ALL we get.

Englishman said...

McLabours manifesto for 'our country' aka E*gla*d.

Steve C said...

I have no problem with increasing equality - indeed it's a good thing. You don't have to be socialist to want that. See my post below on another strand that I sent in reply to Despairing Liberal

'Conservatives want social inequalities to decrease, the argument is the mechanisms by which it is achieved - clunking fist, benefit culture, make everyone equally dependent on the state or removing the inequalities of opportunity so that everyone has a fair chance of making the most of their lives as they see it.
What no-one can do is make everyone equally intelligent, equally motivated, equally healthy, equally moral etc so society will never be truly equal.
What you can do is to help those who genuinely cannot help themselves and remove the barriers to social mobility and advancement for the rest.'
Chris, I'm not expecting you to change your politics but please don't think that only the 'left' care about other people getting a fair chance in life.

wild said...

"People who campaign in favour of greater equality are either jealous (if poor) or hypocritical (if rich). They can't win."

What a silly claim

a) It is not either/or.

b) All British political parties are believers in equality - if for example you mean equality under the law or help for those incapable of helping themselves.

c) "Egalitarianism" as a political creed is so insane it is natural to try and understand why anybody would advocate such a thing.

By the way looking at totalitarian societies that pursued "Egalitarianism" is an illuminating way of understanding a Leftist mentality.

This is not the same as saying that Brown = Stalin. It is the claim that understanding (for example) how the USSR worked (or more to the point failed) does illuminate the Leftist mentality.

Unknown said...


I'm afraid that given the median wage is about £23k then people on £44k are indeed, in the grand scheme of things, rich. Not filthy rich, but rich nevertheless.

Andy DM said...

@wild - You've assigned me some views that I don't hold. But I think your comment on "even though they have paid taxes on everything they have earned and owned while they were alive?" was illuminating and shows the difference between my view and mine.

I don't view IHT as a tax on the person who's died (after all, once I'm dead I don't need any money, I'm not a Pharaoh). I view IHT as a tax on the inheritors. It seems wrong and dare I say un-conservative to tax a man who spends their lifetime working hard to earn a million pounds but to let a lazy man inherit a million pounds tax-free. And yes, I would tax lottery wins as income too.

@Mick Turatian - The reason I picked RPI is that's what usually applies to Income Tax and NI thresholds. But you're right, property is outstripping IHT thresholds. That's why I support things like putting a charge on the property so the IHT is only paid when it's sold so that people aren't forced to sell up at an already distressing time.

@Steve C - Good to hear that you support equality as I must admit that's a blind spot of mine. In fact if I believed Cameron on the subject I would vote Tory. I agree that we can't make people equally able, but we can do a lot more to give people an equal chance. At the moment a good part of your life chances depend on who you happen to be born to. Inheritance seems to me as a tool to entrench inequality. How would you want inequality to be defeated.

@Devil's Kitchen - "shifting the burden of taxation to those who benefit most from those services" That's quite thought-provoking and if everyone did genuinely have a decent chance in life and as long as there's a safety net for those that no fault of their own can't compete then I would go for that. Same challenge to you though, how do we give a kid born to a drug-addict 15 year old prostitute in prison the same life chances as a son of a billionaire?

Stuart said...


You should have included a hat-tip to Daniel Hannan with that excellent anecdote.


wild said...

D.M. Andy,

Did you earn the assets that you are so keen to confiscate from the people who (for you and your friends) are now so conveniently dead?

I thought not.

Of course you do not personally steal it, you get somebody else (indeed you pay somebody - or more likely get somebody else to pay) to steal it for you.

You just take it upon yourself (in the name of justice I believe you call it) to decide who is worthy to gain any benefit from their efforts.

It makes you uncomfortably that X lives in a house built by his great grandfather (how dare he!), or that Y has the leisure to write books about unfashionable poets, because he has a private income deriving from money left to her by her uncle - how appalling that she is not dependent upon the taxpayer! What a parasite!

How unfair it is that Z was able to set of that successful software business of his simply because he was fortunate enough (unlike you) to inherit enough money to get it started, not to mention the fact that his school fees were paid for by a long dead benefactor.

Not satisfied it seems with the fact that (via taxation) X and Y and Z pay your wages (the fact that you work for the State and live off the tax payer is of course entirely coincidental - entirely coincidental to your parasitic mentality) you think it is only just that the State should get an additional 40% of everything they own when they die, just in case the people (and the institutions) whom they wish to benefit might actually benefit, might actually flourish, independently of any dependence upon the State, indeed without your approval or the approval of the pro-bureaucracy party you (so morally) support.

It is clear you have not the slightest understanding of how a free society works, a society in which people make their own choices, live (so far as this is possible) independent of the benevolent political classes - who advance their career not by creating wealth but by arguing how to take if (I mean re-distribute it) from others.

You give the impression that you have never in your life ever been told about the concept of a free society, you have only ever been told about this thing called "politics" where people are entitled to take what they want from others because it makes them feel good to steal, to instruct, to direct.

Mick Turatian said...

@DM Andy
Thank you for conceding the point on property values outstripping increases in IHT exemptions. It's a small step from that to admitting that it's sneaky for the govt to cash in.

Let me try and tempt you?

I think it's a bit odd to argue for a policy that makes my estate exempt from IHT on the value of the family home until the property is sold. The incentive must then be for my heirs to agree to rent out the property sine die which would be fine by me but not, possibly, by you.

Altogether more sensible, perhaps, would be to fix the value of the property for IHT purposes on its historic purchase price.

At root, your reasoning seems to overlook the basic economic truth that savings (including property as well as financial assets) represent deferred consumption.

Forget the relatively few heirs of the supremely rich for a minute: means testing for benefits, high levels of personal taxation and punitive levels of IHT all encourage the chanelling of disposable income towards consumption and militate against all saving, in turn encouraging reliance on the state in times of difficulty.

How can this be desirable, let alone sustainable?

Devil's Kitchen said...

DM Andy,

"Same challenge to you though, how do we give a kid born to a drug-addict 15 year old prostitute in prison the same life chances as a son of a billionaire?"

We can't—and we might as well acknowledge that before we get any further.

However, the only way in which we can encourage such a child (nothing can make them) is to provide a properly rounded education.

As you may know, I went to Eton. Academic teaching was reasonable but, occasionally, patchy. The value of private schools is that one can do almost anything that one wants outwith the classroom.

So, if you really want my answer to you question, it is this: send the unfortunate child to a private boarding school.

If you can't send the child to a private school, then we should start public boarding schools.

Because, ultimately, the only way that the child is going to learn something other than how to be "a drug-addict 15 year old prostitute" is not to be around the drug-addict 15 year old prostitute. Nor do I imagine that the mother (who is, in your case, in prison anyway) will be particularly unwilling to part with her progeny.

Anyway, you can cut it how you like—but boarding is my answer.


Andy DM said...

@wild - you have a talent for asking me a question and determining my answer without the necessity for me to visit this blog. But I would prefer you allowed me to answer your question in my own words.

Did the inheritors earn it either? No they didn't. Now I understand the incentive to benefit your own offspring, but don't pretend that they are morally entitled to that extra benefit.

Yes, I don't have rich parents so you can call it envy if you want. But that an easy name-call so it doesn't move the discussion on further. I comfortably pay more tax than the services I receive but am completely happy with that because I believe in "From each according to his ability, to each according to his need." Work makes me happy and a comfortable living is merely a side benefit of it.

Of your examples, I don't have a problem with X, as long as the system isn't rigged against someone else owning their own homes too. Y seems to me to be no better morally than a benefits scrounger, just that she's found a different source of funds to sponge off. I do think that it's unfair about Z, but would like to make sure that people like Z who could make a go of making their own business be given equal help. It's surely not good for UK plc for people who could create valuable businesses to be denied the chance by accident of birth.

@Mick Turatian - You could equally say that Income Tax allowances should go up by average earnings. You make a point, but I was just being consistent.

I do have a concern about property being exempt from IHT and that's because I think that property being sold is a good thing as it increases supply and reduces price. I'm a bit worried that we're moving towards a divide where there's a class that own property and an underclass that can never aspire to own their own home because it's economically impossible.

Interesting point about savings but what's your suggestion for encouraging savings as it's something that currently Labour and Tories both haven't managed to sort out.

@Iain Dale - Just another thought, how does the Tory marriage allowance help couples where both parents work, because it's families like that that really need the help.

Steve C said...

@ DM Andy
You wrote
"At the moment a good part of your life chances depend on who you happen to be born to. Inheritance seems to me as a tool to entrench inequality. How would you want inequality to be defeated".

That's a huge question and I can't possibly answer it satisfactorily in a short blog but something else you said to Devil's Kitchen gives me a tack to try on you.
You said:
"how do we give a kid born to a drug-addict 15 year old prostitute in prison the same life chances as a son of a billionaire?"

I want to focus on your word "give" because I think that small word identifies the different philosophies. The 'left' want the state to be responsible for 'giving' things to people,(state dependency, finger wagging, big brother stuff when taken too far) the 'right' want the state to 'allow' people to be able to make of their lives what they want by removing the inequalities that it is right/possible to remove.

For example, you cannot remove the inequality that some parents constantly think, 'what can I do to help my children and improve their knowledge, attitudes, morals and chances in life of being happy?' whereas others think it's good enough to just feed and cloth them and send them off to school.
My wife is a teacher and everyday she comes face to face with children whose parents clearly make no effort at home to read with their children, make up stories with them, draw and paint with them etc. I think my point is that it's not a 'class' thing or a 'wealth' thing it's an ATTITUDE thing.
If people have a dynamic, forward thinking, positive, hard-working attitude, then they can achieve a lot. The school system is more than adequate for those who want to succeed in it; for those who couldn't care less, why should the State give them special treatment? They have created their own inequality through their bad attitude. But even then there are night classes and the Open University etc for those who realise how stupid they were to waste their schooling, so second chances galore abound in our society.
As I said, this is not the right forum for a detailed discussion but I do want to refute the nonsense spouted by some on the 'left' that those on the 'right' don't care about social mobility and removing inequalities of opportunity. It is a difference on the role of the state in achieving this that is in question.

Mick Turatian said...

DM Andy
"I think that property being sold is a good thing as it increases supply and reduces price.

That really doesn't follow. The net availabilty of housing will change in response to a change in the sizes of the population and/or the housing stock.

House prices have risen as a result inter alia of cheap credit and a subsequent policy of "quantitative easing" which has served further to increase asset values, including property. These were entirely within the control of government.

Finally, the best way for governments to encourage saving is not to punish people for saving. You increase tax breaks for savers, you do not raid pension funds and you do not means test every government hand-out to favour the profligate.

wild said...

Children are not "morally entitled" to any "extra" benefit they gain from their parents.


"I comfortably pay more tax than the services I receive but am completely happy with that"

You work in a tax payer funded "service" and passionately believe that taxpayers should be forced to pay for your "service" - amazing!

"I do not have a problem with X"

Tell that to the family who have to sell their family home because of inheritance tax.

"Y is no better than a benefits scrounger"

Y receives no handouts from the tapayer, on the contrary they pay taxes on their capital and income.

You think "it's unfair" that Z can create "valuable businesses", so in the name of equality you want to prevent it.

In short, you (on the grounds of an appeal to justice) want to use the power of the State to level down, discriminate, and impoverish.