Tory Government to take from the poor to give to the old?

[Mr Jack]

You think it's fair that people should pay 40% tax on everything above a threshold which they have already paid tax on, once they die?

By definition, they do not pay the tax. They are dead. Inheritance tax is paid on the massive, unearned, income passed on to the next generation.

Personally I think 40% is too low. I would make inheritance a tax paid by the recipient with a threshold amount each person can receive in their lifetime, above that I'd apply a 40% tax on the first £500k or so and then a 75% tax on everything above that.

 

[cheesyboy]

You think it's fair that people should pay 40% tax on everything above a threshold which they have already paid tax on, once they die?

A threshold that use to be irrelevant. But with house prices nowadays being what they are, owning a resonable house uses up all the allowance.

You could own a £350k house (reasonable house). When you die it will be taxed £10k before your children get it. Any money left over subject to 40% tax.

You can find my thoughts on IHT in the relevant Speakers Corner thread. I think it's unfair, but not in the same way you do - I think it should be a much lower threshold.

But that's off topic, and is not in any way relevant to low-income households, who won't generally be anywhere near that sort of inheritance. With a very small number of exceptions, poor working people are not affected by IHT

 

[balky12]

By definition, they do not pay the tax. They are dead. Inheritance tax is paid on the massive, unearned, income passed on to the next generation.

Personally I think 40% is too low. I would make inheritance a tax paid by the recipient with a threshold amount each person can receive in their lifetime, above that I'd apply a 40% tax on the first £500k or so and then a 75% tax on everything above that.

Yes you're right, my bad wording.

My point is that it dosn't have to be massive amount before the tax kicks in. at £325k people houses swallow this allowance. I feel it needs to be increased so working class families, who have a moderate house but are not rich, do not get penalised.

 

[dowie]

You sure on that? The threshold hasn't changed in ages and house prices have increased massively. Most peoples houses will use up this threshold amount. So they have to pay 40% on the rest that makes up their estate.

I could be wrong, be interesting to see some figures, but due to house prcies IHT affect quite a few.

I'm pretty sure yes - you get a whole 325k tax free per parent... so yeah 'working class' people might have to pay some tax on the amount over 325k or 650k... it's still unearned income for them and for most people the tax is a small amount or not relevant - just look at average property prices...

 

[do_ron_ron]

You need to realise that the "welfare" paid to pensioners is, mostly, their pension. That's a "benefit" too, of course, but not one given to ward off poverty. That's why it's such a huge figure - exceeding all out of work benefits combined, and dwarfing working tax credits.

A staggering statistic that emerged today in a National Audit Office report on DWP spend. £82bn per year of the total £160bn is spent on the state retirement pension (£72bn) and state pension credit (£8bn). Pensioners receive 51.25% of welfare benefits (excluding the £6.622bn they receive in Housing Benefit)

Pensions were given to ward off poverty, some pensioners get a lot more but they are few. In the years to come, with few of today's people having had other pensions they will increasingly rely on welfare. This was behind the Govt. recent compulsory work place pension(for most workers).

 

[dowie]

Yes you're right, my bad wording.

My point is that it dosn't have to be massive amount before the tax kicks in. at £325k people houses swallow this allowance. I feel it needs to be increased so working class families, who have a moderate house but are not rich, do not get penalised.

It doesn't apply to spouses!

If someone else dies and leaves you their home then yes you might need to pay a bit if the home is above 325 or 650... depending on circumstances... You're still getting ownership of a substantial unearned asset.

 

[balky12]

I'm pretty sure yes - you get a whole 325k tax free per parent... so yeah 'working class' people might have to pay some tax on the amount over 325k or 650k... it's still unearned income for them and for most people the tax is a small amount or not relevant - just look at average property prices...

Yes, but passing it onto their children would make thier lives a little easier, wouldn't it? Is my argument, which in turn could mean their children's lives are a bit easier, etc. Increase the threshold so the beneficiaries recieve more tax free?

 

[dowie]

Yes, but passing it onto their children would make thier lives a little easier, wouldn't it? Is my argument, which in turn could mean their children's lives, etc. Increase the threshold so the beneficiaries recieve more tax free?

It's a fairly good tax in principle (in practice it has quite a few holes/ways to avoid). I don't see any moral reason to ensure people get huge unearned six figure lump sums tax free. My main point is that a mansion tax is much less fair - tax assets upon transferring them, increase the rate above 2million say too... I really don't see an issue with increasing inheritance tax and cracking down on loop holes.

 

[wordy]

Tories gonna Tory.

 

[anything I don't mind]

Just wondering what the general OCUK consensus is on the Chancellor's announcement yesterday.

http://www.bbc.co.uk/news/uk-politics-29402844

Working tax credits, child benefit, housing benefit will be frozen for two years, whilst pension rises will be "protected". No attempts made to cut the pension benefit, even to the richest pensioners.

Low-income Working families stand to lose in the region of £400-£500 per year through the freeze, according to Conservative officials (a working couple with one child, with each earning £13,000 a year, would lose £44 a year in child benefit and £310 a year in tax credits. A household with a single earner and two children would lose £75 a year in child benefit and £420 in tax credits.)

It reminded me a little of the "bedroom tax". A policy which I, somewhat, felt was not unreasonable in theory (assuming, unrealistically, that smaller houses were actually available to give people the choice to downsize and avoid the "tax"), but which was undermined by the exemption give to (of course) OAPs. OAPs who, often, are living in family council houses long after their children have left.

I can understand why a Tory government might make such moves - a very large and vocal part of the Tory vote is at or near pension age, whilst the young don't vote as much, don't vote blue as much and, for under 18s, who will be hit hardest by cuts to family income, are not allowed to vote.

But I can't understand why the general public accept such regressive policies. Why do we pump so much cash into an unproductive, relatively wealthy section of society when the opportunity is there to assist current and future generations to be more productive and engaged with society?

So, GD, what do you think?

TLDR:
Is it fair and equitable to reduce income for poor working families whilst protecting income for all pensioners, a wealthier demographic?

I am a bit confused. How can it be a freeze but people still lose money? Is that they are saying they are going to lose money it realy means they are going to not receive the expected increases or is the amount actually going down? If it is going down then that is not a freeze, it is a reduction.

 

[Freakbro]

I am a bit confused. How can it be a freeze but people still lose money? Is that they are saying they are going to lose money it realy means they are going to not receive the expected increases or is the amount actually going down? If it is going down then that is not a freeze, it is a reduction.

It is called a cut in real terms. The actual amount won't go down, but because it doesn't increase in line with inflation (ie: the increase that prices will still go up in the cost of living) then the same amount of money is worth less in 2 years time.

It's a perfectly valid way of describing it, and is used on both sides of the argument.

Just recently they were talking about the cut in rail travel costs....because it was only rising at a rate less than inflation...so even though the absolute cost of the ticket goes up, it's a cut in real terms.

 

[Lartyconshayo]

OT:

What was the deficit before the coalition came into power, and what is it now? Also what did they say they would get it down to?

http://anotherangryvoice.blogspot.co.uk/2014/09/george-osborne-failure-public-trust.html?m=1

That should answer your question in detail

 

[Firestar_3x]

Most working class families obliterate the threshhold (currently £325k per person) on just their house.

Please show me proof that most working class families in the uk are in a house worth over £325k.

 

[gothic_hobbit]

The rich get richer.

And the poor get poorer.

 

[Hagar]

??????? Government to take from the ??????? to give to the ???????

Thats what government does.

 

[geekman]

As I say, think very carefully about what accusations you make online. I have the means to pursue these claims.

 

[Dicehunter]

Why does the english government always go to war on the ordinary people ?

Really baffles me.

 

[Energize]

Child benefit needs cutting back on anyway, it's paid to people earning more than enough money.

 

[Dicehunter]

Child benefit needs cutting back on anyway, it's paid to people earning more than enough money.

I know a few people that are single parents and really struggle, Cutting child benefit would pretty much be taking food out of the mouths of a lot of people who are on the bread line already.

 

[VoG]

Why does the english government always go to war on the ordinary people ?

Really baffles me.

How else are they going to keep them cowed down & in their place...