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Here’s why increasing inheritance tax would be a further attack on social cohesion

‘In this world, nothing is certain except death and taxes,” Benjamin Franklin once said. In Ireland, it is starting to feel like new taxes are becoming more certain than death itself – and death is going to be taxed even more. 

The new report from the government appointed Commission on Taxation is little more than an exercise in how and where more money can be squeezed from the Taxpayer.

At a time when the cost of living is increasing, the wisdom of such an exercise is to be questioned – and even more so when it is clear that many of the increasing costs – such as on fuel – are being exacerbated by tax-systems that tie the amount of tax to the net cost. But surely the most ill-advised is the recent announcement that the government is considering increasing inheritance tax quite significantly.

Yes, it isn’t politically savvy. But neither is it necessarily economically sensible. Parents work hard, save, advance themselves, and try to improve their lot in life for one primary reason: their family and children. Certainly, some individuals are motivated by money and wealth for its own sake but the vast majority do this so they can leave their children in a better position in life than they themselves were.

The unintended consequence of this is that the state coffers benefit throughout the lifespan of each individual or family as they generate income which is then taxed giving the State very deep pockets. To try to make a short-sighted money grab on inheritance may provide an initial boon to the economy as people bequeath to their offspring but the more the State takes, the less the incentive for people to work hard and to build up their wealth and wellbeing.

Self-interest, or interest in the well-being of one’s nearest and dearest is an important driver of economic continuity and growth.

David Goodheart wrote in The Road to Somewhere of how modern society is dividing between the somewhere and the anywheres, with the latter being the urban, liberal, unencumbered and university educated, and the former primarily rural, conservative, living in community, often less educated.

This categorisation covers a spatial and geographic differentiation that is – depending on your perspective – correlated with a view and approach to society or the cause of it. However, there is also, less explored the possibility that this categorisation is also connected to a temporal differentiation – the sometimes  and the anytimes.

Roger Scruton, speaking about Edmund Burke in ‘Conservatism: An Invitation to the Great Tradition’ takes aim at the inherent assumption with increasing inheritance tax that all that matters is the here and now and that society and a social contract is just a means to granting equality to those that are here right now.   

“Burke rejected the liberal idea of the social contract, as a deal agreed among living people. Society, he argued, does not contain the living only; it is an association between the dead, the living and the unborn. Its binding principle is not contract but something more akin to trusteeship. It is a shared inheritance for the sake of which we learn to circumscribe our demands, to see our own place in things as part of a continuous chain of giving and receiving, and to recognise that the good things we inherit are not ours to spoil but ours to safeguard for our dependents.”

While modern society has seen the gradual erosion of the spatial continuity that allows society to function, the attack on inheritance is a further step in the disintegration of social cohesion as well as social stability over time. From people bound to community and to generations before and after, a push to create generational equality by diminishing what one generation can provide for the next is the next step in atomisation of society.

Instead of individuals being placed in a particular time, connected to their forefathers and working for the improvement of their forebears, the erosion of the rights of individuals to bequeath and to gift to their next-of-kin dislocates generations from those that have gone before and those that come after.

Instead the hard work of individuals is taken by the State throughout their lives and when they depart with the assumption that the State and the Government will be one to decide how the accumulation of a lifetimes hard earned graft is to be distributed.

Burke recognised the value to society of the ‘little platoons’ that brought people together to build their own society but never explicitly talked about the ‘platoons’ as also being intergenerational. As society becomes increasingly anywhere it is also becoming anytime and this is a major change from the stability provided throughout history when society was anchored much more in time and place.

Those in favour of inheritance tax – and a lot of it – argue that children have no right to be bestowed with the accidental advantages of the wealth of their parents just as poor children ought not to be encumbered with accidental disadvantages of the poverty of their parents. Those who argue against, understand that society is not just about a list of rights and benefits to be adjusted and adjudicated by an omnipotent state but an amalgam of relationships and connections across time and space.

Ultimately, if the State doesn’t incentivise parents (by simply leaving people alone) to work hard to create a better future for their children, they might not work hard at all to create a tax-base for the government.

 


David Reynolds

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