|The Campaign for Universal Inheritance|
|FOR GREATER EQUALITY OF OPPORTUNITY|
British Universal InheritanceFairer Capitalism in the UK
British Universal Inheritance will be broadly financed by progressive taxation on the cumulative lifetime total of all capital gifts and inheritance received, except from partners or spouses, at a progressive rate starting at 10 per cent and remaining there for most beneficiaries. It will immediately entitle every British-born Tom, Dick and Hannah in our open democratic capitalist country to the right to a decent minimum amount of capital of £10,000 (less the 10 per cent tax) by way of inheritance or capital gifts by the age of 25. It will itself be subject to the tax, thus being clawed back in tax on further receipts of capital gifts and/or inheritance.
In this it is very different from New Labour's Baby Bonds of £250 or £500, which will go in 18 years time to future inheritance multi-millionaires as well as to those who would otherwise inherit nothing.
British Universal Inheritance will give every young man and woman a basic minimum stake in the country without adding to the fortunes of inheritance multi-millionaires. It is a third way, fairer capitalism, popular capitalism as opposed to unfetterred dynastic capitalism, with a wider spread of the private - not state - ownership of wealth in each new generation. The amount of the British Universal Inheritance should grow over the years, under the pressure of democratic debate. It should be introduced immediately.
To finance British Universal Inheritance (in line with the principle of Universal Inheritance) the rate of the existing British Inheritance Tax (on cumulative lifetime totals of all inheritance left and capital gifts given away) will be reduced from 40 per cent to 10 per cent. In tandem with this existing but lower rate tax, there will be a new progressive cumulative lifetime Inheritance and Capital Gifts Receipts Tax, starting at the same rate, on cumulative lifetime totals of all capital gifts and inheritance received, except from partners and spouses, including the British Universal Inheritance Payment itself. The majority of beneficiaries or recipients will pay no more than the 10 per cent starting rate.
Double taxation will be avoided by transferable tax credits between the two taxes. A tax credit will record the overall rate of tax rate paid on the cumulative total of an estate and lifetime capital gifts. This will be offset against the rate of the new tax on receipts.
All the exemptions from the existing Estate Duty-type Inheritance Tax will remain, but there will be no exemptions at all from the new lower rate tax on receipts- except between partners and spouses. There will, however, be in effect an exemption of £90,000 ( with a £10,000 British Universal Inheritance and a 10 per cent starting rate of tax - but figures will vary according to political taste) for every recipient. All tax payers over 25 will be able to offset the after-tax British Universal Inheritance against the first tax payment due on any inheritance or capital gifts received after the tax is introduced.
A progressive cumulative Inheritance and Capital Gifts Receipts Tax was first proposed by the Institute for Fiscal Studies in 1973 under the name of an Accessions Tax(1). The proposal at the time was to replace one tax by the other. This led to difficulties which are avoided by running the taxes in tandem, with transferable tax credits.
Since British Universal Inheritance will be of an amount that is broadly financed by taxation on inheritance, the annual cost to the Exchequer will be merely the current revenue foregone from the present Estate Duty-type Inheritance Tax. This revenue, because of the present vast and widespread tax-free exemptions for the rich and wealthy, is only about £2.5 or £3 billion a year. So that is the annual cost of British Universal Inheritance - a modest cost for the gradual transformation of our open democratic capitalist country.
For Britain to introduce British Universal Inheritance, it must remain an independent country. European Universal Inheritance could come eventually - if the European Union becomes a Single European State and survives as such for long enough - but Britain must lead the way, being already a country with a sense of national community and independence in tax policy. British Universal Inheritance - as part of a "fair deal for all" - would provide a new democratic capitalist image for the Conservative Party and help it to win the next General Election, keep us out of the Euro and keep our country from becoming a collection of regions in a Single European State.
In 2003, New Labour announced the introduction of Baby Bonds - a sorry consequence of the New Labour taboo on the redistribution of inherited wealth and a parody of their soundbite "Opportunity for All". So much for New Labour being in favour of equality of opportunity. There is no way to have greater equality of opportunity without the positive redistribution of inherited wealth.
Can New Labour admit that Baby Bonds are just all "good new story" spin and no substance for 18 years, and adopt British Universal Inheritance before the Conservative Party does? Unlikely, because New Labour, like the Liberal Democrats, are too busy trying to lose the Pound into the Euro - and Britain into the United States of Europe - to adopt anything British instead of European. And - dishonestly and tellingly - in a kind of Orwellian 1984 distorted 'double-speak' they call themselves patriotic for doing so. In the meantime, some young people have untaxed inheritance and capital gifts running out of their ears, while others, through no fault of their own, have none at all instead of the starting after-tax minimum £9,000 at 25 that they could have with British Universal Inheritance - NOW.
These figures are put into perspective by the recent announcement by the Office of National Statistics that the average wealth of all adults and children in the country at the end of 2002 was £85,000. The amount of the British Universal Inheritance and the starting and progressive rates of tax will have to be carefully chosen by the political party that introduces it, according to its priorities. Once the principle and the proposal are introduced and understood, informed democratic debate will lead to evolutionary changes in the amount and the rates as the years go by.
(1) CT Sandford, JRM Willis, DJ Ironside, Institute for Fiscal Studies Publication No7 September 1973 - An Accessions Tax