time to be a little bit controversial
with some of you. Um, but I'm not just
being controversial for the sake of it's
something that I've long believed. The
truth is sometimes people say you're
leftwing or you're rightwing or
whatever. Truth is most people are a
sort of elomeration of different views
from different parts of the spectrum. I
think it's fair to say this might be my
most left-wing political view, but let
me explain why. Let me give you some
background to it before we start the
conversation because I know many of you
will disagree and that's fine. That's
what this is all about. Um there have
been suggestions in the last couple of
days the chancellor is thinking about
tightening up it rules on inheritance
tax. A tax which currently raises only
applies to about 6% 7% of all estates
and raises about 10 11 billion pounds a
year. Um this is she's thinking about
tightening up the rules to make it so
that there's currently a bit of a
loophole where if you gift someone
something um then you do it within and
you don't die within 7 years then
basically it's no longer subject to
inheritance tax more or less. Chancellor
apparently thinking about tightening up
this rule. Now, uh there's a wealth
manager, weird thing. This isn't a
wealth manager. Wealth manager manager
quilter and the center for economics and
business research consultancy has warned
this morning that going after family
gifts and inheritance tax grab as the
times put it. Why is it always a tax
grab? I wonder. Tax grab risks cutting
struggling young families off from vital
support. The the typical pensioner gives
10% of their income, an average of
almost 2,500 away to family each year,
they say. and they say that if you were
to change the rules that basically young
families would struggle. Rachel Griffin
from Quilter says there's a strong
economic case for supporting the
transfer of wealth between generations.
Weird that wealth manager would think
that, isn't there? Because the thing is
if you transfer wealth, who do you need?
Oh, right. Yeah, a wealth manager. Okay.
Younger people face significant
financial pressures, she says, from high
housing costs to childare and limited
pension savings. So while older
generations often hold substantial
assets, sensible rules help to unlock
this capital at the right time. Now
leaving aside the fact that there may be
a little bit of touch of self-interest
from Miss Quilter from Miss Griffin from
Quilter there, it's an interesting
argument. She's basically saying that
because reg um uh generational
inequalities are so severe, something
that I talk about a lot and I have
complete agreement with and concern
about, the best way of addressing those
inequalities is by making sure that some
people from wealthy families and younger
people can benefit from the inheritance
of their forebears. Now, of course, this
does pose the obvious question or two
obvious questions to me at least. one is
um okay but what is the kind of moral
right to inherit and second well what
about everybody else those who are not
so lucky to have wealthy forebears let
me just explain and give you some
context in all of this I'm a great
believer that we need to have fewer
taxes on earned work on income I think
it's absolutely right when the rights
say that we're overt taxed they're
correct the numbers of people who are
now being dragged
young people in particular who are now
paying higher rate income tax is far
higher than it was ever supposed to be
or it ever was in the past. That is a
situation which seems only set to worsen
in the coming budget with the chancellor
I think very likely not to change tax
thresholds as would have been done in
the past according with inflation. That
was a cheeky little trick, nasty little
trick that the previous Conservative
government did again and again and
again. And so although you're not
changing the top rate of income tax, in
reality, what you're doing with
inflation is dragging more and more
people into it. You have got younger
people who are starting their careers
now, starting their careers, sometimes
paying marginal tax rates when you throw
in their student loan, which has
basically become impossible to pay off
under repeated changes to the rules. You
know, marginal tax rates of 30, 40, 50%.
Right? Meanwhile, meanwhile, you've got
wealth which is relatively untacked in
this country and it is hard to tax. I
appreciate that. It can be harder by
comp by comparison to income. But you've
got older generations which are sitting
on big big assets and unearned income
from those assets which are being taxed
at a far lesser rate. So we saw for
example when Rishies Sununnak published
his tax return that his overall rate of
tax given so much of his income was
being generated by wealth by unearned
income we saw him paying a marginal tax
rate which was far lower in the 20 or
30% far lower than people who have no
assets working every hour god sends day
after day after day just to put food on
the table who are on much lower incomes.
This is a big problem. It's something we
saw a picture of which was much more
like the 19th century than the early to
mid 20th century when there was a huge
huge sort of gilded age. The huge huge
inequalities particularly in wealth
where you had huge parts of the sort of
upper echelons of society basically
living off their wealth and their in
unearned income while people lower down
the chain had no wealth whatsoever. Let
me give you some statistics on this. The
bottom 50% of the population in this
country own less than 5% of the
country's total wealth, while the top
10% hold over 57%. That's up from 52% in
1995. The top 1% alone in the UK owns
nearly a quarter, 23% of Britain's
wealth.
That is a massive difference and way
more unequal compared to income. Right?
The wealth gap between the top top and
bottom 20% in this country rose roughly
7.5 trillion pounds from 2011 to 2019
from 7 12 trillion to 11 trillion
largely driven by property values.
There's huge regional disparities as
well. Right? So we're dealing with a
context where there is truly enormous
inequalities of wealth and that has a
big effect. It has a big effect if we
hope in any way to achieve a truly
meritocratic society. Why? Well, because
if you have dynastic wealth, it
entrenches inequality. Without high
inheritance taxes, families just
accumulate wealth and more wealth and
more wealth generation after generation
after generation. Regardless of their
merit, regardless of their productivity,
regardless of whether they're doing
anything to earn it, they're just
lounging around in their yachts off the
Mediterranean coast and they're just
getting richer and richer and richer
because the entire system is geared
towards they're getting richer.
Meanwhile, you've got the wage slaves
out there, to put it provocatively, no
wealth, having to pay higher marginal
tax rates time after time after time on
their income because they have no assets
and they have no wealth. If you tax
large inheritances properly, my
contention to you is that it prevents an
aristocracy of wealth from forming and
it keeps opportunities open in society.
what we've got at the moment is an
aristocracy of wealth in this country.
It's also true of the United States as
well. So, what I would do, what I would
do, and I wouldn't be opposed to, by the
way, I wouldn't be opposed to 100%
inheritance tax or maybe let's say 99%.
You know, my my rule might be that if
you can put it in two P bags, then you
can hand it over. That's fine. 99 95%.
I'm being provocative, but you see what
I mean? I would not be against a far
higher rate of inheritance tax than we
have at the moment which is 40% above a
certain threshold. I wouldn't be opposed
to putting that to 50% 60% 70%. Why?
Because I think the quidd proquo should
be twofold. One that helps fund public
services which actually helps level the
playing field in achieving a true
meritocracy. Two, it will help us reduce
taxes on income because at the end of
the day, I want to incentivize work. I
want to incentivize productivity. I want
to incentivize people to get up off
their backsides and do more.
That doesn't work when you have such a
disparity between taxation on wealth and
taxation on income. My contention is,
and I know this is controversial. I know
not everybody agrees with it, but my
contention is this. You don't have a
right to inherit.
You should have a right to be to work
while you're alive and get keep more of
your own money. That to me is more
important way more important than your
right to just inherit some money from
mommy and daddy that you did nothing to
earn. We need to move away from the
rentier economy that we have moved to
and move to a society where work is
rewarded. Where yeah, you can keep more
of your own money in your own pocket at
the end of the month because you're
working harder rather than being faced
with extra taxation after extra taxation
after extra taxation. And just hope, as
this silly little wealth manager seems
to think, that the best hope, your best
hope will be just to hope that maybe at
some point you might inherit some money
from your nan and granddad or your mom
and dad. What kind of society is that?
And the thing is, if you go back in the
we've had those sort of inheritance tax
rates before, by the way, this wouldn't
be new. Actually, if you go back, the
first estate duties that we saw were
imposed in the early 20th century by the
Liberal government at that time because
they needed to fund the First World War.
And you saw big estate duties and
actually you had a lot of estates broken
up at that time because you had
unfortunately fathers and sons dying in
the first world war from aristocratic
estates. It was so controversial. Lloyd
George famously said that he would tax
the rich till the pipsqueak. Likewise
after the second world war we had higher
rates of inheritance tax. Guess what?
Society was fairer. There was more of a
meritocracy than there is today. There
was less dynastic inheritance of wealth.
So we're not talking about doing
something new here. We're actually
talking about doing something old. And I
think that there is a very solid case, a
progressive case, a case that everybody
should be in favor of. Not just a
progressive case, but I think that if
you're on the right as well, you should
be in favor of people working harder
while they're alive, not just inheriting
something when your mum and dad are
dead. I don't understand it. I
understand that there are people that,
you know, people will say, "Look, I want
to pass on something to my kids." I
understand that. I understand that. I
mean, I still would be in favor of 100%
inheritance tax actually because I
actually think my kids, if I had them,
I'll be like, "Well, go and earn your
own cross." But you know I can
understand why you want to inherit
something. But I don't see why you have
a right a right to inherit. I don't
think there is a right. I think you have
a right to be expect to receive income
as much income as possible from your own
work not from the work of somebody else.
I think at the moment this aristocracy
of wealth that we are developing is
making the whole country poorer or at
least the whole country poorer but them.
So if the chancellor wants to really
really be radical in this budget then
doing something like this I think would
not only raise tens and tens of billions
of pounds but it would level the playing
field for future generations. This is
something by the way that previous you
know you go back hundreds of years
enlightenment thinkers were thinking
about all the time. Thomas Jefferson
said that the land belongs to the living
not to the dead. He actually thought
there should basically be a
rearrangement of land every 17 years as
a result of a sentence to make sure that
we are not being governed by the
decisions of our fathers and mothers
before us. Because why on earth should
someone who just happen to be we've got
people in this country today who are the
great great great great sons and
daughters of grandsons and daughters of
of of people who happen to do well in
the Victorian period and they're still
living off the fat of their land. Why?
What have they done to deserve it?
Nothing. We're just expected to deal
with it as if it's normal. It's only
normal because that's the world that
we've grown up in. And I think and
you've got societies in the world that
do have far higher rates of inheritance
tax like Japan for example, a dynamic
economy. It works. We just think that
there's a weird weird ability and a
right to inherit. So why don't we
actually start and there's a
generational element to this too. Why
don't we start moving the burden of
taxation to wealth? People always say,
"Oh, how do you tax wealth?" This is how
you do it. This is how you do it. Your
calls to come on this. I suspect that
you might disagree or maybe you agree. I
don't know. Maybe I've convinced you.