Gongol.com Archives: August 2025
August 17, 2025
If both death and taxes are inevitable, then it's unsurprising that talk about imposing taxes upon death should also be periodically unavoidable, too. That's currently the case for the UK, where talk of invigorating the country's inheritance tax system is running hot. The Guardian has editorialized, "There is a powerful argument for intergenerational fairness in a society where inheritance, especially of property, dictates life chances, dividing ever younger cohorts into landowner and tenant classes. Taxing inheritance is a modest but necessary levelling mechanism." ■ Such arguments seem to survive in almost copy-and-paste format from every inheritance tax debate cycle to the next. Sure, it's a "powerful" argument, but that doesn't make it persuasive. ■ There will always be some intuitive appeal to the claim that it's unfair for some people to gain a financial advantage over others just because they landed in the lucky end of the gene pool. Yet there's also a widespread intuitive understanding that some people just have better luck than others, and almost everyone is either happy to have it or jealous of those who do. ■ People also tend to realize that the greater the emphasis on activating government power to control choices about what people can pass on after death, the greater the amount of scheming that will result to avoid the penalties of taxation. It's a make-work program for accountants and estate attorneys. ■ Moreover, two of the great asset classes (real estate and private businesses) are also the hardest to piece out so that tax can be paid. It's hard enough to divide a quantity of farmland among individual heirs or to split up a family-run construction business without also accounting for selling off a portion of the operation to satisfy the tax collector. ■ The difficulty inherent to division, especially when combined with a meaningful inheritance tax burden, only serves to subsidize more impersonal structures of ownership, like REITs and publicly traded corporations. Things divided up into millions of small shares are naturally easier to liquidate to pay some taxes than heavy equipment or apartment buildings or privately-held patents. ■ It's important to stop and ask whether a policy is really enhancing desirable social consequences or merely replacing one undesirable outcome with another. It's not always the case that a family-owned farm or business enterprise is better for the community than one that is publicly traded, but fairly often it is. Britain is welcome to make its own choices regarding inheritance taxation, but it would be unwise to ignore the secondary effects of policy choices.
