Friday, August 25, 2006

Some day all this will be yours!

I have been mulling over the issue of inheritance tax, following Stephen Byers’ recent call to scrap it. Although his comments have been dismissed by a lot of people on the left as right-wing nonsence, I have a certain sympathy with his criticisms of inheritance tax.

Death duties are administratively neat, taking money at the point where it is passed to the legatees. The latter don’t miss what they’ve never had and have done nothing to earn. So far, so good! But one of the motivations for people to work hard and succeed in their chosen careers is to provide for their families and enable their children to have a better life. The ‘one day all of this will be yours’ sentiment seems to me a generous and noble one. The money and assets people have acquired during their lives has already been subject to tax, so there is no obvious reason why it should be taxed again.

These sentiments are perhaps coloured by my love of stately homes and the sense of historical continuity through generations that they give – even if the aristocracy are mostly a load of horrid old Tories. Recently I visited Dalmeny, just outside Edinburgh, the home of the earls of Rosebery. Dalmeny survives in the family’s ownership and is open to the public. But Mentmore , the another, and perhaps the greatest, of the Rosebery family homes has not been so fortunate. The house was reputedly one one of Britain’s great historic treasures with a collection of art and furniture unrivalled anywhere in Europe. On the death of the sixth earl in the 1970s the family gave the government the opportunity to acquire the house in lieu of death duties. This was rejected by the appalling Callaghan government and the house was sold, its contents auctioned off and dispersed.

The battle to save Mentmore for the nation was one of the great cause celebres of the heritage movement. It was one of the greatest losses to the national heritage of the post-war era. The house was acquired by the followers of the Maharashi Yogi and became the headquarters of the Natural Law party. It has now been sold again and is set to become a luxury hotel.

There is some irony in the fact that the prime minister who presided over the introduction of graduated death duties in 1894 was none other than the fifth Earl of Rosebery, who was primarily responsible for accumulating the treasures of Mentmore. Rosebery was only a reluctant supporter of the new tax, however. The real enthusiast, his chancellor Sir William Harcourt also became a victim of his own policy when in the last year of his life he inherited family estates at Nuneham, Oxfordshire.


Joe Otten said...

Iain, I agree that inheritance taxes are discouraging action on a noble enough sentiment.

But then so do most other taxes. Income tax, particularly. While we still have income tax, this particular argument against inheritance tax seems very weak.

Iain said...

I don't disagree with you. Disasters like Mentmore avoidable by absence of bloody-mindedness as much as abolishing inheritance tax.

All I am perhaps saying is that we shouldn't assume that abolishing it is a nasty right-wing idea and that there isn't anything wrong or reprehensible about inheritance.

Joe Otten said...

Yes, don't assume things.

But I suspect that abolishing it is in fact a nasty right-wing idea, because a true believer in the argument used would prefer cuts in income tax.