Did Labour crash the economy?

[Seagull58]

You are aware that the person who bought the property 30/40 years isn't the one paying the inheritance tax! When you inherit exactly what have you done to earn that income?

The tax is levied on the estate before the remainder is distributed so its arguable on whom the tax is levied. If someone has worked hard and invested prudently, both for their benefit and for the benefit of their descendants, it is not fair that the government steals a portion of the estate.

 

[Hampster Gull]

New Labour, in government from 1997 onwards, openly believed in 'soft touch' supervision of the banks, The City, and the financial services sector in general, rather than strong regulation. Leading to the explosion in risky financial products, reckless lending and tax evasion.

Government, bank, public-private initiative debt and personal debt levels in a credit boom, all grew exponentially from 1997, giving us a far higher debt level per capita than all/most other developed nations when the crisis came.

The early years of Brown's chancellorship were marked by "prudence" as he carried on the sound work of Ken Clarke. After just a few years (but before the Northern Rock crash), Brown and Blair abandoned all that with debt laden budgets on a spend-spend-spend.

All giving the UK many decades afterwards of paying the financial price.

Absolutely. But at least There was to be no more boom and bust...

 

[drew]

The tax is levied on the estate before the remainder is distributed so its arguable on whom the tax is levied. If someone has worked hard and invested prudently, both for their benefit and for the benefit of their descendants, it is not fair that the government steals a portion of the estate.

There is no argument whatsoever. The tax is effectively paid by the beneficiaries as it reduces the amount they receive. It certainly isn't paid by someone who is dead! In your original example you cited someone who bought a house 30/40 years ago. They have done nothing to earn the increase in value other than sit tight! The trouble with inheritance tax is that people moan about the concept but at the end of the day, very few estates are actually subject to it. As at June 2013, under 4% of estates left on death actually paid the tax!

As for you comment about the governement 'stealing' the money then all tax is theft. A ridiculous notion.

 

[beorhthelm]

... The trouble with inheritance tax is that people moan about the concept but at the end of the day, very few estates are actually subject to it. As at June 2013, under 4% of estates left on death actually paid the tax!

you know why that is dont you? and its not just because of the threashold (hint, Miliband did it). some would agree all tax is theft, though i think that goes too far. what i do find ridiculous is the contradiction in the supposed morallity around taxes. as in inheritance rax, one might say the beneficiary doesnt deserve it or hasnt earnt it, however few would advocate a zero threashold, making all estates no matter how small taxible. no, there has to be an allowance for those who leave a little something (£324,999 little), but we'll get something for the rest. the whole system is based on making exceptions, there isnt room for any real moral imperitive, just selective application.

 

[drew]

you know why that is dont you? and its not just because of the threashold (hint, Miliband did it). some would agree all tax is theft, though i think that goes too far. what i do find ridiculous is the contradiction in the supposed morallity around taxes. as in inheritance rax, one might say the beneficiary doesnt deserve it or hasnt earnt it, however few would advocate a zero threashold, making all estates no matter how small taxible. no, there has to be an allowance for those who leave a little something (£324,999 little), but we'll get something for the rest. the whole system is based on making exceptions, there isnt room for any real moral imperitive, just selective application.

I know what you are saying about Miliband and I agree that any scheme to avoid IHT shouldn't be allowed just as any other tax avoidance scheme. However, as far as I'm aware, with regard to Miliband, no IHT was due on Ralph Miliband's inheritance as it went to his wife. The deed of variation wasn't going to eliminate IHT just reduce it so it would still be one of the estates within the percentage that I quoted. I suspect very few estates use schemes to totally avoid tax but just to reduce it and so they will therefore still be included in the stats. The deed of variation transferred 20% of the property to E Miliband but when he sold it to D Miliband, he paid CGT on it which is of course at a lower rate than IHT!

As for the beneficiaries, I would agree that they haven't earned it but don't agree that they don't deserve it. Two very different things.

 

[looney]

Just heard Clegg (Clegg, not Cameron) trot out this hackneyed line (he thinks Labour should apologise). No doubt we will hear this a million times over between now and May. To what extent do you think this is true - or was the economic crisis caused by the greed of the bankers or global forces beyond Labour's control?

No, they just screwed everything else up instead.

If you are looking to point a finger to blame someone specificly then it was Bill Clinton who pushed to underwrite the subprime market. Its a tennant of the left in the USA that the poor should be helped or subsidised in owning their home. This effectivly gave the bankers a no lose bet who then piled into the sub prime market.

 

[beorhthelm]

...I suspect very few estates use schemes to totally avoid tax but just to reduce it and so they will therefore still be included in the stats.

i suspect that most estates worth over £325k are using schemes to be "tax efficient" as some like to put it. another method is to give parts of the estate to family, if its a certain time before your death and IHT doesnt count. the recipient will pay CGT, but that joyfully has taper relief on it for holding the asset for a longer time. its not something that is "allowed" its using tax allowances/excptions/relief created for the purpose. fact of the matter regarding the Milibands is there is no reason to seperate the ownership of the property other than to reduce (ergo avoid) some tax liability.

 

[drew]

i suspect that most estates worth over £325k are using schemes to be "tax efficient" as some like to put it. another method is to give parts of the estate to family, if its a certain time before your death and IHT doesnt count. the recipient will pay CGT, but that joyfully has taper relief on it for holding the asset for a longer time. its not something that is "allowed" its using tax allowances/excptions/relief created for the purpose. fact of the matter regarding the Milibands is there is no reason to seperate the ownership of the property other than to reduce (ergo avoid) some tax liability.

I'd be very surprised if people living in properties valued at between £325k and, say £450k are actually doing much, if anything, about IHT! Also, to be outside of that percentage that I quoted, you would have to totally avoid IHT rather than just minimise it so it still remains a very low percentage of households.

 

[sten_super]

If it's not dressed up as an unbiased view, I don't mind it. It was my high expectations last time that led to my disappointment.

"How did a policy that makes so little sense to economists come to be seen by so many people as inevitable?"

Is there a link to show that the consensus among economists is that the austerity policy is a bad one? If so, I'll have to re-evaluate my view.

The FT do a survey of prominent economists annually, but I don't think that would show the consensus that SWL is talking about.

I think it depends what he means by the policy. Pretty much any half-decent economist would have told you that austerity was going to have a negative impact on the economy (which George Osbourne refuted, citing nonsense on crowding out). However, they'd disagree on the scale of the impact. I also think that the vast majority of academic economists would have suggested that austerity was 'bad', in that there was little risk from the size of the government deficit and debt. There would probably be a more mixed picture from 'financial' economists, but whether that's because they genuinely hold the view that there was a risk from the scale of government debt, or because it's in their firms interest for them to hold those views is difficult to ascertain.

Apologies for resurrecting a slightly old thread, but [MENTION=4019]Triggaaar[/MENTION] I saw this today and thought it might be of interest...

The Importance of Elections for UK Economic Activity

 

[drew]

Apologies for resurrecting a slightly old thread, but @Triggaaar I saw this today and thought it might be of interest...

The Importance of Elections for UK Economic Activity

Which carries more weight, that report or a letter in a tory paper signed by 100 tory supporters who will be personally financially affected by Labour's reintroduction of the 50p tax rate?

 

[WonderingSoton]

Gordon Brown selling off £3.5 billion assets wasn't too clever.

not forgetting all that gold he sold off at it's lowest ebb, before the price of gold soured to record levels. Oh dear Gordon.

 

[drew]

not forgetting all that gold he sold off at it's lowest ebb, before the price of gold soured to record levels. Oh dear Gordon.

 

[Triggaaar]

Apologies for resurrecting a slightly old thread, but @Triggaaar I saw this today and thought it might be of interest...

The Importance of Elections for UK Economic Activity

Thanks. It contradicts what Simon Wren-Lewis said for a start.

 

[osgood]

not forgetting all that gold he sold off at it's lowest ebb, before the price of gold soured to record levels. Oh dear Gordon.

..and then prior to selling the gold , gave everyone 2 weeks notice to ensure that the lowest price was obtained , anyone would think he was being pressured into this act by a third party, no-one could be that Stupid , could they

 

[Bold Seagull]

..and then prior to selling the gold , gave everyone 2 weeks notice to ensure that the lowest price was obtained , anyone would think he was being pressured into this act by a third party, no-one could be that Stupid , could they

Surprised he wasn't involved in the selling off of the Post Office...

 

[sten_super]

Thanks. It contradicts what Simon Wren-Lewis said for a start.

I think it depends precisely what question is being asked. There's not complete consensus that the government policies were bad for growth (although two-thirds is a decent majority who say it was), but I think you'd get much closer to that consensus if you asked whether Osbourne's explanation about why/how austerity wasn't bad for growth was valid (it wasn't). He made nonsense claims about public sector spending and investment crowding out private sector investment which patently was not true and has never been true. The question then is, given that austerity is likely to cause some kind of slowdown in the economy, is it worth that pain for long-term gain? Two-thirds of those surveyed think that it wasn't, 15% think that it was.