Striking a chord

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The big policy announcement in Badenoch’s speech to the residual faithful yesterday concerned changes to Inheritance Tax (IHT), as a result of which half of those currently paying would end up paying nothing, and the other half would end up paying significantly less. Since only around 4-5% of estates attract the tax currently, it amounts to a tax cut for the very wealthiest in society. It went down well at the Tory conference – whether that’s because they think it objectively a brilliant idea or because their chief donors - and maybe even many of those faithful themselves - are among the main beneficiaries is an unanswered question.

IHT is often described as the most unpopular tax according to surveys. Google’s AI search tells me that “multiple regular surveys by organizations like Hargreaves Lansdown, Opinium, and the TaxPayers' Alliance place IHT as the most hated or unfair tax, with around 24% to 46% of respondents ranking it worst ahead of income or council tax”. My suspicious mind wonders about the methodology and participant selection being used by organisations which start from a predisposition against the tax, but YouGov surveys have also consistently shown a predisposition amongst UK electors for the abolition of the tax, so let’s give them the benefit of the doubt. The question to which I’ve not seen a satisfactory answer is why so many are so opposed to a tax which affects so few, when so many recent surveys seem to show popular support for wealth taxes. It seems that many people whose estates will never come anywhere near the threshold still, somehow, believe that they will have to pay the tax.

It may be, of course, that the industry which has sprung up around methods of avoiding IHT is disguising the true scale of the number of estates which ought to be subject to the tax if those owning large estates had not taken action to avoid it. That doesn’t quite work for me, though: in the first place, the idea that more like a quarter to a half of all estates should really be paying the tax doesn’t pass the ‘feel right’ test for all mathematically-derived answers, and in the second, I’d expect a tax which was so easy to avoid on such a large scale to be more, rather than less, popular than other taxes.

Maybe it’s the power of repeated propaganda. The media moguls who own the increasingly concentrated media are certainly amongst those expecting to pay the tax, and at least some editors and experts in the field might be similarly liable. It would certainly be no surprise if their coverage might not be entirely objective and balanced.

The extent of the disparity still puzzles me though. Widespread support for a policy which deliberately shifts taxes from the few to the many (which is the unspoken implication of cutting IHT) is a strange phenomenon, but one on which she might just have struck a dishonest chord.