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14 June

Inheritance tax is more popular than the right thinks

It’s only a question of how it is sold to the electorate.

By Freddie Hayward

Inheritance tax riles some Conservatives. George Osborne tried and failed to raise the threshold at which it’s paid. In certain circles, scrapping the tax is talked about wistfully, with an obligatory reference to Edmund Burke’s “partnership between those who are living, those who are dead, and those who are to be born”. Many see it as an affront to property rights and a “double taxation” on hard-won wealth. Two weeks ago, the Telegraph and 50 Conservative MPs launched a campaign to scrap this “death duty”. The tax whiz Nadhim Zahawi called it “morally wrong”. And the public at large generally agree: around half of voters consistently think that inheritance tax is unfair, according to YouGov.

However, a new report from the cross-party think tank Demos argues this view is less reliable once voters are presented with the specific inheritances that will be taxed, such as second homes, financial assets and unearned wealth. Around 75 per cent supported inheritance tax once a threshold was specified. Most people supported the current arrangement where the tax kicks in on wealth over £325,000.

The Demos paper is an example of how polling on attitudes towards taxation can be misleading. The reason is simple: if someone is asked whether they would rather pay less tax, and therefore have more money, they’re going to say “yes”. But once the specific level and use of the tax are included then that answer becomes less certain. The latest British Social Attitudes survey, for instance, found 52 per cent of people supported higher taxes and higher funding for public services, compared with 6 per cent who wanted lower taxes and cuts to public services. Connecting the two increases support for taxation, which is unsurprising when people want to improve the quality of public services.

Taxes have to be sold to the electorate with a story about their purpose. Hence the power of labelling Theresa May’s plans to fund social care as a “dementia tax” during the 2017 general election campaign, and Rishi Sunak’s determination to name his increase in national insurance after the pandemic a “health and social care levy”. Messaging matters.

This piece first appeared in the Morning Call newsletter; subscribe to it on Substack here.

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[See also: Why cutting inheritance tax would be the most regressive move possible]

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