Inheritance tax 'is here to stay'. By Dan Martin

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Inheritance tax (IHT) is likely to remain in place despite its unpopularity, a leading expert has claimed.

Alan Auerbach, professor of economics and law at the University of California at Berkeley, said although fewer analysts see a future for capital income taxes ' which includes IHT - it still has a part to play in the tax system.

Delivering the annual lecture for the Institute of Fiscal Studies (IFS), Auerbach said eliminating capital income taxes "is not likely, nor is it particularly desirable".

"Eliminating all taxes on capital income gives up much more revenue than simply eliminating the tax on the normal return to new saving, and does little for the cause of equity, in fact and in appearance," he said.

The professor argued that although IHT discourages saving like other capital income...

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By keanes
07th Sep 2006 10:58

Is this gobbledegook?
Maybe it's me, but I could hardly understand one word of this article! I have never used the term 'capital income taxes' and am unsure what he means. He also seems to be suggesting that we replace these so called capital income taxes with VAT.

The whole article sounds like American academic gobbledegook - can't we find a British expert, who might at least talk a language we understand?

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By MacSmat
11th Sep 2006 14:20

Perhaps "& " is missing
I agree that the article is gobbledegook .. and the way I could make sense of it is when I inadvertently inserted "&" between capital income. I assume that the "learned" professor meant to cover both income taxes as well as capital taxes... but there again perhaps this is where the Chancellor got his ideas for the ultimate "capital income tax" - Pre Owned Asset Taxation !

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06th Sep 2006 21:55

IHT's future.
Like any policy, IHT will be amended as soon as it becomes an electoral liability. Economics or tax policy will have little to do with it.

Don't you just love hearing academics spout theoretical nonsense ? Nice people, but perhaps not in touch with the real world.

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11th Sep 2006 23:36

Before it was IHT
Had he done a little research, or bothered to read the first 3 words of IHTA 1984, s.1, he might have suspected that perhaps we did have a tax regime that "solved the problem" of people giving away their taxed income and gains to relatives and avoiding another layer of tax on it. The tax was re-modelled in its current form (I don't count FA 2004, Sched 15) because it was so "unpopular".

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