From The Independent:
Baby boomers must pay to fund the spiralling costs of health and social care or risk inflicting crippling tax hikes on their children and grandchildren, Lord Willetts will warn in a major speech on Monday.
“The time has come when we boomers are going to have to reach into our own pockets,” the Tory peer and chair of the Resolution Foundation will say, "The alternative could be an extra 15p on the basic rate of tax, paid largely by our kids. “Is that kind of tax really the legacy we – a generation who own half the nation’s wealth – want to bequeath our children and grandchildren? This is the moment when the chickens come home to roost for all of us, but the baby boomers in particular..."
To tackle the problem, Lord Willetts will propose “long overdue” reform of council tax and inheritance tax, both of which are effectively levies on wealth. A 1 per cent tax on property values over £100,000 would bring in £9bn and a lower rate of inheritance tax on a larger number of estates would be fairer for all, Lord Willetts will say.
That would begin to tap the £2.3 trillion transfer of largely unearned property wealth estimated to have been accrued by baby boomers during their lifetimes.
I'm not sure how you work out that a 1% tax on the value of homes in excess of £100,000 would raise £9bn. The total value of UK housing is, ballpark £7 trillion, knock off £2.8 trillion for bricks and mortar (28 million x £100,000) = £4.2 trillion; £4.2 trillion x 1% = £42 billion. Enough to replace Council tax and Inheritance tax with £10 billion-odd left over.
Mucking about with Inheritance Tax is not worth the bother. As far as I can see, they only have IHT a) as a fig leaf to show some vague commitment to wealth redistribution and b) to generate work for lawyers, accountants, trustees and bank managers. The total income generated by all these avoidance schemes is probably not much less than the IHT actually collected. Scrap it and collect a bit more land value tax instead.
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