THE NON-REACTIONARY LEFT:

Blair plans inheritance tax relief for middle class (BRIAN BRADY, 8/22/04, The Scotsman)

[D]owning Street and the Treasury are considering introducing a banding system, similar to income tax, with a base rate of 22% and higher bands of 40% and 50% for more valuable estates. The new thinking, on an issue which threatens to plunge the government into renewed protests during the crucial run-up to an election expected to take place next year, is reflected in a new report from a left-leaning think tank which is published today.

The Institute for Public Policy Research (IPPR), which has put forward a number of initiatives picked up by the Government in recent years, claims that introducing a banding system would cut the inheritance tax bills for 87% of estates.

But IPPR researcher Dominic Maxwell said the reform would also generate almost £150m extra in tax receipts, over and above the £2.8bn claimed back by the Treasury from inherited property every year.

The financial burden would therefore shift from those benefiting from a relatively modest inheritance to heirs of estates valued at many times beyond the current threshold.

"A fairer inheritance tax would see the very wealthy, who are comfortably over the threshold, pay more, whilst the vast majority of families that are currently taxed would pay less," Maxwell said. "As well as being fairer to those who inherit assets, this reform would also benefit those born with nothing, through a beefed-up Child Trust Fund."

The Child Trust Fund will deposit £250 for all children, plus £250 more for the poorest, in accounts for children born from September 2002 onwards.

Invested over 18 years, the IPPR believes the extra funds raised from IT reform could provide an extra £662 for children from the poorest third of families, and £331 for the rest.

If only John Kerry had even one such idea, he wouldn't be stuck in Mekong mud.

Posted by Orrin Judd at August 22, 2004 10:42 AM