From: "Tim" 
Newsgroups: uk.finance
Subject: Re: Inheritance Tax
Date: Sat, 9 Oct 2004 08:02:25 +0000 (UTC)

> "Tim" wrote
> > So - you wouldn't tax capital gains, then?  When an asset that
> > is held increases in value, there are no "monies" coming into your
> > coffers.  Also, the increased value does not provide "ability to pay".
> > Further, you have already stated that you would not tax selling
> > an asset at market value (the car example) - so you aren't going
> > to tax the (earlier) increase in value at the (later) time of sale.
>
"Fred" wrote
> Fwiw, yes, I'd certainly tax capital gains.

Even before they are realised?!  You have already stated that you don't
believe selling an item at market value should be taxed, so your system must
involve paying tax continuously as the asset increases in value (not just at
the end when it is sold).

That goes against your "ability to pay" requirement, unless you require
"(illiquid)asset-rich, cash-poor" people to continually sell their assets to
pay the tax.  Is *that* fair??

"Fred" wrote
> When an item appreciates in value beyond inflation
> then that's surely as much of an increase in net
> assets as interest on savings - leaving aside liquidity.

Of course.

As an (*important*) aside - it is just as an increase in value of someone's
principal home is "as much of an increase in net assets" - would your system
also tax those increases (ie remove the current exemption) ?

"Fred" wrote
> And of course the increase in value provides an
> increase in your ability to pay tax - why wouldn't it?

Because the asset hasn't been sold yet.

"Fred" wrote
> What about council tax? Do you think someone living in a
> mega-pound house with few liquid assets should be exempted
> just because they can't put their hands on the readies?

Not necessarily - but then I'm not the one with your strange ideas about
tax!

"Fred" wrote
> I don't know what the most effecient mechanism for tax
> collection is but I do know that fairness and equitability
> should be the fundamental driving force and to me that
> means ability to pay - including your "potential working hours".

How would you factor those in?

"Fred" wrote
> One of my worst nightmares is a country in which half the population
> effectively lives mostly off the legacies of their parent's estates - and
> hence on the backs of the other half of the population.

Hold on - which is it?  They live "mostly off the legacies of their parent's
estates", - or - "on the backs of the other half of the population" ?

If they are actually living mostly off their parents estates, then they
aren't taking anything from the "other half of the population" !