By Lisa Mitchell BBC News The hottest political potato of the day is inheritance tax, with the Tories and Labour keen to cut death duties. But for 2,000 years, it's been used to redistribute wealth.
By Lisa Mitchell BBC News The hottest political potato of the day is inheritance tax, with the Tories and Labour keen to cut death duties. But for 2,000 years, it's been used to redistribute wealth.
Invented by Emperor Augustus to raise funds for soldiers' pensions, inheritance tax has been used by the West to redistribute wealth ever since. It is one of the most ancient and widely adopted state levies on the individual.
Invented by Emperor Augustus to raise funds for soldiers' pensions, inheritance tax has been used by the West to redistribute wealth ever since. It is one of the most ancient and widely adopted state levies on the individual.
It's effectively taxing a very noble desire to look after your children Matthew Sinclair, Taxpayers' Alliance The rule of Augustus - or Gaius Julius Caesar Octavianus - as the first leader of the Roman Empire ushered in an era of relative peace and he needed cash to pension off the soldiers back from subduing the natives.
It's effectively taxing a very noble desire to look after your children Matthew Sinclair, Taxpayers' Alliance The rule of Augustus - or Gaius Julius Caesar Octavianus - as the first leader of the Roman Empire ushered in an era of relative peace and he needed cash to pension off the soldiers back from subduing the natives.
Like its modern day successors, Augustus's tax was revenue raising and hit only those with an estate worth over 100,000 sestertii. Unlike today's system in the UK, it did not apply to those who were next of kin. With varying tweaks, it's a system which has been accepted by societies over the millennia.
Like its modern day successors, Augustus's tax was revenue raising and hit only those with an estate worth over 100,000 sestertii. Unlike today's system in the UK, it did not apply to those who were next of kin. With varying tweaks, it's a system which has been accepted by societies over the millennia.
But in the past week, controversy over this well-worn formula may have caused a swing to the opposition in 83 marginal seats, prompting the prime minister to cancel his plans for a snap election.
But in the past week, controversy over this well-worn formula may have caused a swing to the opposition in 83 marginal seats, prompting the prime minister to cancel his plans for a snap election.
This tax, which affects only 6% of dead people's estates and raises a relatively small amount of total taxation (£3bn), has become a political battleground.
This tax, which affects only 6% of dead people's estates and raises a relatively small amount of total taxation (£3bn), has become a political battleground.
A number of newspapers have campaigned on the issueThe Conservatives announced they would all but abolish it by raising the threshold from £300,000 to £1m. The government has counter-attacked by doubling the threshold for couples.
Caesar did not have snap elections to worry about
The Conservatives announced they would all but abolish it by raising the threshold from £300,000 to £1m. The government has counter-attacked by doubling the threshold for couples.
"It's 0.5% of government revenue so compared with increases in spending, it's not going to make a significant difference in government spending," says Matthew Sinclair, of anti-tax campaign group Taxpayers' Alliance.
"It's 0.5% of government revenue so compared with increases in spending, it's not going to make a significant difference in government spending," says Matthew Sinclair, of anti-tax campaign group Taxpayers' Alliance.
So what makes this "insignificant" tax so unpopular with voters now?
So what makes this "insignificant" tax so unpopular with voters now?
In the US, where a fierce debate has resulted in the tax being repealed for a year in 2010, it's dubbed the "death tax", a phrase which has crept across the Atlantic.
In the US, where a fierce debate has resulted in the tax being repealed for a year in 2010, it's dubbed the "death tax", a phrase which has crept across the Atlantic.
Levying a tax on the dead is a moral issue, Mr Sinclair says, and he claims the duty forces many people to sell their family home too quickly.
Levying a tax on the dead is a moral issue, Mr Sinclair says, and he claims the duty forces many people to sell their family home too quickly.
A number of newspapers have campaigned on the issue
"There's something immoral and unpleasant about worsening the trauma of the family of the dying by forcing them to sell the family home according to the taxman's timetable," says Mr Sinclair.
"There's something immoral and unpleasant about worsening the trauma of the family of the dying by forcing them to sell the family home according to the taxman's timetable," says Mr Sinclair.
Not only is it unpleasant, it's unfair, he argues, as the dead person has already paid income tax during their lifetime.
Not only is it unpleasant, it's unfair, he argues, as the dead person has already paid income tax during their lifetime.
This is denied by supporters of a levy on inheritance who say double taxation is accepted throughout the system. For example, people pay income tax and then VAT when they spend their taxed wealth. They argue that creating more equal starts in life for people encourages upward mobility.
This is denied by supporters of a levy on inheritance who say double taxation is accepted throughout the system. For example, people pay income tax and then VAT when they spend their taxed wealth. They argue that creating more equal starts in life for people encourages upward mobility.
The Taxpayers' Alliance disagrees. "It might result in downward mobility and it discourages saving," says Mr Sinclair. "It's a desire to get at people who've been lucky enough to inherit. It's effectively taxing a very noble desire to look after your children."
The Taxpayers' Alliance disagrees. "It might result in downward mobility and it discourages saving," says Mr Sinclair. "It's a desire to get at people who've been lucky enough to inherit. It's effectively taxing a very noble desire to look after your children."
Tax the rich
Tax the rich
But preventing people from taking too great a care of their children is precisely what has kept it in currency for so long.
But preventing people from taking too great a care of their children is precisely what has kept it in currency for so long.
France has had strict inheritance tax since the revolution
France has had strict inheritance tax since the revolution
Death duties have been used since feudal times to redistribute land and property to avoid it being concentrated in too few hands.
Death duties have been used since feudal times to redistribute land and property to avoid it being concentrated in too few hands.
In France, the tax on estates is not only high - up to 60% - but inheritance laws introduced after the 1789 revolution ensure people have no choice but to break up their estates among children and relatives. Being able to hand down all your wealth intact to one person created too much inequality for the fraternite.
In France, the tax on estates is not only high - up to 60% - but inheritance laws introduced after the 1789 revolution ensure people have no choice but to break up their estates among children and relatives. Being able to hand down all your wealth intact to one person created too much inequality for the fraternite.
The idea of a redistribution of wealth is one which still holds for some today.
The idea of a redistribution of wealth is one which still holds for some today.
"It's trying to neutralise the worst excesses of inequality of inherited wealth," says Tim Houghton, of the Fabian Society think tank.
"It's trying to neutralise the worst excesses of inequality of inherited wealth," says Tim Houghton, of the Fabian Society think tank.
"Most modern societies favour equality of opportunity. Inheritance tax doesn't stop parents helping their children, it smoothes off the inequalities at the top."
"Most modern societies favour equality of opportunity. Inheritance tax doesn't stop parents helping their children, it smoothes off the inequalities at the top."
How much "smoothing off" of the very rich the tax does is questionable. Labour peer Lord Lipsey called it a tax for the "unwise or unlucky" because those in a position to do so could use loopholes to circumvent it.
How much "smoothing off" of the very rich the tax does is questionable. Labour peer Lord Lipsey called it a tax for the "unwise or unlucky" because those in a position to do so could use loopholes to circumvent it.
A dramatic rise in house prices over the past few years has brought many more people unwittingly over the threshold. They have neither the tax savvy nor finances to avoid paying.
A dramatic rise in house prices over the past few years has brought many more people unwittingly over the threshold. They have neither the tax savvy nor finances to avoid paying.
Give something back
Give something back
A fear of being caught in the trap is being exploited by abolitionists, says Mr Houghton.
A fear of being caught in the trap is being exploited by abolitionists, says Mr Houghton.
Wealth is power - and it just is not a good situation Bill Gates Sr "There is a lot of misunderstanding. People think it's 40% of their estate and not 40% on the inheritance over and above £300,000. There is a great deal of evidence that people do think of the greater good of society when paying taxes, if they think they are fair."
Wealth is power - and it just is not a good situation Bill Gates Sr "There is a lot of misunderstanding. People think it's 40% of their estate and not 40% on the inheritance over and above £300,000. There is a great deal of evidence that people do think of the greater good of society when paying taxes, if they think they are fair."
The Fabian Society argues that by taxing recipients of the "unearned windfall", people's faith in the tax will be restored. It proposes that the revenue be more transparently redistributed to poorer children in a form of a state inheritance.
The Fabian Society argues that by taxing recipients of the "unearned windfall", people's faith in the tax will be restored. It proposes that the revenue be more transparently redistributed to poorer children in a form of a state inheritance.
During the debate in the US, some of the staunchest supporters of the tax were billionaires including Bill Gates Sr, father of the Microsoft entrepreneur.
During the debate in the US, some of the staunchest supporters of the tax were billionaires including Bill Gates Sr, father of the Microsoft entrepreneur.
In an interview with PBS, Mr Gates Sr said it was a "question of fairness". He also harked back to the motives of the revolutionaries in 18th Century France.
In an interview with PBS, Mr Gates Sr said it was a "question of fairness". He also harked back to the motives of the revolutionaries in 18th Century France.
"Wealth is power. And it just is not a good situation. The examples of the aristocracies of Europe are so clear. We don't want to have a country like that."
"Wealth is power. And it just is not a good situation. The examples of the aristocracies of Europe are so clear. We don't want to have a country like that."
