A bundle of good ideas is in the air. The Institute for Public Policy Research wants to band inheritance tax so people pay very little at first: nine out of 10 would pay less, yet it would raise £150m more. Social democratic Sweden recently abolished inheritance tax, but has a property tax instead. The Bow Group, a Tory thinktank, calls for a 1% levy on all property over £70,000, with a 38% flat tax to simplify the whole system and make it more socially just at the bottom. Simpler flat taxes need not be regressive: the Joseph Rowntree Foundation has just published a report from the poverty researcher Donald Hirsch and the Institute for Fiscal Studies, which suggests a flat rate of 35% could lift many out of the poverty trap at the bottom. Foolishly the Liberal Democrats are ditching their best policy - to add a 50% top rate on earnings over £100,000, which would bring in £6.5bn just from the top 1%.
I believe another important idea is to extend Capital Gains Tax to capital transfers, so that inheritance tax cannot be avoided simply by transferring assets at least seven years before death.