Six per cent of households are rich enough to pay inheritance tax because they have £285,000 or more. According to the official Family Resources Survey, in 2004-05, 49% of households had less than £1,500 in savings. Before Gordon Brown rushes to the rescue of the rich, he might give a thought to that group of people, eight times more numerous and many, many times more deserving.
It is certainly the case that in a meritocracy, allowing families to build up wealth over generations will inevitably lead to an aristocracy of the type we are still trying to get rid of in the UK. This is why Bill Gates, Warren Buffet and other billionnaires have campaigned against President Bush's abolition of the US estate tax. As Lipsey points out, wealthy families can buy their children advantages in areas such as education and healthcare that are hardly compatible with an equal-opportunity society.
The practical problem with our inheritance tax is that it hits families whose main asset is their home, whereas richer individuals have both more diversified assets and better tax advice to minimise its impact. It might therefore be more equitable to replace inheritance tax with a general Capital Transfers Tax, as has been suggested by IPPR; or with an annual wealth tax of around 1% of assets that could be postponed by capital-poor pensioners until the sale or transfer of their property.