happened J.ohn stuart mill And David LloydGeorgerespectively the greatest philosopher and politician (with both a lowercase and a capital “L”) in the history of British liberalism, paving the way for a bold step for Rachel Reeves to take. initial and definitive budget.

Because they were both strong advocates of increasing what used to be called “death duties” but which we now know as inheritance tax or IHT. And you have to hope that the Chancellor will not be deterred by the inevitable row he knows will follow if he raises that figure on Wednesday, as he has long considered doing.

Mill argued that “it is in the public interest to limit what is not gained, not what is earned.”

In case there was any doubt as to what he meant, the great 19th-century thinker wrote in terms that seemed surprisingly topical, 150 years after his death and at a time when many Conservatives longed to reduce or even abolish tax: “Inheritance and the end of taxation of inheritances exceeding a certain amount.” They are extremely appropriate issues and the income to be obtained from them should be large enough not to lead to smuggling through donations, interliving or concealment of property so that it is impossible to adequately control it.

Lloyd George’s pithy explanation of the matter was characteristically more worldly, but came to the same conclusion: “Death is the best time to tax rich people.”

Technical changes announced by the Chancellor this week Compliance with rules governing the national debt, which Labor had promised would fall as a parliamentary proportion of GDP, allowed it to raise tens of billions of pounds.

But this is for investment, not for the day-to-day spending that will be needed to begin revitalizing the country’s badly creaking public services in the coming years.

It’s not exactly news that this would require tax increases. Moreover, a broad extension of the freeze on tax thresholds, which would push hundreds of thousands of taxpayers into higher rate bands or paying tax, will hardly achieve this.

This measure may well be necessary to destroy the spirit, if not the letter, of Labour’s pre-election promise not to increase tax rates on employees. But it is unlikely to raise more than £7bn of the £22bn funding gap the Chancellor says he inherited from the previous government. Let alone what it takes to actually start increasing spending on basic public services.

All this suggests that now is a good time to close some of the loopholes – more easily “controlled” in Mill’s time – that enable the rich to escape their full share of IHT.

This is just one of a wide range of measures open to Reeves – including reforming capital gains tax and creating higher council tax bands. But it would also help symbolize Labor’s stated readiness to place a greater burden on “the broadest shoulders”.

And since the tax falls on the testators, not the testators, this falls squarely within Mill’s still very valid preference for taxing “unearned fortunes.”

This is true IHT currently raises around £7.5bn a yearIt is often described as the most “hated” tax. But who exactly is hated? Only 4.4 percent of the population pays this amount. As rising house prices continue to push more families into the tax, this rate is unlikely to rise above 7 percent in the foreseeable future.

The standard rate paid for properties above the £325,000 threshold is 40 per cent. But thanks to a network of grants that particularly benefit the wealthy, the real rate paid on properties worth between £3 million and £7.5 million is 25 per cent, according to the Institute, and just 17 per cent on properties worth at least £10 million. Financial Studies.

One measure Reeves could announce would be an extension of the “seven-year rule” beloved by tax advisers. Currently, a gift made seven years before the giver’s death is exempt from IHT; interliving Circumvention defined by Mill. Reeves could extend that period to 10 years, making it more difficult for wealthy older people to transfer their assets this way.

Other measures that would raise around £2.4bn by 2029-30 would be ending those relating to the transfer of assets, as well as ending the much-criticised IHT exemption for shares on the AIM market, which lists companies with assets under £30m. farmland, pension funds and commercial assets.

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Yet another As Grace Gausden reported in this newspaper on ThursdayThe biggest of these benefits will be to set a new threshold for people who inherit from their spouse to be exempt from IHT. Even restricting eligibility for this exemption to properties above a figure as high as £10 million would generate revenues of £350 million.

Despite his highly respected background, his ambition to raise inheritance tax is often seen by his modern opponents as a dastardly left-wing plot.

But they forget that in the 1980s Friedrich Hayek, Thatcherite guru and a passionate advocate of property rights, admitted: “Inheritance taxes can of course be made an instrument of greater social mobility and greater dispersion of property, and consequently they are an important part of a truly liberal policy.” They may need to be seen as tools.

In fact, it is not even clear whether the use of IHT is contrary to the objective of economic growth. These opponents, often wealthy, often insist that the desire to pass assets on to your children is an incentive to productive wealth creation. But the converse is to ask whether the most dynamic entrepreneurs consist of a generation of “reliables” or those who started with a little less.

Labor has always been a bit fearful about the IHT and its perceived unpopularity. Indeed, this was one reason why Gordon Brown was discouraged from holding early elections when he took office in 2007. George Osborne’s explicitly political (unfulfilled) threat to raise the threshold For paying £1 million.

Now is the time to lift this taboo. The fact that Labor is not exactly enjoying a happy honeymoon should make it more able to ensure that those who can afford it best endure some of the short-term pain that the Government warns is necessary for long-term gain.

Having decided to means-test pensioners’ fuel allowances (not to mention the freeze on income tax thresholds is likely to be extended), it now also needs to show that it is about a fairer society. Among many other things, Reeves’ Budget is an opportunity for him to show that he understands this by increasing taxes on those most able to afford IHT, among other taxes.

After all, it would be nice to imagine the ghosts of Mill and his predecessor Lloyd George peering fondly at the House of Commons as it sat down after Wednesday’s speech.