Raising inheritance tax is fair and right

Here’s a thought experiment about tax and fairness. Imagine two people, Janet and John. They’re both 30 years old. Janet did better at school and works harder than John, does longer hours and earns more. Her salary is £50,000. Her take-home pay is £37,776 – she pays £12,224 in income tax and national insurance each year. John’s doing OK: he earns £25,000. His take-home pay is £20,881, after taxes of £4,119.

Let us wind the clock forwards by twenty years and assume all else is equal: salaries and tax rates remain unchanged. Over those two decades, Janet’s efforts bring her £755,520. John’s total is £417,620.

Then, aged 50, both our imaginary friends sadly lose their imaginary parents. Janet’s parents live in social housing. John’s parents owned their home, which he now inherits. It’s worth £350,000, somewhere close to the national average for three-bed house.

John pays no tax on the house. So, having earned less than Janet over the last 20 years, his total earnings plus the value of that property now exceed Janet’s earnings.