Lootman commented:
History tells us that any tax rate much in excess of 40% (Laffer's sweet spot)
Not so. Extensive research by Professor Robert Lindsay and others (
Showdown at Gucci Gulph) suggests that, for example, CGT has an optimal revenue rate of around 16.4% and this has been confirmed by much UK research subsequently. Indeed, it is the reason why Alistair Darling (remember him?) set the CGT rate at 18% until George Osborne b******d the whole thing up again! That 18% wasn't plucked out of the air, you know.
I do agree with scrumpyjack that
...[it) would be much fairer if at a much lower rate but without all the exemptions that enable its avoidance (business assets, farmland, AIM shares etc etc)
Indeed. A simple share farming agreement by which the owner of land simply walks over the land farmed by his share farmer yields 100% relief on agricultural value and makes the land qualify for 100% relief though to all reality farmed by the share farmer. But it gets better as land to which the farmhouse (read nice manor house) is of a character appropriate to the land that now qualifies (IHTA 1984 s 115(2)) also qualify for 100% relief. Somewhat better than that portfolio of AIM shares that qualify for business property relief as those pesky things are risky!
I repeat my previous statement on IHT has little to do with its efficacy or its ethics but rather if posters here are willing to admit that it has little of no behavioural effect then the excess burden of the tax must be very small and this is a good reason
ceteris paribus for a high rate of tax because the optimal revenue raising rate of the tax could well be 80%.
Eb