CHAPTER XXII

THE DEATH DUTIES

In "Riches and Poverty," edition 1905, it was urged that the then existing Estate Duties, ranging from 1 per cent. to 8 per cent., might be sensibly increased. The revisions which have been made since 1905 are clearly shown in the comparative table given on the next page, which reviews in part the Estate Duties of the Budgets of 1894, 1907 and 1909.

The rates of Death Duty have been thus raised to about the level suggested in "Riches and Poverty," edition 1905.

The scale does not represent the whole of the Death Duties. Not only is the corpus of the property taxed under the scale, but the remainder, after such taxation, is taxed again under separate scales of Legacy and Succession Duties. I do not enter into the details here, but, generally, such complications are to be deprecated. Let the State take its equitable toll, but let it do so on a single progressive scale, and not tax, and tax again, first taking a percentage from the estate, and next taking a further percentage from the bit of the estate taken by a brother or cousin or aunt of the deceased.

As will have been gathered from Chapter 4 the increase of the duties on estates over £10,000 was more than justified. The great bulk of the national wealth is held in estates of over £10,000 each. The following facts (see Chapter 4) relating to the estates which pass in an average year should never be lost sight of:

THE HARCOURT (1894), ASQUITH (1907), AND LLOYD GEORGE (1909) DEATH DUTIES

-----------------------+---------+-------------------- | | Value of Estate. |Harcourt,| Asquith, 1907. | 1894. | | | -----------------------+---------+-------------------- Exceeds But not over |Per cent.| Per cent. £ £ | | 100 500 | 1 | 1 500 1,000 | 2 | 2 1,000 10,000 | 3 | 3 | | 10,000 25,000 | 4 | 4 25,000 50,000 | 4½ | 4½ 50,000 75,000 | 5 | 5 75,000 100,000 | 5½ | 5½ 100,000 150,000 | 6 | 6 150,000 250,000 | 6½ | 7 250,000 500,000 | 7 | 8 | | 500,000 750,000 | 7½ | 9 750,000 1,000,000 | 7½ | 10 | |/--------^---------\ | |On First On | |Million. Remainder. 1,000,000 1,500,000 | 8 | 10 11 1,500,000 2,000,000 | 8 | 10 12 2,000,000 2,500,000 | 8 | 10 13 2,500,000 3,000,000 | 8 | 10 14 3,000,000 | 8 | 10 15 -----------------------+---------+--------------------

-----------------------+-------------+--------------- | | Rates Value of Estate. |Lloyd George,| suggested in | 1909. | "Riches and | |Poverty," 1905. -----------------------+-------------+--------------- Exceeds But not over| Per cent. | Per cent. £ £ | | 100 500 | 1 | 1 500 1,000 | 2 | 2 1,000 5,000 | 3 | 3-4 5,000 10,000 | 4 | 5-6 10,000 20,000 | 5 | 7 20,000 40,000 | 6 | 8 40,000 70,000 | 7 | 9 70,000 100,000 | 8 | 10 100,000 150,000 | 9 | 11 150,000 200,000 | 10 | 12 200,000 400,000 | 11 |} 400,000 600,000 | 12 |} 13 600,000 800,000 | 13 | 14 800,000 1,000,000 | 14 | 15 | | | | | | 1,000,000 | 15 | 16 | | | | | | | | -----------------------+-------------+---------------

DEATHS AND ESTATES IN THE UNITED KINGDOM

About 700,000 persons, including children, die every year.

Of these, about 620,000 die almost or quite penniless.

The balance of 80,000 persons leave £300,000,000.

Of these, 4,000 persons leave £200,000,000.

It is only necessary to state these extraordinary facts to show the justice of Mr Lloyd George's reform of the Death Duties.

It is of interest and importance to show what a small proportion of the capital passing at death is actually taken by the State. The following figures show, for the years 1894-5 to 1908-9, the total amount of all the Death Duties (i.e. not only the principal "Estate Duty," the rates of which are given on p. 321, but of the Legacy and Succession Duties, Settlement Estate Duty, etc.), received during the year, the total estates upon which the duties were paid and the average aggregate rate per cent. of the whole of the duties:

DEATH DUTIES PAID: 1894-5 TO 1908-9

Average Fiscal Year. Total Total Estates. Aggregate Death Duties. Rate of Duty per cent. £ £ 1894-5 10,894,385 194,465,000 5.61 1895-6 14,088,608 249,942,000 5.63 1896-7 13,878,274 245,883,000 5.64 1897-8 15,449,190 270,326,000 5.71 1898-9 15,732,578 271,901,000 5.78 1899-1900 18,409,293 312,819,000 5.88 1900-1 16,721,129 284,884,000 5.87 1901-2 18,513,714 295,829,000 6.26 1902-3 17,913,177 296,382,000 6.04 1903-4 17,326,137 291,161,000 5.95 1904-5 17,258,431 284,309,000 6.07 1905-6 17,344,925 296,233,000 5.85 1906-7 18,958,763 319,579,000 5.93 1907-8 19,108,256 304,093,000 6.28 1908-9 18,310,280 294,662,000 6.21

These figures were prepared by Somerset House and given to the House of Commons in September 1909 in answer to a question of Mr Thomas Gibson Bowles.

In 1908-9, in spite of the increase of rates in 1907, the Death Duties took but £18,300,000 or a little over 6 per cent. of property worth £294,600,000.

But this is a partial statement of the facts. There is little doubt that the estates passing yearly are worth nearer £400,000,000 than the £300,000,000 which is officially reviewed and taxed. So that the total burden of the Death Duties in 1908-9 was really about 4½ per cent.

There has been some talk in this connexion of diminishing and wasting the national capital. The national capital was conservatively estimated in Chapter 5 as about £13,000,000,000. The Death Duties are now taking about £20,000,000 a year. £20,000,000 is contained just 650 times in £13,000,000,000, so that, even if the £20,000,000 a year were wasted, the national capital would waste away in six and a half centuries. But the £20,000,000 a year is not lost: it is transferred from private pockets to the State and used a hundredfold for the better advantage of the nation than if it were not so transferred. One may go further and say that if it were not taken and used for the furtherance of reform, the national capital would cease to make increase. Expenditure upon Education alone needs to be doubled if British work is to fructify in the near future.

Some attention was given on page 76 to the question of the avoidance of Death Duties by gifts _inter vivos_. The Finance Act of 1909 increased to three years the period before death during which gifts passing _inter vivos_ should be liable to Death Duties. It will be of interest to see whether this checks the avoidance of Death Duties which has given us such remarkable statistics as those recorded on page 76-77.

It is not necessary to dwell at length in this chapter upon considerations connected with the dangers to Society involved in the monopolization of wealth by a few people, for they were treated at some length in earlier pages. I may usefully direct attention, however, to a speech made by the President of the United States of America, Mr Taft, in September 1909, in which he said:

"Let the State pass inheritance laws which shall require the division of great fortunes among the children of descendants, and shall not permit the multi-millionaire to leave his fortune in a mass. Make more drastic the rule against perpetuities which obtain at common law, and then impose a heavy graduated inheritance tax enabling the State to share largely in the proceeds of such large accumulations of wealth which would hardly have been brought about save under its protection and aid. Thus gradually and effectively the concentration of wealth in one or few hands will be neutralized, and the danger to the Republic obviated."

These are the words, not of a Socialist, but of the elected of the Conservatives of the United States. They may fittingly end our consideration of the revised Death Duties.

The reformed Income Tax and Death Duties of 1909 will furnish, with all their faults, a handsome revenue, and it may already be claimed that what was urged in "Riches and Poverty," edition 1905, as to the means of national regeneration, has been amply verified by accomplished facts.