{"id":12489,"date":"2023-11-21T09:13:50","date_gmt":"2023-11-21T09:13:50","guid":{"rendered":"https:\/\/www.taxpolicy.org.uk\/?p=12489"},"modified":"2023-11-22T15:22:36","modified_gmt":"2023-11-22T15:22:36","slug":"iht_polling","status":"publish","type":"post","link":"https:\/\/heacham.neidles.com\/2023\/11\/21\/iht_polling\/","title":{"rendered":"Is inheritance tax really unpopular? We’ve exclusive new polling evidence"},"content":{"rendered":"\n

Thanks to WeThink<\/a> (formerly Omnisis), we’ve conducted some opinion polling on inheritance tax. The polling confirms that inheritance tax really is deeply unpopular, and this isn’t driven by ignorance of how it works. But our polling also suggests that most of the unpopularity is driven by the details, and not the principle, of inheritance tax.<\/strong><\/p>\n\n\n\n

Previous opinion poll research shows that inheritance tax is deeply unpopular – we see this in both straightforward opinion polls<\/a> and more extensive work combining polling with focus groups<\/a>.<\/p>\n\n\n\n

I’ve been curious how much of this polling is led by people not understanding the current over-complicated inheritance tax threshold, which means that inheritance tax in practice usually only applies to a married couple’s assets over \u00a31m. I’ve also been curious whether we’re seeing a principled opposition to inheritance tax in any form, or opposition to inheritance tax as it currently works.<\/p>\n\n\n\n

WeThink<\/a> (formerly Omnisis) very kindly offered to conduct a poll for us without charge. We devised a series of simple questions about inheritance tax that attempted to probe peoples’ views in a reasonably neutral way.<\/p>\n\n\n

The fairness of the tax<\/h2>\n\n\n

WeThink split the panel into two statistically identical groups.<\/p>\n\n\n\n

The first set was asked – without any context – a simple question: \u201cDo you think IHT is fair currently?”. The answer was pretty overwhelming:<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Surprisingly, Labour voters are even more likely than Conservative voters to believe inheritance tax is unfair.1<\/a><\/sup>I’m not including the breakdowns for the other political parties because the numbers are too small for statistical significance; even the Lib Dem figures should be treated with caution. You can see all the details here<\/a>.<\/span> Possibly that’s because some of them believe the tax is too low.2<\/a><\/sup>There’s some support for that in the polling detail; about 10% of Labour voters support a rate of inheritance tax of 60% or more; no Conservative voters do. However the statistical validity of individual answers is very low, so I don’t think it’s safe to draw conclusions from this.<\/span> <\/p>\n\n\n\n

The numbers are broadly consistent with YouGov’s long-running polling on the same question<\/a>.3<\/a><\/sup>Note that YouGov gives a “not sure” option and we did not. The question of whether “forced choice” is the best approach has a long history<\/a>… I have no expertise in this, and was happy to be guided by the experts at WeThink.<\/span> <\/p>\n\n\n\n

The second set were given some context: <\/p>\n\n\n

\u201cFor most married couples, inheritance tax is only charged where their net assets exceed \u00a31m. The rate is 40%. Do you think IHT is fair currently?<\/em>“4<\/a><\/sup>It’s a very simplified presentation but compressing an explanation of inheritance tax into a sentence is not easy. One obvious criticism is that the question could give the impression that all the assets are taxable the second they hit \u00a31m, and this is a fairly common folk belief about tax thresholds. That was perhaps a mistake on my part.<\/span><\/p>\n\n\n

That lets us test the hypothesis that people oppose IHT because they wrongly think it will apply to them. <\/p>\n\n\n\n

We did indeed see an increase in the percentage believing inheritance tax to be fair, but not a terribly significant increase:<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

We still see a large majority against the tax; only Lib Dem voters thought inheritance tax fair, even when provided with that context.<\/p>\n\n\n\n

I’d conclude from this that we should discard the idea that inheritance tax’s unpopularity is caused by a lack of understanding of the system.<\/p>\n\n\n

Options for change<\/h2>\n\n\n

Where a respondent said IHT was unfair, we went on to ask what they thought the inheritance tax threshold should be, giving options ranging from no threshold to a \u00a310m threshold. We also included an option for abolition. The intention was to test whether opposition to inheritance tax reflects an absolute principle, or a dislike of the way inheritance tax currently works.<\/p>\n\n\n\n

A slim majority – 56% – of the “no context” group preferred changing the threshold to abolition. <\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

An even more slim majority – 53% – of the “context” group preferred changing the threshold to abolition:5<\/a><\/sup>Presumably because people who think inheritance tax is unfair after being presented with the context have already considered and dismissed a \u00a31m threshold<\/span><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

We can draw two conclusions from this. First, some of those saying inheritance tax is unfair believe it unfairly under-taxes<\/strong> estates. Second, at least on this evidence, it’s plausible that if the threshold was set to \u00a32m then only a minority of people would believe inheritance tax to unfairly over-tax<\/strong>.<\/p>\n\n\n\n

Finally, for those who said IHT was unfair, but were open to keeping it at a different threshold, we then tested different rates, ranging from 20% to 80%. There was overwhelming support (almost 80%) for reducing the rate to 20%. That was unexpected, and in retrospect we should have given more options below 20%.<\/p>\n\n\n

Conclusions<\/h2>\n\n\n

Inheritance tax is deeply unpopular – not a surprise.<\/p>\n\n\n\n

Some of that unpopularity is caused by a misapprehension as to the level of wealth at which the tax applies. But most of it isn’t – there’s a large majority who believe the tax is unfair even when told that it only applies (broadly speaking) to wealth over \u00a31m.<\/p>\n\n\n\n

A much more significant factor appears to be unhappiness with the threshold and\/or the rate. It’s plausible that a majority would believe inheritance tax to be fair if the threshold was increased and\/or rate reduced. I wouldn’t put it more strongly than that given the limitations of this exercise.<\/p>\n\n\n\n

My view remains that we should cut\/cap the over-generous reliefs from inheritance tax<\/a>, and use the revenues to cut the rate. We didn’t ask that in the polling, because I’m unconvinced the complexity of these issues, and the inevitable trade-offs, can be condensed into a one sentence question without pushing an agenda<\/a> (one way or another). I would prefer that to raising the threshold, because the high (by international standards) 40% rate drives avoidance. A low rate and wide base is the standard boring tax policy<\/a> response to most problems – and it’s the right one here.<\/p>\n\n\n\n

We’ve published the detailed polling numbers here<\/a>.<\/p>\n\n\n\n

<\/div>\n\n\n\n
\n\n\n\n

Many thanks to Brian Cooper and Mike Gray at WeThink\/Omnisis<\/a> for their generosity.<\/p>\n\n\n\n