Maybe things can’t only get better for Keir Starmer, as he is shamed with the latest polling just as the Labour conference begins
Maybe things can’t only get better for Keir Starmer, as he is shamed with the latest polling just as the Labour conference begins
If the inheritance taxes are the reason his parents had to sell then it stands to reason that the people who introduced the inheritance taxes in parliament are to blame, no?
I don’t see how inheritance tax is to blame. You’d pay less on inheritance tax than paying income/capital gains tax on selling your land. I suspect other reasons were at play.
Inheritance taxes for real farmers (as opposed to people who just buy farmland to live in the country) are much higher because they include capital expenditures. Modern tractors, harvesters, ploughs, seed drills, sprayers, barns, equipment sheds, silos, fences, irrigation systems… all of this can add up to millions of pounds. Having to suddenly pay a large inheritance tax for a cash-strapped (high leverage) working farmer because their parent died could absolutely force the sale of everything.
How is that different from any other family that inherits a business? The nominal amount might be different, but it’s the same situation. If they can’t afford to keep it, they need to sell - it’s a frustrating situation for everyone, I don’t see why farmers need to be special. As I said before, to protect society from wealth hoarding, inheritance tax is a necessity and should be properly enforced.
Because farming is notoriously capital-intensive (the equipment costs millions of dollars) and low margin (the supplies you put into each year’s crop cost a fortune as well and the price you can sell your crop for is highly sensitive to supply and demand; have you ever noticed how food at the market goes on sale for extremely low prices? That was a huge crop that came to market from many farmers at once, for very low profit). This means a farmer has very little liquidity because most of their wealth is tied up on equipment and seeds and fertilizers and everything else. On top of that, there’s a huge element of climate and weather risk where an entire year’s profits can be wiped out by a few days (or sometimes a single day) of bad weather at the wrong time. Many farmers go out of business after one bad crop causes a huge loss and they can no longer afford to buy more seeds or they miss a payment on their tractor or their mortgage or whatever.
Compare with something like the restaurant business where the equipment is vastly cheaper (hundred dollar frying pan vs million dollar harvester) and so are the supplies (hundreds of dollars worth of food vs tens of thousands worth of seeds and chemicals). Restaurants are also much shorter in turnaround, as you’re generally aiming to sell out all your food the same day it arrives, whereas a farmer is waiting for their crop to grow all summer long.
And it’s really not wealth hoarding. The capital equipment (tractors, harvesters etc) costs a ton of money but depreciates in value rapidly over time and costs huge amounts in maintenance as well. Furthermore, the maintenance element for equipment can add another risk factor to your crops, as an equipment failure at the wrong time can result in a total crop loss if you’re not able to get it fixed right away.
That harvester can be sitting in the shed all year in perfectly working condition and then break down 2 minutes into harvesting this year’s crop. Unfortunately, all the other farmers are harvesting at the same time and so the harvester mechanics are overloaded with work and can’t get to yours in time to save the crop. Too bad!
Anyway, the other reason farming is different than other businesses is because farming produces the food supply that feeds everyone. Governments are acutely aware of the importance of food security and so they provide subsidies and other support programs for farmers. However, these programs can often be a double edged sword because they make it even harder or more capital intensive to get into the business (for example, by requiring new farmers to purchase quota to be allowed access to the market).
Lastly, I should point out that none of these issues matter if you’re just a rich person who wants to retire to the countryside. You can buy agricultural land cheap (far cheaper than land in the city) and you don’t need to buy any fancy equipment or quota, you just move into the farmhouse. When you pass on your inheritance to your children, the lack of capital equipment means they pay a lot less in taxes than a farmer would.
You clearly are invested in this issue, but your are missing the point.
You might not be aware of other industries, but it’s a very similar situation in most essential businesses - high equipment costs and low margins.
I would still argue that family members who inherit a business are in a better position then, for example, a 20 year old waiter who inherits their mom’s house in London. They also need to pay taxes that they can’t afford.
Anyways… No one is saying that farmers or any essential businesses shouldn’t get support. It’s just that inheritance tax exemption is the wrong one, because if you create a loophole the rich will exploit it.
The rich aren’t paying the inheritance tax because they don’t own farming capital, just a homestead on cheap land. This is an inefficient tax if it’s meant to target the rich. It’s catching family farmers (working class people) in the crossfire and driving the process of farm consolidation (corporations that own many farms and don’t pay inheritance taxes because corporations never die).