Death and taxes aren't the only certainties in this world: Controversy over the right relationship between the two is also a constant. Britain’s Conservative opposition has pledged to abolish inheritance tax (IHT) on family homes and raise the threshold at which it becomes payable on other assets, calling the levy immoral. The proposal sharpens the philosophical divide with a Labour government whose perceived hostility to wealth has led to a string of high-profile departures by the super rich. Welcome to the latest chapter in a debate that stretches back hundreds of years.

Tory leader Kemi Badenoch presents her policy as a matter of principle. The party says it’s “morally wrong” and a form of double taxation to impose charges on assets that people have bought with after-tax income and then “force them to pay even more to the state just because they have died.”The aim is to eventually abolish IHT altogether. Badenoch’s shadow Chancellor of the Exchequer Andrew Griffith framed the promise as a boon for the traditional Tory values of hard work and aspiration; Labour lawmakers have portrayed the plan as an unjustified handout to a rich minority.

Whether IHT is immoral is a subjective judgment. What can be said for certain is that Britain’s toll is high relative to most peer-group economies. The UK’s headline rate of IHT is 40%, but comparisons can be misleading because of variations in thresholds and exemptions. A less ambiguous measure is the amount the levy brings in as a proportion of total tax revenue. On this basis, Britain had the seventh-highest burden among members of the Organisation for Economic Cooperation and Development in 2023. A third of the group’s 38 nations have no inheritance tax.

Britain’s IHT take is poised increase significantly. The £7 billion ($9.3 billion) it raised in the 2023-24 financial year is projected to more than double to £14.7 billion in 2030-31, according to the independent Office for Budget Responsibility. That’s partly because of a freezing of tax-free thresholds: The main zero-rate band of £325,000 was introduced in 2009, and an additional £175,000 allowance for residential property passed on to direct descendants has been in place since 2020. Since wealth can be bequeathed to a spouse tax-free, a couple can potentially pass on £1 million to their inheritors without IHT being charged.

Because asset values typically increase over time, more estates are drawn into the IHT net by this so-called fiscal drag; if these thresholds had kept pace with inflation since 2020, they would be worth a combined £1.3 million today. Labour has extended the freeze until 2030-31, as well as capping relief for agricultural and business property. It will also bring unused defined-contribution pension pots into the valuation of estates for IHT purposes from next year.

All this will drive a surge in the number of estates affected. The OBR forecasts 9.5% of deaths will result in an IHT liability in 2030-31, up from 4.7% in 2024. Notably, this measure understates the real proportion of couples and families affected because tax arises only on the second death. The Institute for Fiscal Studies estimated in 2023 — before Labour’s policy changes — that 12% of people would have IHT due by 2032-33 either on their death or that of their spouse.

The proportion of estates subject to inheritance tax has fluctuated at around 5% for decades, according to Stuart Adam, senior economist at the IFS. Intriguingly, it has often been on course to rise substantially above that level, as Adam observes, but hasn’t done so because governments have periodically enacted changes to bring the number back down.

This suggests there’s a threshold above which political resistance sets in. It’s easy to see why. Inheritance tax, in theory, is intended to prevent the passing down of assets from creating a hereditary “aristocracy of wealth,” in the words of billionaire investor Warren Buffett, that erodes equality of opportunity and damages economic competitiveness. It is by design aimed at an elite, but the more the net widens, the more it captures ordinary middle-class people who — while they may be relatively privileged — consider themselves far from being rich.

In 2009, when the £325,000 nil-rate band was brought in, the average London home was worth about £263,000. In April this year, it was £553,000. Even £1 million only buys you a fairly ordinary property in many parts of the capital these days.

If the historical pattern repeats itself, the Conservatives have positioned themselves to catch the wave. But I wouldn’t be too confident that will happen. The proposal will certainly resonate in London and the South East, which would benefit the most from scrapping the levy. Whether a giant giveaway to a wealthy (albeit expanding) minority in the richest region is really in tune with the times when the country is preoccupied with fiscal pressures and a cost-of-living squeeze is another question.

IHT regularly tops surveys of the UK’s most unfair taxes, but that antipathy is shallow: Most voters don’t see cutting it as a priority — probably because most don’t pay it.

There are questions over the design of Badenoch’s plan, which would abolish IHT on family homes passed on to offspring and raise the individual threshold to £500,000. If the idea is to encourage work and wealth creation, there are plenty of other fiscal changes that would do this more effectively. Meanwhile, exempting property but not other assets will distort investment decisions and push up prices of high-end housing, benefiting existing owners but penalizing future buyers. Do owners of London’s £100 million “giga mansions” really need an extra break?

The casting of IHT as a moral mission is also dubious. People are double-taxed all the time — when they use income to buy goods on which value-added tax has been charged or to pay local-authority bills, for example. And you can’t force the dead to do anything: It’s their estate that gets taxed after death. This conflates the right of the owner to dispose of assets as he or she sees fit with the right of the beneficiary to receive them, a confusion that explains much of the public hostility toward IHT.

Most people intuitively accept the first as being fundamental to private property rights. The second is less clear. Someone who earns £500,000 through working will pay a lot of income tax; someone who inherits £500,000 of parental wealth may receive it tax-free under the current allowances. Is that fair?

Arguments have raged over inheritance tax ever since Roman senators protested the 5% levy brought in by Emperor Augustus in 6 AD. There isn’t any settled consensus even on the center-right that IHT is inherently illegitimate. Adam Smith, the 18th-century father of modern economics, is among classical liberal thinkers who supported the concept. And Winston Churchill, as Conservative chancellor in 1924, commended it as “a certain corrective against the development of a race of idle rich.”

This isn’t a subject that lends itself to moral absolutes. The real question is whether IHT is pitched at the right level and paid by the right people. Abolition of inheritance tax is unlikely to be the popular crusade that propels the Tories back to power. But there’s a strong case to argue that the current toll is too high.