Thousands of self-employed farmers gave themselves the day off to protest in London about having some of their existing tax advantages reduced. Of course, 70% of the population can't enjoy even that privilege, because they are wage-workers, and have to negotiate their days off with their employer, some of whom will themselves be farmers. The farmers were joined by some of the people who are the ones who will really be affected by the changes in Inheritance Tax on farms, the rich landowners who rent out their land to tenant farmers, or who operate farms on a commercial basis, employing professional managers. Some of those landowners are the richest people in the country like King Charles, or the Duke of Westminster, but also, include people like James Dyson, who does not even live in the country, let alone work his farm.
Prominent on the demonstration, which was an echo of similar demonstrations in the past, for example of the petty-bourgeois, Gilets Jaunes, in France, or the Tea Party supporters in the US, was, of course, Nigel Farage, who along with all of those farmers and fishing families that supported him, brought about the Brexit that they are now suffering from, but which, unfortunately, the rest of us are suffering from, also. Also, prominent was Jeremy Clarkson, who admitted some time ago that he had bought his farm, in order to be able to pass on an asset worth several million pounds tax free to his kids. Clarkson is a good example, of the fallacious nature of the arguments being presented.
Clarkson has made three series, shown on Amazon, based around his farming antics. He probably made as much money from the series as he has made from his farming activities. The underlying theme of the series, much as with some of his previous series involving cars, is his general idiocy and incompetence, but from which he is saved by other people, who actually do know what they are doing. In the case of “Clarkson's Farm”, one of those is Caleb, who its clear was the one really doing the farming. In addition, Clarkson employed a professional manager, who advised him on the law, rules and regulations, and oversaw the books. Clarkson's partner, also played a role in the farm, running a farm shop, and so on, but, as far as I could see, the rest of Clarkson's family were nowhere to be seen, as far as farming was concerned.
But, the argument of the farmers is that they need to be exempt from the Inheritance Tax so as to be able to pass down farms to their children so that these children can keep the farm in existence. In the case of Clarkson's Farm, there is even less indication that his children have any interest in taking over and farming the land, let alone ability in that regard, than he does. If there is a case for the farm being handed down to anyone on that basis, it would be to those he employed, such as Caleb, and his professional manager, yet, they will get nothing!
But, even assuming that an existing farmer's children did have any kind of interest or ability in running a farm, it is a peculiar throw back to feudalism to believe that they should simply have an inherent right to take it over. That idea, is just an extension of the feudal relics such as the Monarchy, and hereditary aristocracy. It is wholly undemocratic, but also idiotic. You may as well say that, because my dad was a tool maker, when he retired, I should have had a right to inherit his job, whether I was any good at engineering (I'm not), or not. That is not even the basis of a class system, but of a caste system. No wonder so many of these farmers say that they are making no money running their farms, which should be an indictment of them, in itself, because it begs the question of how many of them, simply inherited the farm and carried on with it, with no great ability to efficiently run such a business, and to be clear, farming is a business, like any other.
To return to the engineering comparison, there are many small, family owned, engineering businesses, but the owners of those businesses do not enjoy the same tax privileges that farmers enjoy. When the owners die, unless they have made use of the many tax loopholes that exist to be able to pass on property, which make Inheritance Tax, really, just a voluntary tax, their estate would pay IHT, like everyone else, at a rate of 40%. Indeed, many farmers themselves do not enjoy the tax privileges that landowners enjoy, either, because only 54% of farms are owner-occupied, with 14% fully tenanted, and 35% mixed tenure. So, if you are a tenant farmer, you have no farm to pass on.
The simple answer for farms is to operate them as companies, as with most other businesses in a modern economy, and for that company to then own the assets, which remain with it in perpetuity. There would, then, be no asset to pass on, and the company would simply employ workers, as either professional managers, or labourers, who would be paid a wage, as with any other business. That would mean that it would be more likely that farms would be run professionally and more efficiently, reducing the costs of agricultural products, and removing the need for subsidies and other advantages. As with all other businesses, the other consequence of that would be that the less efficient farms would be taken over by larger more efficient businesses, thereby, obtaining economies of scale.
Blue Labour in its normal duplicitous manner, as it tries to appeal to the contradictory interests of its unstable electoral coalition, has ended up falling between two stools. It tried to present this change in progressive terms, but, if it really had been a progressive measure, it would have facilitated that concentration of capital into larger, more efficient farm businesses, by removing the insidious privileges enjoyed by farms as against every other form of capital, or asset. In fact, it did not do that, because, it has tried to stick with its own petty-bourgeois, nationalist mindset of privileging the small business class, of which the family farm is the epitome. As it has now had to admit, the reality of its proposal is that, those small family owned farms, will still be able to be passed on tax free up to a vale of £3 million, and with further continued exceptions and privileges even after that.
The arguments of these reactionary small farmers, the majority of whom (60%) voted for the idiocy of Brexit, and most of whom vote Tory or worse, are unsustainable, and certainly unsupportable. The claim that farms will have to be sold, and so would risk future food production is nonsense. If farms are so inefficient that those that inherit them can't make a profit, or can't pay the due tax, then its time they did close down, and were taken over by someone who will run them professionally and efficiently. There are plenty of professional, trained farmers who would be prepared to do so, but, also, there are plenty of larger farm business that would simply swallow them up, and produce on a larger scale, and, thereby more efficiently.
Of course, as I wrote, some time ago, for my part, I would scrap IHT altogether, and simply impose Capital Gains Tax at the same rate as Income Tax, on the recipients. That would encourage large estates of all types of assets to be dissipated, and would ensure that the current voluntary nature of IHT was ended.
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