Inheritance Tax

dvpower

One area of potential income for the state that hasn't had much attention is Inheritance tax.

Currently it is subject to very generous exception limits (

€414,799 for a son / daughter

) and a reasonably low rate thereafter (25%).
Additionally a surviving spouse is completely exempt from Inheritance tax, no matter what the value the inheritance is.

I'm not sure its fair that some people can get massive tax free transfers just because their parents were wealthy. Should the state take a bigger share of these windfalls?

Iago

No, it's an absolute joke of a tax and has less of a place now than it ever had.

I'm completely against this tax for a number of reasons, the key one being that the person that dies has already spent their life paying tax on everything they earn, everything they buy, everything they do. Then when they've managed to do all that and still leave something behind for their families/friends/charities whatever, the state takes another 25% of it, it's a sham.

Sleepy

I'm actually completely in favour of high Inheritance Taxes from both an economic and a social stance.

Leaving an exemption in place with regard to farms or other businesses which the benefactor has had an instrumental part in making valuable (e.g. son tending the farm his entire life / daughter working full time in the family business since leaving school) so as not to take anyones livelihood away, high inheritance taxes should be one form of tax which actually stimulate the economy.

If a rational person is aware that they are likely to inherit a large amount of money in the future that provides a disincentive to work hard or provide for their own retirement.

From a societal perspective, if one desires a level playing field for people where hard work, ingenuity and success rather than fortune in the biological lottery determine ones income and/or wealth (as I do), inheritance is a negative thing.

Taking perhaps the world's most famous heir, Paris Hilton, as an example: aside from a brief, unwitting spell in the porn industry, she has done nothing to contribute to the economy she lives in (save re-distributing her family's wealth).

Surely an economy where all actors are seeking to maximise their own utility through their efforts is going to be more effective at generating a "Perfect World" TM than one where many of the actors produce nothing as their utility is being maximised without any contribution?

EDIT: At some point I'll most likely inherit something as neither of my parents are on the poverty line. If/when it happens I wouldn't complain about a tax of 50-60% on this as it's not money I've earned.

I suspect most that are in favour of this measure will be those jealous of others inheritances and not standing to inherit anything themselves and those that are strongly against it to be those who stand to benefit most from inheritances or have done so already. As a father, I do intend to do everything in my power to set my daughter up for a happy life but even in the event of a lottery win, there'll be very little going to her at the time of my death.

bladespin

Ridiculous and lousy tax placed upon people's families at the worst possible time and as said already this is inheritance that has already been taxed. A government profiteering from someone's death is a new low, even for our lot.

dvpower

bladespin wrote: »

Ridiculous and lousy tax placed upon people's families at the worst possible time and as said already this is inheritance that has already been taxed.

Why is it the worst possible time to impose a tax? An inheritance is an unearned windfall - it seems to me that this is a good time to impose a tax; when the person who owns/owned the money no longer has any need for it.

To say it has already been taxed is stretching the point. Every single euro in circulation has been taxed many times over. But most inheritances are completely tax free.

bladespin wrote: »

A government profiteering from someone's death is a new low, even for our lot.

The government doesn't profit from raising tax; the state does.

Iago

Sleepy wrote: »

I'm actually completely in favour of high Inheritance Taxes from both an economic and a social stance.

Leaving an exemption in place with regard to farms or other businesses which the benefactor has had an instrumental part in making valuable (e.g. son tending the farm his entire life / daughter working full time in the family business since leaving school) so as not to take anyones livelihood away, high inheritance taxes should be one form of tax which actually stimulate the economy.

I completely disagree, what will actually happen in practice is that money will flow out of the country as people seek to put it where the Irish Government can't see it or get at it.

Sleepy wrote: »

If a rational person is aware that they are likely to inherit a large amount of money in the future that provides a disincentive to work hard or provide for their own retirement.

It's not that simple. The people who are leaving the money worked hard to provide, not just for their retirement, but also for their family after their passing. They would have passed those values onto their family and the wheel keeps turning.

Sleepy wrote: »

From a societal perspective, if one desires a level playing field for people where hard work, ingenuity and success rather than fortune in the biological lottery determine ones income and/or wealth (as I do), inheritance is a negative thing.

Again I disagree, there is a level playing field. At least one person worked harder/showed more ingenuity/had more success in that family. Why should they be punished and asked to provide for others who clearly had nobody within that family who was equally driven?

Sleepy wrote: »

Taking perhaps the world's most famous heir, Paris Hilton, as an example: aside from a brief, unwitting spell in the porn industry, she has done nothing to contribute to the economy she lives in (save re-distributing her family's wealth).

There are exceptions to every rule

Incidentally you can be sure that the likes of the Hiltons and people in that bracket wouldn't be affected by inheritance tax, much like Fitzgerald wasn't really affected by going into theoretical bankruptcy.

Sleepy wrote: »

Surely an economy where all actors are seeking to maximise their own utility through their efforts is going to be more effective at generating a "Perfect World" TM than one where many of the actors produce nothing as their utility is being maximised without any contribution?

EDIT: At some point I'll most likely inherit something as neither of my parents are on the poverty line. If/when it happens I wouldn't complain about a tax of 50-60% on this as it's not money I've earned.

I applaud your sentiments, and if we lived in a "Perfect World" TM where that money was effectively distributed to families who genuinely had difficulties as opposed to difficulties they brought upon themselves or (more likely) disappeared into some government quango or other, then maybe I might be more on board with the prospect.


However this is the way I see it;

- We are already discouraged from working as hard as we can, doing so is rewarded by paying more (in % terms) in taxes and charges to fund those who don't work hard or don't work at all.

- Inheritance tax is one last kick in the balls for people who have spent their entire lives contributing to a country through both direct and indirect taxation as well as general spending.

- Inheritance tax doesn't impact on those most able to bear the burden, but rather on those that are most needy of receiving it. Their relative neediness compared to the rest of the country/world notwithstanding.

- Inheritance tax actually stifles the economy because instead of going to someone who will spend it and thus actually generate business and jobs it gets swallowed up on administration and mess within the overall public service.

- The more of these taxes that are put in place to provide for the poor and poverty-stricken the less incentive there is for people to get themselves out of that institutionalized mentality of welfare and benefits.

I think this and the following generation in particular will suffer as a result of this, people who through no fault of their own are out of work and going underwater will be relieved of a large sum of cash that could make a huge difference to their lives and it will be spent on people who contribute little or nothing to the economy.









footnote: My parents aren't quite on the breadline, but we are working class and there's no cherry waiting on the cake. I have no ulterior motive to derive from this point of view. The simple fact is that I firmly believe that inheritance tax is wrong.

Twin-go

dvpower wrote: »

Why is it the worst possible time to impose a tax? An inheritance is an unearned windfall - it seems to me that this is a good time to impose a tax; when the person who owns/owned the money no longer has any need for it.

How do you know its an unearned windfall? And who sees it as a windfall anyway? I don't know anybody that has got an inheritance from a parent or husband or wife that wouln't give it all back to spend one more day with the person that has past.

dvpower wrote: »

To say it has already been taxed is stretching the point. Every single euro in circulation has been taxed many times over. But most inheritances are completely tax free.

The government doesn't profit from raising tax; the state does.

For the vast majority of people the money/property they will to their relations has been subject to Tax already. Income Tax, Stamp Duty, D.I.R.T.

I propose that lottery winnings be taxed at a rate of 40%. that would bring in a nice few millions a year without impacting anyone.

bladespin

dvpower wrote: »

Why is it the worst possible time to impose a tax? An inheritance is an unearned windfall - it seems to me that this is a good time to impose a tax; when the person who owns/owned the money no longer has any need for it.

To say it has already been taxed is stretching the point. Every single euro in circulation has been taxed many times over. But most inheritances are completely tax free.

Do you honestly think it's a good time? a close family memeber has been lost and the stress that carries, do you think the deseased's oh or children need the worry of how much of the home they're going to loose?

NOGMaxpower

dvpower wrote: »

One area of potential income for the state that hasn't had much attention is Inheritance tax.

Currently it is subject to very generous exception limits (

€414,799 for a son / daughter

) and a reasonably low rate thereafter (25%).
Additionally a surviving spouse is completely exempt from Inheritance tax, no matter what the value the inheritance is.

I'm not sure its fair that some people can get massive tax free transfers just because their parents were wealthy. Should the state take a bigger share of these windfalls?

Inheritence tax is a joke, IMO. They tax you all through out your life, they tax you on everything that you've worked hard for. Any assets worth any kind of value IMO have had their taxes paid already. So when that said person dies and they leave X to Y then Y should get it completely tax free since tax has already been paid on it by the original owner/taxpayer.

Its a bloody joke and doesn't make any sense at all and IMO should be abolished.

Say you're in todays market recently redundant, behind in mortgage payments, lost your home and god forbid a parent dies and leaves you a property worth 900k. You will need to sell the property in order to pay the inheritance tax. When you could've easily have moved in and made it your family home.

Its a disgrace we have the tax at all we're taxed throughout our lives and then they tax you when you die. ANyone who thinks otherwise has never had to deal with an inheritance and is probably to young to appreciate it.

Aard

The threshold has risen at an accelerated rate in the past ten years or so. I think the rate should be reduced, along with the the threshold.

dvpower

Twin-go wrote: »

How do you know its an unearned windfall? And who sees it as a windfall anyway?

Of course its unearned; if it was earned it would be subject to Income tax at the relevant rate.

Twin-go wrote: »

I don't know anybody that has got an inheritance from a parent or husband or wife that wouln't give it all back to spend one more day with the person that has past.

Twin-go wrote: »

For the vast majority of people the money/property they will to their relations has been subject to Tax already. Income Tax, Stamp Duty, D.I.R.T.

If I make a profit from selling widgets to consumers I can't avoid paying tax on my profits on the basis that my customers are paying for them out of already taxed income.

bladespin wrote: »

Do you honestly think it's a good time? a close family memeber has been lost and the stress that carries, do you think the deseased's oh or children need the worry of how much of the home they're going to loose?

Spouses are already fully exempt. I wouldn't be in favour of making people homeless to pay it so perhaps we could retain a high exception limit for spouses and dependents.
I don't think theres ever a good time to pay taxes, but we might be able to ease the burden on ordinary taxpayers by asking for a bigger share from people who get large windfalls because they are fortunate to have rich parents.

dvpower

NOGMaxpower wrote: »

Say you're in todays market recently redundant, behind in mortgage payments, lost your home and god forbid a parent dies and leaves you a property worth 900k. You will need to sell the property in order to pay the inheritance tax. When you could've easily have moved in and made it your family home.

That sounds to me like a good advertisement for inheritance Tax

NOGMaxpower wrote: »

Its a disgrace we have the tax at all we're taxed throughout our lives and then they tax you when you die. ANyone who thinks otherwise has never had to deal with an inheritance and is probably to young to appreciate it.

They don't tax you when you die. They tax the person who gets your assets.

Amhran Nua

Iago wrote: »

No, it's an absolute joke of a tax and has less of a place now than it ever had.

The idea behind it is to discourage the concentration of wealth in a few hands over time, and as such its a good thing. It no doubt gets up the nose of anyone who's run afoul of it, but I would support it.

jimmycrackcorm

Twin-go wrote: »

How do you know its an unearned windfall? And who sees it as a windfall anyway? I don't know anybody that has got an inheritance from a parent or husband or wife that wouln't give it all back to spend one more day with the person that has past..

Then they should donate the inheritance to charity. Can't see too many doing that.

Most inheritances come from the passing of (and sale) property. The value in the inheritance is the capital gain since purchase. The gain is what should be taxed but taking into account the real price paid for the property. E.g. if you bought a house for €100k paid an overall mortgage of €350k and sold for €400k that the tax would be only on the €50k gain.

Chris_5339762

Inheritance tax is just cruel IMO.

Sleepy

NOGMaxpower wrote: »

Say you're in todays market recently redundant, behind in mortgage payments, lost your home and god forbid a parent dies and leaves you a property worth 900k. You will need to sell the property in order to pay the inheritance tax. When you could've easily have moved in and made it your family home.

God forbid you'd have to live in a house that was worth less than 900k! :eek:

450k would buy a lovely detached 4 bed in Clontarf ffs.

Its a disgrace we have the tax at all we're taxed throughout our lives and then they tax you when you die. ANyone who thinks otherwise has never had to deal with an inheritance and is probably to young to appreciate it.

I think anyone not living in BertieLand can appreciate the difference a six figure (or even 5 figure) sum would make to their life. 10k would make a massive difference to a hell of a lot of us!

dvpower

Sleepy wrote: »

God forbid you'd have to live in a house that was worth less than 900k! :eek:

450k would buy a lovely detached 4 bed in Clontarf ffs.

Screw that. If I inherited €900k tax free, I'd never have to work again.

Tommy1975

I've recently found out that I'm going to inherit a property from my grandmother. Bless my grandmother for having the thought to do such a thing. However I'm due to leave for Canada and in truth this inheritance is a bit of a nuisance. And the inheritance tax (probably going to be e20,000) is a complete nightmare.

Firstly I can't do anything about the inheritance because my grandmother is now incapacitated. Secondly I probably can't sell the house as it's the home place and it would probably cause war if I sold it. Thirdly even if I wanted to sell the house I probably couldn't in this climate.

To be honest I can't afford the e20,000 inheritance tax. I've got e15,000 savings which I'm using to relocate my family to Canada. In my case the inheritance tax has made a beautiful gesture by my grandmother into a huge burden forcing me to either borrow e20,000 (which will have to be managed from Canada), or sell the house and cause a major rift in the family.

cson

I'd echo the sentiments of Iago; you're taxing an amount which has already been subject to tax over the period of life of the donor when they were creating the asset.

It's socialist bollox if you want my true opinion on it.

Timistry

cson wrote: »

I'd echo the sentiments of Iago; you're taxing an amount which has already been subject to tax over the period of life of the donor when they were creating the asset.

It's socialist bollox if you want my true opinion on it.

I totally agree. BS of the highest order. The cost of VAT on building materials, stamp duty and other taxes on top of endless other expenses over the lifetime of the property going straight to the exchequer. Not to mention, in my case as well as other, endless hours looking after the property (maintainence, gardening etc) only to have to pay for the privilege to continue living in your own home. If you factor in the passing of a loved one, it seems cold and callous really:(

Suryavarman

Tommy1975 wrote: »

I've recently found out that I'm going to inherit a property from my grandmother. Bless my grandmother for having the thought to do such a thing. However I'm due to leave for Canada and in truth this inheritance is a bit of a nuisance. And the inheritance tax (probably going to be e20,000) is a complete nightmare.

Firstly I can't do anything about the inheritance because my grandmother is now incapacitated. Secondly I probably can't sell the house as it's the home place and it would probably cause war if I sold it. Thirdly even if I wanted to sell the house I probably couldn't in this climate.

To be honest I can't afford the e20,000 inheritance tax. I've got e15,000 savings which I'm using to relocate my family to Canada. In my case the inheritance tax has made a beautiful gesture by my grandmother into a huge burden forcing me to either borrow e20,000 (which will have to be managed from Canada), or sell the house and cause a major rift in the family.

Have you thought about taking out a loan for the 20,000 and renting out the property? It would help keep the family happy and pay the inheritance tax and maybe make you some extra money.

Red Actor

bladespin wrote: »

Ridiculous and lousy tax placed upon people's families at the worst possible time and as said already this is inheritance that has already been taxed. A government profiteering from someone's death is a new low, even for our lot.

To use that logic VAT, excise duty VRT etc should be abolished as the money has already been taxed through the income tax system. All we need is to show our payslip to get the tax free goods and those who don't pay income tax will pay the VAt etc.

Pete_Cavan

cson wrote: »

I'd echo the sentiments of Iago; you're taxing an amount which has already been subject to tax over the period of life of the donor when they were creating the asset.

It's socialist bollox if you want my true opinion on it.

I am quite right wing in my views but I totally disagree that inheritance tax is "socialist bollox". It having "already been subject to tax" is irrelevant, the previous owner paid tax on it and now the new owner must also do so. Inheritance tax is assessed on the legacies received by the beneficiaries of the estate so the new owner of the asset is paying their tax for aquiring the asset.

If someone to aquires wealth for no other reason than their someone decided to give it to them, why should the government not take a cut, I mean they take a cut when someone generates wealth for themselves so why not here? The best thing a parent can leave their child is not a load of wealth, but the ability to create their own wealth (ie. a good education, strong work ethic, etc.)

Imo it is an equitable tax, one of the primary functions of taxation is to redistribute wealth, therefore it should be levied against wealth.

Teclo

The most marxist of all taxes, like a tax collector gate crashing a funeral looking for the deceased's cash.

Pete_Cavan

Teclo wrote: »

The most marxist of all taxes, like a tax collector gate crashing a funeral looking for the deceased's cash.

No. The beneficiary pays the tax, not the deceased.

Aard

How is this tax calculated for a house anyway? We're in a period of declining property prices, not to mention not many sales, so the amount you'd pay would probably be more than if you waited a few months...

Tigger

Aard wrote: »

How is this tax calculated for a house anyway? We're in a period of declining property prices, not to mention not many sales, so the amount you'd pay would probably be more than if you waited a few months...

revenue go on the price the day the person died
depreciation means nothing to them

sarumite

Iago wrote: »

No, it's an absolute joke of a tax and has less of a place now than it ever had.

I'm completely against this tax for a number of reasons, the key one being that the person that dies has already spent their life paying tax on everything they earn, everything they buy, everything they do. Then when they've managed to do all that and still leave something behind for their families/friends/charities whatever, the state takes another 25% of it, it's a sham.

From my point of view you are actually not taxing the person who died, but the person who receives the inheritence. It is standard practice to tax monetary transactions (DIRT, capital gains, income tax) and inheritence tax is imo similar.

Teclo

Pete_Cavan wrote: »

No. The beneficiary pays the tax, not the deceased.

If the deceased wished were to have the cash buried with him I'm sure the revenue would have it dug up.

Yahew

Twin-go wrote: »

How do you know its an unearned windfall? And who sees it as a windfall anyway? I don't know anybody that has got an inheritance from a parent or husband or wife that wouln't give it all back to spend one more day with the person that has past.


For the vast majority of people the money/property they will to their relations has been subject to Tax already. Income Tax, Stamp Duty, D.I.R.T.

cson wrote: »

I'd echo the sentiments of Iago; you're taxing an amount which has already been subject to tax over the period of life of the donor when they were creating the asset.

It's socialist bollox if you want my true opinion on it.

A remarkable amount of people seem to think if you inherit €900K you own it, you have a right to it, but if you earn it you should be taxed at 40%.

This is ludicrous. As someone who earns in the top 10-20% I wonder exactly why I have to pay 40% for working, while some parasite born to the right family has the right to inherit money for doing nothing.

( and where is the libertarian anger about scroungers when the recipients are rich?).

Maybe poor people have some utopian idea that a great aunt will die and leave them money. But if inheritance tax was higher, you would be paying less on your work. And being born to rich people is not the same as working. It involves no entrepreneurial talent whatsoever. It leads to feudalism. It was the mainstay of feudalism, in fact.

As for taxing people when they die, as pointed out the people being taxed are the recipients. This is true of any recipient. If the person getting the 400K has actually earned it he would be taxed at 40%, if he had created goods and services worth 400K he would be taxed t 40%. If he set up a business on his own, from nothing, created jobs and awarded himself a divided at 400K he would be taxed.

Apparently being born to wealth makes you special. Nobody should survive on unearned income, not the rich. Not the poor.

The undeserving rich need a kick in the pants.

Dan_Solo

Tommy1975 wrote: »

I've recently found out that I'm going to inherit a property from my grandmother. Bless my grandmother for having the thought to do such a thing. However I'm due to leave for Canada and in truth this inheritance is a bit of a nuisance. And the inheritance tax (probably going to be e20,000) is a complete nightmare.

Firstly I can't do anything about the inheritance because my grandmother is now incapacitated.

Can you inherit it before she's even died?