100% Inheritance Tax

Blisterman

This is intended as a discussion of the idea behind it, rather then the actual implementation which would have numerous loopholes and conflict.

But anyway, it seems to me that the fairest way to tax people would be to have a 100% inheritence tax. For starters, you can't spend your money when you're dead. But more importantly, it would greatly level the playing field. If nobody could rely on inherited wealth, it would mean that everybody would equally have to rely on their merit and ability to succeed. Obviously there would still be other inequalities, such as family connections, education etc. But it would definitely help reduce inequality.

Permabear

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Morag

Or people will just gift everything while they are alive to their kids.

Blisterman

Well as it stands, the government takes a hefty percentage of everyone's earnings anyway, and somehow manages to be broke. So the idea that they would eventually hold all the wealth is flawed.

Secondly, there would be nothing to stop the people's children buying the companies off the government, assuming they had the money. Why is the child of a company owner deserving of a large sum of money, based on no other factor other than the coincidence of their birth?

Permabear

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Blisterman

Sharrow wrote: »

Or people will just gift everything while they are alive to their kids.

Yeah, that's one of the loopholes I mentioned. But anyway, that's why I posted this in the humanities not the economics forum. We're discussing the idea of it, assuming that these kinds of loopholes don't exist.

reverenddave

Blisterman wrote: »

This is intended as a discussion of the idea behind it, rather then the actual implementation which would have numerous loopholes and conflict.

But anyway, it seems to me that the fairest way to tax people would be to have a 100% inheritence tax. For starters, you can't spend your money when you're dead. But more importantly, it would greatly level the playing field. If nobody could rely on inherited wealth, it would mean that everybody would equally have to rely on their merit and ability to succeed. Obviously there would still be other inequalities, such as family connections, education etc. But it would definitely help reduce inequality.

Permabear

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beeftotheheels

If you give away wealth while alive it is also subject to the tax which is called Capital Acquisitions Tax and not Inheritance Tax in Ireland.

I agree that 100% is excessive.

I would certainly be in favor of increasing it above 25%. It is to be one of the least offensive taxes, the person who bears the tax, has done nothing to generate the wealth, and the person who generated the wealth and paid tax on it, is dead so no double taxation.

Way less offensive than increasing income tax above 50% for example which hits the wealth generators.

In the UK the rate broadly reflects the marginal income tax rate and not the capital gains tax rate. The policy purpose of the lower CGT rate is to encourage investment and entrepreneurship, and this logic doesn't apply to transfers of existing wealth. So increase CAT to the marginal income tax rates, no obvious policy objective for equating it with the CGT rate.

Permabear

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Tea 1000

Blisterman wrote: »

Well as it stands, the government takes a hefty percentage of everyone's earnings anyway, and somehow manages to be broke. So the idea that they would eventually hold all the wealth is flawed.

Secondly, there would be nothing to stop the people's children buying the companies off the government, assuming they had the money. Why is the child of a company owner deserving of a large sum of money, based on no other factor other than the coincidence of their birth?

Why is a Government, full of crooks like Ivor Calelly, entitled to take what someone spent their life working towards? It would make me want to significantly under achieve if I thought all my hard work was going to go to the Government.
Taking another point of view that your arguement has, why should a footballer be entitled to be a multimillionaire, based on no other factor other than the coincidence that he was born with a gift that happens to be popular?

goose2005

Tea 1000 wrote: »

Taking another point of view that your arguement has, why should a footballer be entitled to be a multimillionaire, based on no other factor other than the coincidence that he was born with a gift that happens to be popular?

Because clubs are willing to pay him that; and they do so because fans choose to spend enormous sums to clubs.

Blisterman

Tea 1000 wrote: »

Why is a Government, full of crooks like Ivor Calelly, entitled to take what someone spent their life working towards? It would make me want to significantly under achieve if I thought all my hard work was going to go to the Government.
Taking another point of view that your arguement has, why should a footballer be entitled to be a multimillionaire, based on no other factor other than the coincidence that he was born with a gift that happens to be popular?

Well, as I already stated, a significant amount of your heard work and earnings already are going to the government. The way you've phrased it makes it sound like the purpose of life is to acquire as much stuff as you can before you die.

And I'd like to see a multimillionaire footballer, who didn't put in years and years of training and hard work. Talent helps, but it's not going to get you anywhere by itself.

8kvscdpglqnyr4

Blisterman wrote: »

This is intended as a discussion of the idea behind it, rather then the actual implementation which would have numerous loopholes and conflict.

I think so far some of the posters have been too focused on the implementation.

As a concept, I see it having some merit (ignoring all the problems with the implementation). My dad is a farmer and he inherited some of the land he has now. I will probably end up inheriting some of this land too. Is it really fair?

There are so many things that are a consequence of where you were born and who your family is - what you may end up inheriting is one of these consequences.
OP - are you trying to level the playing field so that the consequence of where you were born and who your family is negated?

silverharp

I have a vague mamory from history class that farmers didnt improve their land because they were tenants and any improvement went to the landlord. Essentially turning everyone into tenants would wreck the place, businesses would be run into the ground, people would stop improving their properties.
Stepping back a bit most people do not accept that they are full tools of the state. While people put up with some amount of social engineering, wholesale social engineering would be rejected by the productive in a society

Blisterman

I really don't know why people get so annoyed about the idea of the state taking their assets, when that's exactly what happens now, though instead of paying in installments, i.e. income taxes it would be paid in a lump sum after you die.


I'm not suggesting turning everyone into Tenants or allowing the government to own everyone's land. Assume the assets are auctioned off to the highest bidder, with the proceeds going to the government as a tax. People could still own land, only they'd have to pay for it, be it in cash or a mortgage.

iMax

Permabear wrote: »

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Seriously. I'd love to hear about that. Have twins on the way & would love to set them up for life.

silverharp

Blisterman wrote: »

I really don't know why people get so annoyed about the idea of the state taking their assets, when that's exactly what happens now, though instead of paying in installments, i.e. income taxes it would be paid in a lump sum after you die.


I'm not suggesting turning everyone into Tenants or allowing the government to own everyone's land. Assume the assets are auctioned off to the highest bidder, with the proceeds going to the government as a tax. People could still own land, only they'd have to pay for it, be it in cash or a mortgage.

then everyone would rent

Permabear

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Wibbs

How do you drive your own car? How do you drive a rental car? That's where this idea falls flat.

Del2005

Blisterman wrote: »

I really don't know why people get so annoyed about the idea of the state taking their assets, when that's exactly what happens now, though instead of paying in installments, i.e. income taxes it would be paid in a lump sum after you die.


I'm not suggesting turning everyone into Tenants or allowing the government to own everyone's land. Assume the assets are auctioned off to the highest bidder, with the proceeds going to the government as a tax.

So you propose replacing all other taxes with a 100% inheritance tax. We've already tried that with stamp duty, see what happened there. Now instead of stamp duty you want a 100% inheritance tax, it'll only work for 1 generation. Then as the others have pointed out no one will work hard ever again, see what happened in the USSR.

Bottle_of_Smoke

Permabear wrote: »

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There's also the potential for much more serious events than property damage. Plenty of people would simply refuse to leave the family home. Whilst the police may be able to evict city dwellers it would be a lot more complicated taking land off farmers who would be inclined to band together to defend the family land. And they have access to firearms.

Permabear

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seamus

Although you're talking about the concept without the implementation, the implementation is really all that's important. If a concept cannot be implemented, then it's not worth considering

In reality, the very nature of existence is to procreate, provide for your offspring and then die, passing on what you have. The concept of the state swallowing up everything left over is interference in one of the primary natural processes of animals. And it serves no real purpose except to eliminate any semblence of an upper class - to what benefit?

As Permabear quite rightly points out, within about 50 years, the State will own almost everything that there is to own, with most people renting or mortgaging whatever property they have from the state. The long-term benefits of any kind of mortgaging or loans are undermined by the fact that they can be for personal benefit only, and not the long-term benefit of one's family.

Earthhorse

Blisterman wrote: »

I really don't know why people get so annoyed about the idea of the state taking their assets, when that's exactly what happens now, though instead of paying in installments, i.e. income taxes it would be paid in a lump sum after you die.

But it doesn't take 100% of the assets I accrue over my lifetime in installments so your proposal is quite different to what takes place at the moment. I don't see anybody here opposed to the idea of inheritance tax in general, just at a rate of 100%.

Personally, I do not like the idea of inheritance or gift taxes as you are essentially taxing money that's already earned; people should be free to do what they want with their assets both during their lifetime and when they die, within the law. The only merit, in principle, that I see in these taxes is they help us track money through the economy and so are somewhat of an aid in preventing fraud, money laundering etc.. At a practical level they also generate additional tax revenue but so should any tax.

Blisterman

Some fair points here. I can see why it wouldn't work, though I do think inheritance should be taxed somewhat.

Personally, anything I have left over when I die, I'd give to charity. I'd rather my kids made their own way in life.

seamus

Blisterman wrote: »

Personally, anything I have left over when I die, I'd give to charity. I'd rather my kids made their own way in life.

You may feel differently when you're watching your grandkids playing and you have a few hundred K of assets which will be left behind

Permabear

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RandolphEsq

Blisterman wrote: »

Some fair points here. I can see why it wouldn't work, though I do think inheritance should be taxed somewhat.

Personally, anything I have left over when I die, I'd give to charity. I'd rather my kids made their own way in life.

Since you have a choice right now, why not write the State into your will instead of a charity?

Also, the 'loophole' of inter vivos gift transfers is not something to be ignored. For example, someone can sell their assets, get the cash, and give it to whoever they want that way and there is absolutely no way to stop that 'loophole' because it isn't a loophole; it is a perfectly reasonable piece of law that allows somebody to give a gift to another person!

But on the concept of the whole thing; by having a 100% inheritance act, yes the State would get some much needed money, in theory. But, realistically, who is going to die knowing their estate is just going to be sold off and given to the State? People don't want to have their legacy as a giant tax contribution to the State. That would be the most non-fulfilling legacy to leave behind you!