Wealth distribution through property taxation

Ush1

Minimise income tax, make up the shortfall with inheritance tax. Sound fair?

elperello

Ush1 wrote: »

Minimise income tax, make up the shortfall with inheritance tax. Sound fair?

I don't think the numbers would add up.
Your proposal may need a little more research.

Ush1

elperello wrote: »

I don't think the numbers would add up.
Your proposal may need a little more research.

I didn't say they would balance. Maximise one revenue and minimise the other.

elperello

Ush1 wrote: »

I didn't say they would balance. Maximise one revenue and minimise the other.

Would you care to put a few numbers out there?

Are you suggesting removing the existing thresholds?

How much do you think would need to be collected from Inheritance Tax in order to reduce Income Tax by one percentage point?

kippy

20/20 wrote: »

You are nonsense.
What on earth are you talking about.

Princess Calla wrote: »

How is it nonsense?

I want to buy my boyfriend a nice rolex or omega watch....it's over the 3k threshold, so technically they should be paying tax on the balance of the gift.

Or to give a gift as I please do I have to pay for the gift and also cover the tax liability generated? Which in itself is another tax liability!

air wrote: »

It's nonsense as wages are a fully allowable expense for corporation tax purposes.
Wages are paid from operating profit before any taxation.

I've answered these points earlier on thread. Not gonna go back over it.

hmmm

elperello wrote: »

They have to face the prospect of Revenue taking money from their estate that may be badly needed by a family member.
.

OK, and what about the people in society who badly need something and aren't expecting to receive hundreds of thousands in unearned money? Is life just a genetic lottery?

There's lots of low-income families who could do without paying Income tax, but have to. We should be encouraging people to work, earn income and support themselves. Not penalise work, and have low taxes on big inheritances for the lucky few.

AndrewJRenko

Cyrus wrote: »

The irony is the state did better out of inheritance tax when the thresholds were higher and the rate lower.

Do you have a source for this please?

John Proud Outfielder wrote: »

This is hardcore levels of begrudgery on display here.

No such thing as a fair society, parents who can should give their children every advantage they can to get ahead of others, they children should benefit 100% and not “society”.

Fair play to you for your honesty. I guess most people here and most policy makers would see moving towards a fairer society as generally being a good thing.

the_syco wrote: »

The money would just get moved out of the country sooner, or put into trusts.

IMO, either you pay good accounts to hide your cash, or the taxman will take your cash. Trust funds, grandchildren pensions, etc. All legal ways of hiding the money from the taxman.

Just more people will look to hide it earlier if their money will go to the state after they die.

And then the Revenue look harder at those who are hiding it or change the rules or whatever.

wexfordman2 wrote: »

I would rather burn my house down, than hand it over as a so called "wealth tax". Its my house, I earned it, I paid for it, and I paid every cent of tax due on it, and it is my prerogative to give it to my kids to give them a leg up the ladder.

Its shocking how gullible people are to fall for the type of argument that giving or inheriting within direct family is some sort of undesirable action, and that they would rather hand over taxation of a family home to be squandered by the state while of course feeding the kids into the commercial rental market.

Disgusting

You don't pay any tax when handing over your house, so it would be a little bit silly to go burning it down. Unless you have a very valuable house and a very small number of children, you won't be facing inheritance tax.

Don't kid yourself that those who have a different view to you are gullible.

Bass Reeves

elperello wrote: »

Exactly those reliefs protect real wealth while someone passing on a house and a couple of hundred grand from a lifetime of hard work is caught in the net.

They have to face the prospect of Revenue taking money from their estate that may be badly needed by a family member.

It seems you don't see any point in taking into account the ability to pay but I'm not quite sure.

Inheritance relief from a parent is 310k before tax. That is 10 years wages after tax paid approx and then it is taxed at 33%.

I have given implications if tax on half a million inheritance just earlier. There is also exemptions where beneficiary is dependent on doner

You cannot cover every eventually with tax laws but they are far from unfair.

AndrewJRenko

pwurple wrote: »

The difficulty is really around the property market, as that's the main asset. The average value of a house in Dublin is 375,862. Which means more than 50% of people in Dublin are over that inheritance limit, if they have one child.

While average family size is decreasing, most families of those who are dying and leaving a property behind them would have more than one child, so it is nothing near 50% of people in Dublin that are impacted.

pwurple wrote: »

Basically, if your house is worth over 335k, to minimise the tax on your estate you need two kids. Your house goes over 600k in value, go for the third child.

Even ignoring the absolute insanity of basing family size decisions on tax planning, you'll probably find that having the extra children will cost you an awful lot more than your expected tax saving, so this would be a bit or a silly approach.

Bass Reeves

hmmm wrote: »

OK, and what about the people in society who badly need something and aren't expecting to receive hundreds of thousands in unearned money? Is life just a genetic lottery?

There's lots of low-income families who could do without paying Income tax, but have to. We should be encouraging people to work, earn income and support themselves. Not penalise work, and have low taxes on big inheritances for the lucky few.

By changing inheritance tax laws you will change little in income tax. In 2018 about 5billion was raised in inheritance tax and 21billion in income tax. Already you pay virtually no tax on first 16k in income or 32k for a married couple both working. For such a couple there is access to Family income support and if renting there accommodation there is rent relief.

Out tax net as is is too small . In theory if you restricted relief you would not increase tax. It could become very beneficial to move abroad if you knew inheritance was on the way to a less restrictive regime. You could do this by delaying the taking out of probate. Take it 310k relief was abolished and rate was increased to 50%. Any one inheriting over few hundred K would be better off moving abroad. While some might think this unlikely most people inheriting are in their 50's or 60's in the case of s substantial inheritance moving abroad for 2-3 years would solve a tax bill on what at present is covered by the taxation limits

Yellow_Fern

Tax is designed around protecting special interests and quelling revolt rather than being fair. The idea that taxing inheritance or saving accounts with DIRT and not taxing the lottery is fair doesn't make sense.

Ush1

elperello wrote: »

Would you care to put a few numbers out there?

Are you suggesting removing the existing thresholds?

How much do you think would need to be collected from Inheritance Tax in order to reduce Income Tax by one percentage point?

No I don't care to put numbers out there, hence the terms I used.

I mentioned it in the context of a "fairer" system.

Ush1

Bass Reeves wrote: »

By changing inheritance tax laws you will change little in income tax. In 2018 about 5billion was raised in inheritance tax and 21billion in income tax. Already you pay virtually no tax on first 16k in income or 32k for a married couple both working. For such a couple there is access to Family income support and if renting there accommodation there is rent relief.

Out tax net as is is too small . In theory if you restricted relief you would not increase tax. It could become very beneficial to move abroad if you knew inheritance was on the way to a less restrictive regime. You could do this by delaying the taking out of probate. Take it 310k relief was abolished and rate was increased to 50%. Any one inheriting over few hundred K would be better off moving abroad. While some might think this unlikely most people inheriting are in their 50's or 60's in the case of s substantial inheritance moving abroad for 2-3 years would solve a tax bill on what at present is covered by the taxation limits

Agree with this. Everyone should have skin in the game, no matter how small.

Bass Reeves

Yellow_Fern wrote: »

Tax is designed around protecting special interests and quelling revolt rather than being fair. The idea that taxing inheritance or saving accounts with DIRT and not taxing the lottery is fair doesn't make sense.

Lottery is taxed. About 30% is used for sport funding and good causes., About 30-40%in prizes and the rest goes to the runners of the lottery. Government sold about 15years future earning for 405 million up front after the bust

If you taxed the winnings nobody would play tax us paid pre playing

AndrewJRenko

Ush1 wrote: »

Agree with this. Everyone should have skin in the game, no matter how small.

Everyone does have skin in the game. Every time they purchase in a shop or online, they pay VAT.

Ush1

AndrewJRenko wrote: »

Everyone does have skin in the game. Every time they purchase in a shop or online, they pay VAT.

Skin in the game with regards to income tax. Very few other countries have such a narrow tax base. Even though it likely wouldn't yield a huge amount in revenue, I believe all earners should pay some income tax so they take an interest in where it goes.

The Student

AndrewJRenko wrote: »

Everyone does have skin in the game. Every time they purchase in a shop or online, they pay VAT.

Descretionary spending does not give a reliable long term source of tax.

Our tax base is too small, everybody should pay some form of tax and not just income tax, however people who do pay income tax should receive some form or rebate/credit towards all other taxes they pay.

Look at the water charges as a case in point. We need investment in water (I don't hold with privatisation) but nobody wants to pay for it. It is left to the Paye worker to fund this out of general taxation.

If we had a broader tax base then we could deal with recessions a lot better. We don't seem to learn from our mistakes, firstly we had the building boom when a large part of our tax take was based on this under various taxes including income tax of the trades people etc.

Now Corporation tax has replaced the tax receipts from the building boom.

At least if we broadened our tax base we would not have "all our eggs in the one basket" when things went bad.

If people had to make a contribution to taxes (no matter how small) then they would have an incentive not to take what they are entitled to simply because they are entitled to it.

elperello

hmmm wrote: »

OK, and what about the people in society who badly need something and aren't expecting to receive hundreds of thousands in unearned money? Is life just a genetic lottery?

There's lots of low-income families who could do without paying Income tax, but have to. We should be encouraging people to work, earn income and support themselves. Not penalise work, and have low taxes on big inheritances for the lucky few.

Of course lot's of people need more money.
The point made here by other posters is that the money they have to leave to someone is already earned and tax paid.
So much of life is a lottery but not sure where genetics come in to it.
Income taxes are based on economic activity which generates the finance to pay them.
Inheritance Tax is taking another cut from money that is not directly generated by economic activity.
The money exists because someone earned it and paid tax on it but didn't spend it.
Agree work should not be penalised.

elperello

Bass Reeves wrote: »

Inheritance relief from a parent is 310k before tax. That is 10 years wages after tax paid approx and then it is taxed at 33%.

I have given implications if tax on half a million inheritance just earlier. There is also exemptions where beneficiary is dependent on doner

You cannot cover every eventually with tax laws but they are far from unfair.

I know the thresholds and rates.

The current system does make some allowances but a lot of cases are not taken into consideration.

Hard to cover everything as you say but a system that is blind to ability to generate funds to make payments is unfair.

https://www.irishtimes.com/business/personal-finance/inheritance-tax-at-record-high-due-to-soaring-property-prices-1.3936286

By the way in 2018 the total collected in inheritance tax €466.3 m.
Half of that was outside direct family.

Obvious Desperate Breakfasts

John Proud Outfielder wrote: »

This is hardcore levels of begrudgery on display here.



No such thing as a fair society, parents who can should give their children every advantage they can to get ahead of others, they children should benefit 100% and not “society”.

Indeed. Which is why we all have to pay taxes we don’t want to, including CAT. If you accept that society isn’t fair, you have to accept that that unfairness might work against you sometimes as well as for you.

Princess Calla

kippy wrote: »

I've answered these points earlier on thread. Not gonna go back over it.

Well it's obvious you don't stand to inherit much from your parents (either will I).

If you are happy that after you've paid income tax and dirt on your savings, that in death revenue will coming sniffing for even more tax on your wealth then that's your perogative.

Personally I will be taking steps to ensure my estate will have limited liability.

Also if anyone reading has an incapacitated child that was awarded a compensation claim(where you are now expected to outlive your child), please get tax advice. If memory serves and to be honest it's been a while since I looked at this legislation but there's no threshold between children to parents (as they are expected to outlive parents) as far as I can remember there is a way to circumnavigate this, legally, but do pay for legitimate advice.

Obvious Desperate Breakfasts

The Student wrote: »

Descretionary spending does not give a reliable long term source of tax.

Our tax base is too small, everybody should pay some form of tax and not just income tax, however people who do pay income tax should receive some form or rebate/credit towards all other taxes they pay.

Look at the water charges as a case in point. We need investment in water (I don't hold with privatisation) but nobody wants to pay for it. It is left to the Paye worker to fund this out of general taxation.

If we had a broader tax base then we could deal with recessions a lot better. We don't seem to learn from our mistakes, firstly we had the building boom when a large part of our tax take was based on this under various taxes including income tax of the trades people etc.

Now Corporation tax has replaced the tax receipts from the building boom.

At least if we broadened our tax base we would not have "all our eggs in the one basket" when things went bad.

If people had to make a contribution to taxes (no matter how small) then they would have an incentive not to take what they are entitled to simply because they are entitled to it.

My impression at the time was that more people were happy paying water charges than not. The people who didn’t want to pay were vocal but I never thought they were a majority.

Mad_maxx

AndrewJRenko wrote: »

Everyone does have skin in the game. Every time they purchase in a shop or online, they pay VAT.

If you are on welfare, just because you pay vat doesn't make you a tax payer

Anyone saying otherwise is making a political statement

Mad_maxx

hmmm wrote: »

OK, and what about the people in society who badly need something and aren't expecting to receive hundreds of thousands in unearned money? Is life just a genetic lottery?

There's lots of low-income families who could do without paying Income tax, but have to. We should be encouraging people to work, earn income and support themselves. Not penalise work, and have low taxes on big inheritances for the lucky few.

How comfortable one's life is will be significantly determined by how responsible and productive one's parents were.

AndrewJRenko

elperello wrote: »

I know the thresholds and rates.

The current system does make some allowances but a lot of cases are not taken into consideration.

Hard to cover everything as you say but a system that is blind to ability to generate funds to make payments is unfair.

https://www.irishtimes.com/business/personal-finance/inheritance-tax-at-record-high-due-to-soaring-property-prices-1.3936286

By the way in 2018 the total collected in inheritance tax €466.3 m.
Half of that was outside direct family.

If you're getting a large asset, and you can't pay the tax, then you sell the asset and pocket the difference. You're still going to come out with a large pile of cash.

The Student wrote: »

Descretionary spending does not give a reliable long term source of tax.

Our tax base is too small, everybody should pay some form of tax and not just income tax, however people who do pay income tax should receive some form or rebate/credit towards all other taxes they pay.

Look at the water charges as a case in point. We need investment in water (I don't hold with privatisation) but nobody wants to pay for it. It is left to the Paye worker to fund this out of general taxation.

If we had a broader tax base then we could deal with recessions a lot better. We don't seem to learn from our mistakes, firstly we had the building boom when a large part of our tax take was based on this under various taxes including income tax of the trades people etc.

Now Corporation tax has replaced the tax receipts from the building boom.

At least if we broadened our tax base we would not have "all our eggs in the one basket" when things went bad.

If people had to make a contribution to taxes (no matter how small) then they would have an incentive not to take what they are entitled to simply because they are entitled to it.

Broadening the tax base is indeed important, and VAT is a big part of this. During the recession years, VAT came very close to PAYE in terms of overall revenue. The PAYE worker does not have a monopoly on paying tax, regardless of what you hear on Newstalk.

Ush1 wrote: »

Skin in the game with regards to income tax. Very few other countries have such a narrow tax base. Even though it likely wouldn't yield a huge amount in revenue, I believe all earners should pay some income tax so they take an interest in where it goes.

There is no connection between paying income tax and taking an interest in where it goes. There are lots of people that pay lots of income tax and take no interest in where it goes. there are lots of people that pay little or no income tax who take great interest in where it goes.

Mad_maxx wrote: »

If you are on welfare, just because you pay vat doesn't make you a tax payer

Anyone saying otherwise is making a political statement

It is a factual statement, not a political statement. When you buy clothes in a shop or pay your phone bill, you pay VAT, regardless of whether you're on welfare or not.

But I'd be interested in your definition of 'on welfare' - is every family that gets child benefit 'on welfare' in your book? And is every pensioner 'on welfare'?

Mad_maxx wrote: »

How comfortable one's life is will be significantly determined by how responsible and productive one's parents were.

Or how wealthy your parents were, regardless of their level of responsibility or productivity?

Princess Calla wrote: »

If you are happy that after you've paid income tax and dirt on your savings, that in death revenue will coming sniffing for even more tax on your wealth then that's your perogative.

Personally I will be taking steps to ensure my estate will have limited liability.

Do you take steps to ensure that your spending has limited liability for VAT, given that you've already paid income tax and DIRT on your savings?

Yellow_Fern

Bass Reeves wrote: »

Lottery is taxed. About 30% is used for sport funding and good causes., About 30-40%in prizes and the rest goes to the runners of the lottery. Government sold about 15years future earning for 405 million up front after the bust

If you taxed the winnings nobody would play tax us paid pre playing

The winnings are not taxed. Sure you could use the same participation argument about working or saving.

The Student

AndrewJRenko wrote: »

Broadening the tax base is indeed important, and VAT is a big part of this. During the recession years, VAT came very close to PAYE in terms of overall revenue. The PAYE worker does not have a monopoly on paying tax, regardless of what you hear on Newstalk.

Where did I say the PAYE worker has a monopoly on paying tax?

If you read my post you will see that I identified discretionary spending and VAT receipts on same as not a reliable source of tax.

Again my reference to the PAYE worker related to Water charges and the PAYE worker paying for same through general taxation.

While we are at full employment the tax take from the PAYE worker via income tax would be a higher percentage of overall tax take then it would have been during the recession, it stands to reason as more people are working and as such are paying income tax.

But feel free to interpret my posts the way you want to rather than the way they are written.

Princess Calla

AndrewJRenko wrote: »

Do you take steps to ensure that your spending has limited liability for VAT, given that you've already paid income tax and DIRT on your savings?

Well vat is a very unavoidable tax in everyday living.

If you run a business there are avenues to take to decrease your liability.

But yeah for a time I did take steps to limit my liability, before I had kids I'd go to the states twice a year, NY is a tax free state so too is delaware, so for a time alot of my clothes, shoes, handbags etc were American bought!

Granted I paid tax on the purchase of the plane ticket

I really don't see the point in muddying the waters talking about vat tbh. It's the built in cost of a good or service.
Income tax and dirt are tax on money earned as you are well aware!

caff

elperello wrote: »

Of course lot's of people need more money.
The point made here by other posters is that the money they have to leave to someone is already earned and tax paid.
So much of life is a lottery but not sure where genetics come in to it.
Income taxes are based on economic activity which generates the finance to pay them.
Inheritance Tax is taking another cut from money that is not directly generated by economic activity.
The money exists because someone earned it and paid tax on it but didn't spend it.
Agree work should not be penalised.

The money isn't always "earned" you get windfalls from government intervention like building the dart or luas increasing property values or land rezoning.

elperello

caff wrote: »

The money isn't always "earned" you get windfalls from government intervention like building the dart or luas increasing property values or land rezoning.

An interesting point.

The Government intervention via infrastructure is financed by taxation so everybody makes a contribution even those who don't use the infrastructure.
So far the Government has not sought to directly monetise these interventions except through LPT.

Increasing property value can be a double edged sword for those with low incomes living in "hot spots".

They can end up with bills for LPT and Inheritance Tax that they can't afford.