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More Kiwis are dying wealthy and leaving large inheritances, thanks to booming property and asset values. These windfalls between generations largely escape the taxman but some experts say the Government should be taking a slice to avoid a "looming disaster" as baby boomers retire and the costs of superannuation and healthcare increase. Is it time to start taxing inheritances?
What a great idea - finally a tax that does not adversely affect the person that created the wealth. The only reason there would be an outcry from the greedy inheritance beneficiaries would be that they were expecting all for nothing. They would fall into the same shameful pit as all beneficiaries. So bring on inheritance tax, as it will create a far more equitable society.
All the accountants and tax lawyers will be rubbing their hands and saying bring it on. The lesson of history shows that death duties and gift duties have been tried and failed because those who could afford the clever advice simply structured their affairs to avoid the charge. Most recently, gift duty was abolished because it cost IRD more to enforce than they could collect. Nothing has changed. The middle-income earner winds up carrying the tax burden and retaliates by widespread evasion at the bottom end - the IRD call it the hidden economy. Everybody is culpable. Everybody loses.
Nothing new there. We had those taxes in NZ for many years. They were called death duties. As a result, many wealthy oldies sold up in NZ and moved to Queensland, where those taxes did not exist. During both World Wars soldiers who died defending king and country then had their estates taxed as a result. It's all about the politics of envy - you have it, I don't, so you should be punished.
What about a wealth tax on anyone with more than $5 million net in assets? Not sure too many people would object to that?
As a couple, we have a cash income including Super of circa $60k+. That easily meets living expenses with mortgage-free accommodation. Over the last five years our annual gains (and losses) from investment have been from -$70k to +$350k, not including an increase of $1.2m on the house. These figures are not unrealistic for many people. My question is: "can we attribute our good fortune to hard work?" There's no axe to grind either way but maybe the Irish system that takes the tax from the estate and pays out before the beneficiary sees the net amount is relatively painless.
I left school at 16 and have worked my butt off. If I want to leave my kids my hard work, that's my choice. The Government can go jump.
I came out of nothing. My whole adult life has been about giving my children a hand up. I certainly didn't do it for me. We all have a higher purpose at something in our lives, whatever it may be. So I'm pretty much opposed to anybody or any government taking what I got for my kids just because the government wants more money. I note those favouring inheritance tax talk about equitable outcomes - but I fail to see how it's equitable to focus only on certain inheritances based on wealth. I'm in favour of tax restructuring over society as a whole, rather than pinging one group only.
A terrible idea. Any way you slice it, this is double taxation. A perfect way for any government to be promptly voted out.
The worst thing about an inheritance tax is that it rewards the idle. Where would be the incentive to go to school or to learn if you could go through life on any number of benefits and then 'retire' on a bountiful pension topped up by taxing those who had worked hard all their life? An inheritance tax is an envy tax.
When unearned capital gains exceed what any normal person could expect to earn in a lifetime, we are heading for a problem. A person's chance of owning property would depend more on their inheritance than their own efforts - that can't be right.
We should look at wasteful spending first before we should be looking at more taxes.
I support a high inheritance tax. That way, rich people are encouraged to use philanthropy because they don't trust the state to wisely spend that tax (and fair enough too). If they don't like it, they'll sell their houses and leave. Prices come down and boom, two birds with one stone. Bring it on.
This misses a very important point - the inherited assets don't just lie dormant doing nothing. One way or another, they create revenue which the taxman gets his mitts on anyway - for example, an income-producing property produces income for beneficiaries, which in turn is taxable. The income also quite likely becomes discretionary spending - taxable. Inherited windfalls create expenditure - expenditure creates tax.
Most of this wealth is completely unearned. Some people were lucky to buy property at a fortunate time when prices were relatively cheap and governments, local governments, and the RBNZ inflated values wildly for them. It is completely unacceptable that we haven't redistributed some of this wealth to the less fortunate over the last 30 years. The best time to start is right now.
Capital gains tax is preferable to an inheritance tax.
No, inheritances should not be taxed. If someone earns money and pays tax on that money, then invests it, and pays tax on the interest earned on it, how is it in any way equitable that if a capital sum or asset is transferred to a beneficiary of an estate, that a random tax should then be imposed on that asset or fund? Totally unreasonable and just a bare-faced tax grab. Perhaps those who would like more of our money to spend ought to consider cutting their cloth to fit - consider where the money already taken as tax is being spent, and how that could be reviewed.
I hope Labour and the Greens make inheritance taxes part of their next election promises.
The answer is no. Most people have worked hard and paid a lot of tax. They are fully entitled to leave their wealth to their family or whoever they choose. People make choices, some choose to create and save, others don't. We should not be taxed twice.
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