Begrudgery? December 2, 2016Posted by WorldbyStorm in Uncategorized.
Brian Keegan in the Tax Take column in the SBP is no fan of Capital Acquisitions Tax. No fan at all. For him it is “a heartless encroachment by the state into a family bereavement” no less.
He argues that:
Inheritance tax concerns are a needless source of stress of the elderly, and a heartless…etc… Such encroachment might be justified if inheritance taxes collected a significant amount for the exchequer but they don’t.
Hmmm. Does he meant that? If they collected more than €400m (he admits this is during a time of depressed property prices, but hey, that isn’t going to be the case for ever) he’d be happy with it? I don’t think so.
He complains about complexity because it is calculated by the degree of relationship to the person receiving the gift or inheritance. Wouldn’t seem to me to be an insuperable issue, and I say that as someone who regularly files tax returns.
He then further complains that:
…the worst aspect of all inheritance tax is that it is the harshest form double taxation. People pay tax on their income throughout their lives, and use whatever’s left to buy a home, make investments, or perhaps put together some savings. Then they die and the state takes a further one third out of what they leave behind. The exempt thresholds on the value of estates, below which the tax doesn’t apply, do little more than put a veneer of fairness on the whole troublesome arrangements. We are finding just how thin that inner is, as asset values start to recover and people of modest means find themselves losing a third of their inheritances.
Doesn’t that directly contradict his earlier point re lack of take from the tax? And doesn’t that also get the dynamic entirely wrong. If one dies one cannot be ‘taxed’ in the sense he means. The tax isn’t on the person who dies, it is on the person who inherits through no effort of their own monies. How is that ‘double’ taxation?
What one suspects he wants, and he talks of ‘reform’ of CAT, is the abolition of it entirely, or to reduce it to nothing (he mentions applying the probate tax system, ‘a fixed levy on the value of estates’). As to begrudgery – I don’t begrudge the state taking a slice in the slightest, wouldn’t begrudge it taking more if I eventually inherit something – IIRC I’ve paid CGT on stuff on foot of someone’s death and never seen a reason to complain. I didn’t earn that money, I had no part in generating it, and of course I never want to see someone die simply so that I should I profit, why should I complain about what is indeed a gift (and by the by the thresholds for CAT aren’t exactly low).
This double taxation stuff about CAT is quite the rage these days, google it and you’ll find some neat rebuttals.