Should Australia introduce an inheritance tax?

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The key to tackling Australia’s rising wealth inequality and helping middle-income Australians afford their own homes is an inheritance tax – so says a leading economist.

French economist Professor Thomas Piketty, who has earned himself the title of ‘rockstar economist’, told Lateline that Australia’s property tax system is not equitable and it’s making it nearly impossible for middle-income Australians to buy their own homes.

He suggested an inheritance tax would ease the nation’s growing wealth inequality.

Stating his concern about the dangers of allowing a concentration of wealth to remain in the hands of a small number of people, Professor Piketty said it would not be simply “to raise tax for the pleasure of raising tax”.

“The objective must be to reduce taxes for others and in particular for those with middle wages and lower wages.”

Australia, he said, was an outlier because its government did not impose taxes on those who have been bequeathed multi-million dollar properties. Whereas government in the US, Europe and Japan apply taxes of between 40 and 45 per cent to the same after-tax gifts.

According to Professor Piketty’s book, Capital in the 21st Century, which charts the progression of global wealth inequality throughout history, the three richest Australians are in possession of more wealth than the one million poorest.

The largest share of Australia’s national income is going to the top 10 per cent of people, making it considerably more challenging for the younger generation of Australians to own property than it was for their parents about 20 or 30 years ago.

Data shows that the top 10 per cent also happens to be comprised of mostly older Australians.

What do you think? Would an inheritance tax in Australia ease wealth inequality? Can you think of other ways the Government could make housing more affordable?

Read more at abc.net.au

Read more at acoss.org.au

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Written by ameliath

81 Comments

Total Comments: 81
  1. 0
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    Where do you start? Do you tax the children of a pensioner who bought a house in a shabby suburb 50 years ago and then see it become a fashionable suburb where the property is now worth millions? There would not be much else to tax.

    Will the top 10% have to pay the tax? I doubt it as most of their assets will be tied up in Trusts.
    So that leaves the great unwashed to fund an Inheritance Tax.

    Mal/Bill start looking now!!!

    • 0
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      I expect to pay an inheritance tax and this is as it should be. My parents were encouraged to spend their money on themselves as we adult children could fend for ourselves.
      Why should I get a cash hand out and not pay tax on it I am for a 15% inheritance tax.
      I also believe that money we win should be taxed at 5% of the total amount.
      Legislation can be written to include all types of trusts and have them subject to inheritance tax as well.

    • 0
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      Or you could just have a 1% transaction tax and everyone pay it. The wealthy who transact more and the corporations that transact in the billions would simply pay their share.

      No need for any other taxes.

      No tax deductions needed.

    • 0
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      Rae a transaction tax is a GST on steroids and will bring the economy to it’s knees very quickly as the transfer of money stops. That’s is what caused the GFC.

    • 0
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      Why would a dollar cost on every hundred stop money transfers OG when there are no other taxes at all and you have all that extra to play with.

      The only people it would hurt are those diddling their taxes, claiming fancy cars and flights and stuff and numerous tax deductions.

      Yes all those not paying tax would be upset but the 83% of overseas owners would still want to take the money home and would have to pay 1% to do it.

      The banks wouldn’t care they’d just up the fees and charges.

      I’d pay a bit more as an investor and I suppose so would you but gee wouldn’t it be worth it to stop the slow train wreck currently taking place.

    • 0
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      With interest rates so low the retirees with lazy investments (bank deposits) will be slogged 1% every time they transfer their money into a better investments. That’s where it will really hurt.

    • 0
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      Rubbish. The government is supposed to be encouraging people to SAVE. This is not the way to provide encouragememt. Our massive debt is due to overspending by everybody on everything. We should save – but not to provide a milking cow for spendthrift governments

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      I wouldn’t be able to survive as an investor with a 1% transaction tax as I would not make enough money to cover it.

    • 0
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      What rubbish tactful – my dad paid tax on money before he paid for his mortgage and if he leaves it to us, it’s from something that was hard earned and paid for with after tax income!

    • 0
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      Captain and Kaz, you are both right. Tax was paid on the money that parents used to build their estate. An inheritance tax would be double dipping by the government.

      And where does this stop? If you have to pay tax on an inheritance, should you also have to declare the value of birthday and Christmas presents each year and add that to your taxable income?

      The poor would pay, the wealthy would swim free with the aid of their tax minimization experts.

  2. 0
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    Here’s a novel suggestion…. perhaps crack down on tax evaders (pay their fair share) whilst alive rather than make a grab for accumulated wealth after death. The super wealthy will remain untouched I guess leaving the masses to have their bones picked clean in the after life. Might have to consider ‘gifting’ of any accumulated wealth rather than bequeathing.

  3. 0
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    Simple, we don’t need any more taxes, we need less government! Inequality is created by government policies which in turn are pushed onto them by their masters, the multinational corporations. We need to look at the big picture and go to the cause of inequality.

  4. 0
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    The wealthy and their accountants will find a way around this as well!!

  5. 0
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    Surely this is yet another ‘thought bubble’ from vested interests who’d rather not pay tax! Perhaps if a universal, non means test, old age pension was introduced this could become a concept that was acceptable to the people most effected. cheers

    • 0
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      The squillions of money they waste figuring out and implementing how to scrounge an extra $2 per fortnight out of “eligible pensioners” would be negated if everyone received a universal pension, no questions asked.A massive bureaucracy with its costly upkeep would then be re-directed to far better use.

    • 0
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      Bravo !! But it wont Happen !! It’ll cost too many Jobs for the Boys 🙁 🙁

    • 0
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      Brissiegirl, what do you mean by “massive bureaucracy? Only a couple of days ago we were complaining that Centrelink had been gutted and we needed a much larger bureaucracy to help with the long lines of people on the ‘phone, online and in a real Centrelink office.

    • 0
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      Hi Old Man,
      Centrelink is indeed a massive bureaucracy supported by dozens of linked departments and departmental branches that serve the costly purpose of chasing people down in case they don’t declare every cent, don’t report their movements etc. etc. Just because we know they don’t answer the phone in a timely manner doesn’t mean it’s an efficiently scaled department.

  6. 0
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    This bloody government is taking as much as they can and doing sod-all for it than any other government in history. Turncoat is an egotistic incompetent who is struggling with everything he “attempts” to do or “must” do with the title of PM otherwise he would do nothing but jet around for free and continue to prattle senselessly like he has done since he stabbed Abbott in the back. This inept plodder/plotter is bringing this country to it’s knees. His pro-wealthy policies and super and tax “reforms” (HA!) which penalise the retirees and young generations whilst letting his fats mates and politicians fill their pockets with taxpayers’ dollars are exacerbating the country’s financial straits and creating further divisions between the haves and have-nots. WHY CAN HE NOT SEE THIS?! NO, we DON’T need MORE taxes!!!!

    • 0
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      I have nothing against wealthy people, in fact Kevin Rudd was the richest man ever to grace our parliament. However, none of his wealth made up for his inept managerial skills and propensity to back-stab. As well, Malcolm Turncoat should take notice of the petition going around asking for him to lead by example and share some of the “diversity” that consecutive governments have forced down the necks of a population that was never asked if “diversity” is an acceptable and meaningful policy. The petition is asking that Turnbull good-heartedly demonstrate his love of diversity by instituting a policy that re-locates a large proportion of “refugees” into his own suburb.Then we’ll all see how much he enjoys “diversity” (which imo is a word derived from “division”).

    • 0
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      More likely “diversion” or “deviation”.

    • 0
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      Did you really just suggest that diversity is divisive? Isn’t it the exact opposite of that?

    • 0
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      ianjs, imo cultural diversity equates to the growth of cultural groupings that are supposed to co-exist alongside a host culture and preferably, assimilate into an adopted environment. Those who sing the praises of “diversity” obviously don’t live in areas where Australians/western citizens are no longer welcome, mostly because the areas in question have been “diversified”. Whatever the real meaning of the word, whenever I hear people like Turnbull from Point Piper raving on about diversity in the context of cultures, it reminds me of the big divided cities of Europe and the difficulties they are now enduring as a result of politicians (like Turnbull) who think the public actually enjoys and believes that oil and water will, sooner or later, become one. History now shows that cultural “diversity” has been a failed experiment.

    • 0
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      Probably way off topic but just to answer part of Brissiegirl’s post. I blame Grassby for a lot of the problems with migrants. Before he copied the word “multiculturalism”, Australia was classified as a “cosmopolitan” society. Loosely defined, cosmopolitan means that we all bring our cultures together to make one society whereas multicultural means that those arriving can keep their own culture without necessarily taking up any of the existing culture.

    • 0
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      Grassby was chumby with his Mafia mates and cleared the way for them to come into the country. Turncoat hosted a dinner for radical Muslim mates. Any difference? I think not.

  7. 0
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    So many Taxes on the people…I would really like to see a list of ALL Taxes, duty, levies and excise etc. currently alive and operating in Australia today. Then the % per dollar/rate imposed for each of those Taxes.
    Just think how vibrant our economy could be if the Governments reduced the amount they greedily take, take, take and still want more, more, more.

    • 0
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      Yes Gunner and because of it millions of people would rather lose money each year speculating and gambling than make money and pay tax on it. It’s bizarre but true.

  8. 0
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    This has always been on the cards. The gubberment bean counters know what demographic the money’s held in. When the baby boomers start falling off their perch there will be buckets of “bugs bunny” in expensive real estate and investment funds up for grabs.

    If that above article is correct , could you imagine what a 40% to 50% slice of that wealth would do to the gubberment deficit. AND Given that most of the baby boomers will all start “carking it” at a similar rate to how we got here……it’s no brainer for a treasurer knowing that the bulk of the nations wealth is held in that demographic. It would be a cash cow income stream for life.

    I’m already gifting cash and setting up assetts and investments to sidestep that issue. I don’t want 40/50 % of my hard earned ( that’s already been taxed) given away as foreign aid to corrupt countries or wasted like the many gubberment programmes we’ve already got.

    Death and taxes huh. It’s a good game they’ve got. You pay around 35% of what you earn through your working life, with the GST you kick in another 10% as your spend it, plus stamp duties , levies, licence fees etc etc …and then when you cark it..this rock star economist reckons another 40/50% thrown in at the finish is a good idea.

    If my dodgy maths are correct , that leaves about 5% for the punter.. Ya know what they say, we come into the world with nothing and go with nothing. No pockets in a shroud.

  9. 0
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    Our wealthy use our current tax laws to their benefit, I have no problem with that. Be honest if you had wealth wouldn’t you have you accountant do whatever he could to minimise the level of tax you pay, of course you would. Your just jealous, I bet you wouldn’t put in the hours needed to create the level of wealth those who are filthy rich do and have done.
    We can all be wealthy, we just need to stop buying rubbish, giving handouts to family without getting repaid etc.
    It would be fantastic if the taxation system was overhauled all loop holes closed up tighter than a fishes bum, then hit the corporate world to pay their fair share of tax.

  10. 0
    0

    So here it comes. Close to the highest aggregate tax rates on the planet and here comes an Inheritance Tax. What have I been saying.
    I would have no problem with the above if rich folk were restrained from setting up ways to avoid an inheritance tax and if a threshold where this cut in was set. Say $4 million. And this was unable to be avoided with clever accounting and lawyers.
    The last thing we want to see is average citizens paying the next tax impost so that governments can squander even more of our money and pass on ever increasing tax cuts to the big end of town. That would be the reality no matter how the bastards dressed this up and sold it to the mentally challenged public.

    • 0
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      How true Mick. I find it amusing that the average taxpayer can get investigated up to 7 previous years yet a bankrupt does not have to explain why all of the assets went to family members weeks before the bankruptcy. We need laws that are consistent because it seems that those with huge assets get a different treatment.

    • 0
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      Not true. They are on to that little scam and, while you take a punt and try it on, there’s no guarantee they won’t come after assets transferred to family members:

      http://www.smh.com.au/business/if-creditors-should-come-knocking–20120622-20tvi.html

    • 0
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      Thanks ianjs, on reading the article I think it reinforces my comment. If a bankrupt was solvent at the time of gifting, it’s nearly impossible to reverse the transfer. As well, it refers to the difficulty in proving the intent of transfers. I agree with you that something is being done and there are some laws in place to expedite these matters but more needs to be done.

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