Recently I heard on the news that Samsung heirs are paying a massive amount(11 Billion USD) in inheritance tax. Do we have one? Is it implemented properly? If we have one, will it be a part of reducing income inequalities in capitalist countries? Did Gina Rinehart and James Packer pay any inheritance tax? Please vote yes if you want an inherent tax on Billionaires in Australia
50% Inheritance Tax on Billionaires (Should we have one?)
[Deactivated] on 16/09/2021 - 07:54
Last edited 16/09/2021 - 11:30
Last edited 16/09/2021 - 11:30
Poll Options
- 311Yes
- 372No
Comments
Only if paid to a non-dependent.
Even then it's only up to 15% tax.
Cash it out before you die (your POA can do this on your behalf) then it becomes normal estate assets.
Oh good to know!
Non-dependent would include any adult children.
Personally I'm alright with not taxing the money going to young children.
@Zephyrus: 'Non-dependent would include any adult children.'
Generally this is correct.
However an disabled adult child would be considered dependent. A 21yo university student living at home would generally also be considered a dependent and so would a 40 druggie whom the parents support financially.
What about if it is in pension phase?
it still the same
The phase doesn’t matter for non dependent children, only whether it was originally a concessional or non concessional contribution. That’s why lots of people withdraw concessionally and recontribute as non concessional, it will remove the tax their children have to pay on inheriting it (there are caps and limits though. The absolutely outrageous way super used to be is mostly a thing of the past for new contributions at least.
If you tax the heck out of successful people you penalise them for being successful. You will also cause a brain drain where successful people will just pack up and go to a different country. Neither of these are good for the country.
Successful people deserve to be able to provide for their children and let them continue their legacy if they wish, so an inheritance tax isn't fair. It won't even work because there will be ways around it. Our tax laws are far too complicated. The average person can't make financial decisions to minimise tax so the market doesn't work efficiently in that regard.
A little doom and gloom, don't you think. Wealth created from the resources of this country deserves to be shared among the people of this country, not the grand kids of business owners. And I doubt tax minimisation is going anywhere.
You suck at parenting if you have 50 million plus at your death and your children, who should be retired at your death, are relying on their inheritance.
Wealth created from the resources of this country deserves to be shared among the people of this country
So why not abolish income tax and tax all the resources instead? That would make taxation law much simpler. The tax can also be made progressive depending the size of the resources owned/used.
are you saying that if someone dies at 70 their 40 year old child should already be retired
@This Guy: lots - many mega rich die young as they drink and are regularly stressed from a lifetime of big business and booze
I would agree with an inheritance tax if the top tax rate is dropped from 47% to 15-20% maximum. Then a inheritance tax might make sense.
"You suck at parenting if you have 50 million plus at your death and your children, who should be retired at your death, are relying on their inheritance."
Disagree with that statement.
If you could save $250k+ per annum in tax by leaving Australia, would you do it?
@drfuzzy: The reality is any such tax would need to have a US style global reach. People would need to renounce citizenship to avoid it.
The reality is that most of the super wealthy have already left to lower rate tax havens in a global race to the bottom. Those that have not really mostly cannot because their wealth generation is based on their being in Australia, and especially being Australian citizens not subject to foreign investment review.
Inheritance taxes that target any wider than the top 1% of the top 1% would be politically very hard to implement.
@drfuzzy: How did I make the money? It's a little hard to leave a Australia to save tax if all of my money is tied up in the country.
Wealth created from the resources of this country deserves to be shared among the people of this country, not the grand kids of business owners.
The annihilation of the family in favour of the state. A disgusting and unnatural philosophy.
@This Guy: Fundamentally an inherence tax is an attack on the family as the basis of society. These philosophies have been pilloried across the ages, rightfully so. My original comment was channeling an anti-Mohist quote.
More pragmatically, these policies never really extend to the Rineharts of Australia. More realistically, it will be another way of making sure that none of our children own a house.
@CommuterPolluter: Look at what Scotty from marketing has been upto. If the Scotty wanted to put a death tax on the property rich poor Scotty would do so.
Yes, I doubt a death tax on billionaires would ever get off the ground in Australia. But we don't have our own unicorps like Samsung. A death tax on billionaires opens control of billion dollar companies up to all millionaires instead of just trust fund babies.
The Rineharts have proven themself capable of inter generational wealth transfer (even if messy). But I have worked for a billionaire empire that has no chance of surviving their next generation. I would rather that cash go on taxes instead of drugs, cars, "accountants" and "girl friends".
Wait, what's wrong with you?
Why are you relying on inheritance? Perhaps it is you who sucks at life?
Wait, what's wrong with you?
Please enlighten me.
Why are you relying on inheritance?
No.
Perhaps it is you who sucks at life?
Perhaps. I could buy two houses with the amount I am spending on my children's education. So yeah, pretty fair.
Success correlates with hard work and risk management, but extraordinary success is often also the product of extraordinary luck (including the luck of a good start to life and family connections but also excessive risk taking) as well as political support from the state. A billionnaire is not some ordinary multi-millionnaire, they are the product of where they are and it makes sense that some of that amassed wealth returns for redistribution. Also, through tax minimization, they don't get taxed on the margin remotely as much as a salary worker does, so it makes sense to tax their wealth at some point in the line.
We are already in a situation in Australia where we have few significant exports outside of resources. The trade war with China is making things worse. (Don’t get me started about “how badly we will hurt China…” they don’t care about Australia. The whole nation is the size of 3 mid-sized Chinese cities + suburbs).
There is already massive brain drain so if we disincentivize big business, our GDP will sink any further.
@alienurbanite: Maybe we should export our billionnaires to China, we already import their millionnaires :)
A lot of the "success" is based on employment of machinery and other peoples' labour so they are technically not taxed for their own work, but the leverage that employment of efficient machines and labour provide hence contributed back to the society.
Example 1: A man who uses the whole communitys' effort to pass stones from hand to hand to the top of the mountain gains efficiency because he uses the combined labour of the community than doing 100 rounds himself.
Example 2: A man who uses a machinery invented by somebody else for a sum of money, that money is collected from the community/market because the machinery is very expensive for a small group of individuals to afford.
The product of the efficiency of such a machinery and labour cannot be attributed to his "success" or abilities. What I am saying is that if you tax these two factors then it is not punishing to the CEO's as they already enjoy plenty of benefits which are not monetary.
Why not?
I'm guessing they aren't able to use trusts in Korea to dodge taxes.
A trust doesn't let you dodge taxes.
At best, a trust will minimise taxes a little and provide asset protection.
At worst, a trust will complicate your financial affairs and cost more to administer than you manage to save.(I don't work in finance). Won't the trust live on after the parent dies, thereby avoiding the inheritance tax? Also I don't think it could cost 11 billion to administer.
It’s not really that simple, when you move money into trusts you can trigger capital gains taxes, or potentially when you add beneficiaries to it etc.
Lots of people have trusts and only a few million in them and pay much more to administer them than they save (or conveniently for their accountants, almost as much). They’re mostly for asset protection and sometimes to distribute income to adult children to save a little tax.
Inheritance taxes are however really prone to a bunch of issues, not the least of which is that gifts are tax free (something that would be incredibly unpopular to change).
This ain't a poll, it's a test.
Change "do" to "should."
For society to progress rapidly it needs incentives for people to do their best and take risks to innovate so we have the best new technology, existing products and services. If people aren't rewarded for doing their best then many won't bother and instead take the easier routes.
Do you want society to develop as much as it can or do you want development to reverse because you don't want the biodiversity of other life on Earth to be affected by humanity?
Change isn't necessarily good. We need to be going the "right" direction.
With that said, we are intelligent enough to test for people's IQ, but we are not wise enough to test for people's wisdom. Therein lies the root of our problems.
What about if you just made the first billion tax free? Would being able to inherit a billion be incentive enough?
What if we just locked down for two weeks to flatten the curve a little bit?
Wouldn't this incentive wealthy people more, because they'd have to work even harder if they wanted to leave their offspring an obscene amount of wealth?
This is such a dumb argument, because lower taxes actually lead to the reverse, beyond a certain after tax income people stop being motivated to work for money alone. Thus if you want to motivate people to work harder you actually tax them more.
Also no one is suggesting removing that incentive anyway. Besides I don’t stop going to work because the government will take part of what I earn to help me keep the rest.
The "trickle down" theory that you are espousing has been well and truly proven incorrect. In reality low tax rates hurt innovation - it just results in people amassing wealth and stashing it somewhere. There's a nice medium to be found, but higher tax rates incentivise people to invest back into their business. The only "beneficial" side of the trickle down theory is that people can use their wealth to conduct share buybacks, which changes absolutely nothing.
Still need to pay CGT if the (investment) asset made money.
during inheritance not tax, but CGT from when the deceased purchased it.
You mean when you sell your inherited item you pay CGT right?
Yep
CGT when it is sold, not if kept. Check with your accountant on this, as it may mean a lot of work to determine purchases costs of assets…
@SF3: I am my accountant. the cost base of inherited items depends on when they were purchased.
If they were purchased before 20 September 1985 the cost base is the market value at the date of death of the deceased.
If they purchased the asset on or after 20 September 1985 the cost base is the price the deceased purchased the asset at.
of course this is not set in stone the cost base of of the deceased main residence is the market value at the time of their death.
and
if you received the asset as the trustee of a special disability trust.Though accountants should be consulted anyways as it gets weird when its like an asset the deceased inherited themselves.
@Bjingo: Slightly related but if you're selling an asset and don't have a record of the purchase cost, can you just set it at $0, over-pay (pay CGT on the entire sell value), and be fine when audited? As in, do the ATO care if you don't have good records but it's obvious that you've over-paid the tax?
@idonotknowwhy: I'm sure the ATO will be fine with this, but you still need the acquisition date to claim the 50% CGT discount.
It depends on the assets, but you can always get an expert to provide the approximate acquisition value at the date if you cannot produce evidence of the acquisition costs. The ATO may accept this if you provide an expert's fair and reasonable estimate, like a Quantity Surveyor report when claiming depreciation on an investment property.
@idonotknowwhy: If I was in that situation personally, the first thing I would do if it were shares is use the HIN/SRN and log into the single holding option on computer share/link market and look up the history. Alternatively you could look for or try to remember the purchase date and then look at the market value at the time and use that figure. or just take the year it was purchased them and use the lowest market value for that year.
You can also go through your bank statements if you so choose and look for that
But worst case scenario you can just put down zero and cop it, rule of thumb with the ATO they wont chase up money they owe you.
@Bjingo: Even some accountants and the ATO don't even know how to figure out CGT or what the rules are!
I'm going through this ATM. Sold my father's estate, more than 2 hectares. Had different answers from two different accountants about CGT and how to calculate/pay it. Also had about 4 different answers from the ATO themselves when calling to clarify stuff on the website. The whole thing is a fricking mess. 😡
@SkMed: Yeah thats pretty common, often laws pertaining to these things is made intentionally vague because the more specific a law is the easier it is for people to take advantage of it.
@SF3: Yep. My father bought Commonwealth shares some time in the 80's and passed away last year. We basically had to assume that it was 90%+ capital gains as we didn't have the original purchase documentation.
@macrocephalic: You/your accountant can get records from the share registry to work out the cost base
@macrocephalic: Did you get the CGT discount for this without the original purchase documentation?
Thanks for the replies Bjingo and JimB.
So if I have absolutely no proof of the year i acquired the assets; worst case, I lose the 50% CGT discount, and declare a $0 purchase price.
Overpay the ATO quite a lot, but get to liquidate my asset.
YUP there lots of TAX that death TAX years ago.
why should one have to pay an inheritance tax? by nature of an inheritance, one would assume tax is already paid.
We all think inheritance is liquid assets (stock, cash, etc), but laws will cover EVERYTHING that the estate own and have any monetary value with it.
Shitty paint on your wall? taxable.
Shitty vase on the toilet? taxable.
Remote farmland that you know you cannot get rid of without discounting big time, taxable.
A car you know is worth $500, but taxable at a "market" value of $5000.
Term deposit that you do not want to break, obviously taxable.Billionaires who have enough liquid assets will have no problem paying out tax or whatever, small forks like you and me will get tax notice knowing it's not worth the paper.
same here mate my nan and pop estate was full of shit 60s rent all need major work in a regional city in a falling market. 100,000 each.
Laws often have caps.
like landtax in victoria, or fbt on minor exempt benefits or small business concessions and the 6m net asset test.
You probably could mandate it so it was like 50m tax free
issue is that, it's the same as the superannuation issue right now, people just do deathbed gifts
Estate taxes are not for the likes of you or me. They generally kick in at $50M+ mark. If you're worried about the technicalities of paying an estate tax, then those who actually would pay them have done a good job of making you think you are part their very exclusive group.
Easily solved. Just set the tax at a level that will kick-in at very high wealth level…like $100m or the top 1% of the population.
Person 1 dies. Person 2 inherits money. Person 2 never paid any tax on the inheritance!
But lets go with your logic:
Stamp duty on old houses is double tax because tax was paid first time.
Taxes on wages means triple tax because customers paid GST and company paid taxes.
Ergo, we should abolish taxes on everything and just tax new money from RBA.
Tax the filthy rich. Unless you expect to inherit millions of dollars, you're protecting the rich.
I'm neither a millionaire nor inheriting millions. I have no interest in protecting the rich either. I was only trying to understand. I do not agree with your logic. Person 1 has already paid taxes on his income, he saved/invested frugally so s/he can leave an inheritance to their children. It doesn't matter if person 2 has not paid tax on the inheritance as this has already been paid. I am unable to comment on the stamp duty issue as I'm not aware of it. As for taxes on wages, no it is not triple taxed, taxes on wages is only taxed once. GST is a different class of taxes and yeah company paid taxes but company was allowed to deduct employee wages so they did not pay taxes on that. I may be wrong though, not a tax professional, just the way I understand things.
That means each employee got $126,000 instead of $200,000!
Each employee got to what they agreed to in their contract, not based on a company's revenue. So no, no tripled-taxed…
@ozhunter: What if the 5 employees was a family?
What if they're sole traders? No company tax but still pay GST AND income tax = double taxation!!1!
What if the 5 employees was a family?
The same applies?
but still pay GST
The GST you collect isn't meant for you to keep.
The GST you collect isn't meant for you to keep.
Just like the inheritance tax is not for the kids to keep either.
@ozhunter: Cleaners agree to getting 5% of what lawyers get.
"Agree" is a loaded word when there are scant options.
@fantombloo: We have a minimum wage here.
Who decides what a cleaner should get and what a lawyer should get?
@fantombloo: Cleaners didn't pay for 26 years of law school (this is an exaggeration before everyone gets upset), then work 80 hour weeks at minimum wage either. No one was stopping them doing this though, they chose not to.
scant opportunities.
Scant opportunities to go to university in Australia? Or do a trade? University cost can be deferred until you earn a reasonable amount, nothing stopping anyone going to uni. Lots of trades crying out for workers as well.
@brendanm: This is an amazingly uneducated take.
The fees are not the only barrier, it’s great that we’re in a country where they’re not the main barrier though.
@orangetrain: Lol this isn't how it works. The company is paying the taxes, not the employees. And you're very naive to think that if the company didn't pay the taxes, they would just pass on the savings to the employees. There's a reason CEOs have million dollar pay packets while the average worker earns a very average salary.
@orangetrain: The company only gets taxed on profits. hence after GST was taken out the company has $900,000.00 in the bank. then that could be given to the 5 employees ($180,000.00 each - which each individual employee would then get taxed for). The company would not pay company tax in this scenario.
@orangetrain: They should implement an oxygen tax, I think that might be a good way to raise some taxation revenue.
by nature of an inheritance, one would assume tax is already paid.
Not necessarily.
Proponents of the inheritance tax think that this is the only way to defeat a key strategy used by billionaires and the ultra-wealthy, to avoid paying their fair share of tax. And this can go on for generations. They borrow money to fund their lifestyle. This article explains a bit how this works. Although it focuses on the ultra-wealthy in the US – it could equally apply to billionaires here too – since Australia also do not tax stock holdings or assets until they are sold.
Borrowing money allows the ultrawealthy to earn minuscule salaries, avoiding the 37% federal tax on top incomes, as well as avoid selling stock to free up cash, bypassing the 20% top capital gains tax rate. Since loans aren’t considered taxable income, the wealthy need only pay back the principal and interest, rather than the higher taxes that would accompany multimillion-dollar incomes and investments.
Without an inheritance tax, the ultra-wealthy will pass on their significant asset holding to the next generation, and the next generation willl use the same strategy – using mainly borrowing to fund their lifestyle.
Opponents of the inheritance tax also have a point: that it can lead to family farms and businesses being broken up (especially if inappropriate levels or parameters are set), and imposing an unfair burden on the heirs.
So clearly, if an inheritance tax is to be brought in, it must be carefully considered and implemented in such a way to strike the proper balance – to extract some tax from the ultra-rich who manage to avoid paying their fair share during their lifetimes, yet not making it too burdensome on the heirs.
The ultra wealthy are least affected by an inheritance tax as they can funnel it offshore into tax havens or trusts that the government can't touch. It will be the average Australians that get hit hard if inheritance tax comes in, not the ultra wealthy.
The ultra wealthy are least affected by an inheritance tax as they can funnel it offshore into tax havens or trusts that the government can't touch.
Tax avoidance by the ultra-wealthy is a hard problem, or else it would have been tackled already. It takes multi-pronged strategies to chip away at the problem. Inheritance tax is but one proposed measure. These include but are not limited to:
Governments, G20, OECD, etc are all working to combat this problem with increased international cooperation.
Pressure on tax havens is bearing some fruits – e.g., Swiss banks which used to hide money for the rich now will turn over information to foreign governments.
Leaks like the Paradise Papers and Panama Papers shine a light on tax havens and their operation – and ATO does follow up on these.
It takes societal and political will to confront this; the ultra-wealthy has lots of lobbying power, therefore it is a hard problem to solve. In time, when the "use of tax haven" problem is drastically reduced through punitive and other measures, you still have to confront this problem - ultra-wealthy using borrowing to fund their lifestyle.
It will be the average Australians that get hit hard if inheritance tax comes in, not the ultra wealthy.
Implied by my statement, that “it must be carefully considered and implemented in such a way to strike the proper balance …”, is that it should not apply to average Australians. My definition of ultra-wealthy must differ from yours if yours also include average Australians.
@bluesky: The road to hell is paved with the best of intentions. The UK system was intended to target the wealthy, instead the wealthy and Ultra Wealthy are really the only people easily exempted from it as they can afford the trusts and offshore tax structures to avoid it completely. Inheritance tax one day might be a great idea, but until you fix trusts, offshoring, profit shifting and a whole raft of tax havens all it will do is send money out of the country. Governments, G20, OECD etc have been "working" (use that term losing as really most have just been blocking) to fix the international problem for decades and it never really seems to get far, too many pollies have vested interests to not hurry with any real solution.
@gromit: Criticisms that the UK system does not end up targeting the ultra-wealthy (instead impacting the less wealthy), are down to policy and implementation. TBH the UK threshold at which it applies could be too low - at £325K. It is why, if this tax is to be considered here, it deserves careful consideration and study, to avoid the pitfalls seen in other implementations. If the levels and parameters are set appropriately to target the real ultra-wealthy, the majority of citizens will not be impacted.
Hypothetically, let’s say after careful consideration, such a tax is brought in to target the ultra-wealthy. Granted, as you say, at the moment, they are still other loopholes - like tax havens, off-shoring, etc, because progress to close those loopholes are slow. The result is that this tax does not net much $. If so, I can’t see how this is different from the current situation as it stands. But it would have laid the groundwork – allowing its operation to be studied and so forth.
Trying to tackle this problem, no measures should be off the table. At least, the tax deserves careful consideration. As with any long-running societal issue (racism is another that comes to mind), even if progress is slow and halting, possible solutions including this have to be constantly revisited and refined. And sometimes, with a changing societal landscape, e.g., more people want to see the ultra-wealthy pay their fair share, more leaks like Paradise Papers, etc, it may just spur faster changes to narrow or close those other loopholes.
@bluesky: Except the only groundwork it lays is to chase money out of the country. The moment it comes in $100's of billions will leave the country making us significantly worse off. like all things, when you screw up the foundation anything you build on top of it will be an unstable mess. The core foundations need to be fixed before anything like this could even be considered.
@gromit: To your assertion that nothing can be considered until all core foundations or loopholes are fixed – name one country that has effectively fix all these tax loophole problems. This is basically saying let the status quo stands. When in fact, as a society, we need to approach such issues on multiple fronts - considering any measures that make them pay a fair share.
My thoughts on this align with mskegg’s comment here. The ultra-wealthy have a variety of motivations to keep money invested in a country – tax has a role, no doubt, but there are many other factors at play as well, including economic and political stability, etc. No doubt some cash will flow out. The UK has had the inheritance tax for a while now – its economy was not brought to its knees, due to it.
As mentioned above, the ultra-wealthy can use borrowing and other strategies - effectively paying even less tax than the normal employee or worker. Is that fair? Do we want them to stay here to continuously exploit us as a country and to this degree? Hence why I share mskegg’s sentiment:
And for the record, I would prefer zero billionaires and billionaires children and a much more egalitarian society, even if it means a handful of them move elsewhere.
Mind you, I am not even talking about the somewhat wealthy, but ultra-wealthy (with hundreds of millions and above)
@bluesky: No I am saying you can't implement something like this while the underlying system is broken, it will make it worse not better. Fix the strategies that the ultra wealthy use to avoid tax, only then can you look at what else can be done otherwise you end up like the UK disaster
And for the record, I would prefer zero billionaires and billionaires children and a much more egalitarian society, even if it means a handful of them move elsewhere.
So really you aren't out to make Australia better or fairer, you just want to punish the rich even if everyone else is worse off you doing it.
@gromit: Why do you just make sweeping statements without providing supporting facts?
When I said this deserve proper consideration and study, you said it cannot be considered until all loopholes are fixed first. To me, the first step is a feasibility study and modelling to see what impact it has. You haven’t provided a good argument why this cannot be considered.
You claim it’s a disaster for UK, with no facts. How is it disastrous and measured against what criteria? Outgoing funds? The well-being of society? With no supporting facts at all, do you just expect the reader to take your word for it?
You plugged a number from thin air - $100’s of billions, which you say will leave the country. Considering you don’t even think any study is needed, how are we to find out the real magnitude? Again, are we to take your word for it? On the other hand, a proper study might provide some modelling to determine this.
Since the ultra-wealthy can and have been exploiting other loopholes as well up till now, what makes you think that majority of their funds haven’t already left the country, using those other loopholes (tax haven etc)? So, what is the basis for this large number – $100’s of billions? Once again, proper modelling might determine this.
So really you aren't out to make Australia better or fairer, you just want to punish the rich even if everyone else is worse off you doing it.
This statement is so flawed and misleading – but I am glad you brought it up – because it allows me to address this. Whenever some of us say: “we don’t mind if some ultra-wealthy individuals who will not pay their fair share of tax leave the country”, the typical response is:
we just want the rich punished (envy)
everyone is left worse off
we aren’t out to make Australia better or fairer
The major flaw in this stems from the thinking that we, as a society, will be worse off if they leave, taking their funds with them. But it is not so clear-cut, because this also reduces economic inequality, which may increase society's well-being on many social measures. Economic inequality is already a problem, but when the ultra-wealthy do not pay their fair share, it exacerbates the economic gap problem.
I would highly recommend this TED talk for those who are interested: How Economic Inequality Harm Societies. (Transcript included on the page.)
The main points are:
The average well-being of societies in rich developed countries is no longer dependent on national income and economic growth.
On all these measures: life expectancy, kids' maths and literacy scores, infant mortality rates, homicide rates, proportion of the population in prison, teenage birthrates, levels of trust, obesity, mental illness, drug and alcohol addiction, social mobility – the more the inequality in society, the more the social disfunction. It's not just one or two things that go wrong, it's most things.
Even the rich benefit in a society where income inequality is smaller, although not as much as the poor.
Quite poignant, but with reason is this quip by the speaker: if Americans want to live the American dream, they should go to Denmark (a reference to social mobility).
In short, society’s well-being cannot be measured by $$ only, but on other social measures as well. Rather than the reasons usually cited (it must be envy, to punish rich people, and so on), the main reason why an inheritance tax warrants consideration is because preventing the widening of the economic gap has wide-ranging consequences on the fabric of our society and its members’ well-being.
The other myth is that the ultra-wealthy must have gotten their gains fairly and squarely (from hard work, entrepreneurship, innovation etc). Therefore, they should not be unfairly targeted. Joseph Stiglitz, Nobel Laureate in Economics wrote extensively on how the system is in fact rigged - through rent-seeking and other means.
For some insights into this, I highly recommend this TED talk The Dirty Secrets of Capitalism – And a New Way Forward where an actual ultra-wealthy capitalist shares the dirty secrets used by those of that class, to exploit and gain the unfair advantage.
So, for those who might have a misplaced sense of justice, sounding the war-cry about how the ultra-wealthy is unfairly targeted - it would be good to have some insights first – so you can understand if it is a fair playing field or not.
BTW For those interested, another interesting talk in social psychology: The Psychology of Inequality and Political Division – which shows the effects of inequality and what it does to the psyche. The situation is pretty bad in the US, but it can happen here too.
Coming back, how ironic you simply surmise that I don’t care to make Australia better or fairer, and that you do. And saying that everyone is left worse off, by focusing narrowly on $, with no regard for other social factors of well-being in a society.
@bluesky: Because I am not making sweeping statements, however you most definitely are. I am giving you facts and they are well supported facts based on other countries disasterous attempts at this that followed the EXACT line of thinking you are, The UK after just 6 years in oepration is already looking at having to revamp inheritance tax. You seem to live in a world of rainbows and fairies, the real world is not like that. It is like considering how to plug a crack in burrinjuck dam wall with gaffer tape and some sealant from bunnings. Economic equality is NOT enhanced by everyone having a lower standard of living and calling it better because the top end is now lower.
what I don't understand is why you seem so offended by real actual tax reform that is desperately needed that would be far better for everyone with better return for effort spent, i.e. reform that would actually make a real difference to inequality and not just be another pointless tax law, like cracking down on tax havens, profit shifting, trusts etc.
Because I am not making sweeping statements, however you most definitely are.
What?? Me making sweeping statements? Anyone reading this can clearly see I did a deep dive into the topic - providing references, etc. You, on the other hand, dodged all questions I asked. You still have no convincing argument as to why a study cannot even take place until every tax loophole is fixed.
I did not come into this discussion taking a position, and I still don't. My thinking is simple – if a tool is available that can potentially solve a current problem, it deserves careful consideration. That does not mean the outcome is determined. It means a detailed look in, feasibility study, modelling, cost-benefit analysis, and so forth. Implicit is that it must be suitably adapted to our goals and environments, avoiding known pitfalls, etc. If the conclusion reached is that it is beneficial, it will be adopted. Otherwise, it will be shelved.
But when you say it must not even be considered, not even initial study, that just shows either you have a very closed mind, or that you have an agenda in mind.
I am giving you facts and they are well supported facts based on other countries disasterous attempts at this that followed the EXACT line of thinking you are, The UK after just 6 years in oepration is already looking at having to revamp inheritance tax.
No one says we must adopt their model wholesale. Or jump in blindly. It is exactly why we must do a careful study. And make sure to learn from their pitfalls and mistakes. We will adapt it to suit our needs. For e.g., we probably want a high threshold to impact only the ultra-wealthy. (I know – in this comment your definition of ultra-wealthy is the “average Australian”! Probably why even a study is so threatening to you).
You seem to live in a world of rainbows and fairies, the real world is not like that.
Oh, yeah? So, being close-minded is better? If you think it failed elsewhere, then rule it out completely. As if improvements are never possible, so never consider it ever again. Wow, with that attitude, I wonder what the world would be like if everyone thinks like you.
I also doubt someone living in fairyland would say what I said: “Tax avoidance by the ultra-wealthy is a hard problem, or else it would have been tackled already. It takes multi-pronged strategies to chip away at the problem.”
Economic equality is NOT enhanced by everyone having a lower standard of living and calling it better because the top end is now lower.
This statement is largely a ploy. Just because a super-wealthy person lives in a neighbourhood, all it does is increases the average wealth in the suburb, that does not mean the average Joe is much richer due to this. Even if you assume they spend say 20 times more than the average family, if they leave the country, the impact is still relatively small. However, the corporations they are affiliated with are a different thing, as they employ workers. But moving companies overseas is not as easy as it seems. So, since this is more relevant on the individual front, the impact is not as big as it seems, if they leave.
Where you also go wrong is thinking that they must be worse off. When research shows it is not income that matters. When there is more economic equality, there is less social dysfunction in society in all these measures: life expectancy, kids' maths and literacy scores, infant mortality rates, homicide rates, proportion of the population in prison, teenage birthrates, levels of trust, obesity, mental illness, drug and alcohol addiction, social mobility.
You make bold predictions like you know what is going to happen, (such as $100s of billions leaving) but you don’t. They are just your wild assumptions. You don’t know what is going to happen, just like I don’t know – until some study is done to look into it.
As I touched on this before:
The ultra-wealthy have a variety of motivations to keep money invested in a country – tax has a role, no doubt, but there are many other factors at play as well, including economic and political stability, etc
The actual effect might not be significant, because wealth could already have left, using the other tax loopholes (like tax haven).
what I don't understand is why you seem so offended by real actual tax reform that is desperately needed that would be far better for everyone with better return for effort spent, i.e. reform that would actually make a real difference to inequality and not just be another pointless tax law, like cracking down on tax havens, profit shifting, trusts etc.
Are you just being mischievous, or you really don’t understand what I said before?
“When in fact, as a society, we need to approach such issues on multiple fronts …”.
“It takes multi-pronged strategies to chip away at the problem.”
What I utterly disagree with you is that no study of this tax can even begin until all the core tax reforms are completed.
Offended? Of course not – but due to your lack of rigour it leaves a lot for me to unpick. So many holes 😊
the ultra-wealthy can use borrowing and other strategies
How can we make so that normal people can use that borrowing strategies as well to level the playing field?
@leiiv: I don’t think it is that easy to level the playing field. The scale is just different.
The more wealthy, the more assets can be used as collateral.
And more willing are the private banks to lend them, at super low rates.
This article says they can access loan as low as 1%.Probably others know more about this than me. I can only guess that some also engage in some questionable and dodgy stuff.
Because if you die with a billion $ stashed away you're a selfish prick that should be punished.
No inheritance tax in Australia.