We can sense that Vladimir Ilyich Ulyanov (Lenin) and Karl Marx must be feeling warm all over at the very suggestion of an inheritance tax.
Why not? The rich can afford it.
And then the government can divvy it out to 25-year-olds as it pleases. Great idea? Of course not. And even less so when you do the numbers.
We presume the ‘four per cent’ figure assumes that, each year, 4% of those rich people — with $10 million or more of assets — will die. That would result in a redistribution of wealth amounting to $3.5 billion per year.
If we just take that at face value, what would it mean? Well, according to the Australian Bureau of Statistics (ABS), in 2016, around 7% of the Australian population was aged 25–29.
If we distribute that number equally across the five age levels, around 1.4% of the population was aged 25 that year.
With Australia’s population around 24 million, that works out to 336,000 people.
Those are the raw numbers. Now let’s take it a step further. Assuming we’ve just taxed 4% of those rich people who have just died (a nice thing for a grieving family to deal with), that’s $3.5 billion to spread between 336,000 people.
To save you the trouble of figuring it out for yourself, that’s $10,416.66 for each 25-year-old.
A lot of money? Sure it is. But is it the solution for helping people buy a home, pay university fees, or start a business?
Maybe. But that’s not the point.
First, taxation is theft. There’s no possible way to argue otherwise. Theft is the coercive seizure of private property. That perfectly describes all elements of the taxation system.
So regardless of whether a tax would benefit someone else is irrelevant. If a burglar nicks off with your best silverware, and gives it to his dear old mum so she can sell it to buy her weekly shopping, does that justify the theft?
But that’s not all. The $10,416.66 assumes that the so-called rich would — with the presence of an inheritance tax — behave and save in the same way as they do now without an inheritance tax.
Kris’ background includes 20 years of experience stock analysis, financial brokering, and wealth management. He has worked for Port Phillip Publishing for over ten years and currently pens Money Morning Australia and the Port Phillip Insider.
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