Inheritance Tax?

TradCat

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€542,544 is the amount a son or daughter can inherit without paying any tax. If we reduced that to €20,000 which would allow for keepsakes rings etc but not the family home would we not take care of a lot of problems at once.

We would get people spending on the basis that the more you spend now the less tax you pay on death.

Inequality would be reduced.

It would mean a significant rise in the tax take with no disincentive to work.

It would effectively be a property tax.

So why is it not mentioned as an option? Is their a good case against it?
 


Chrisco

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IHT has to be viewed as low-hanging fruit and I would be astonished if it isn't tampered with in the budget.
 

grafter1

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You'll get plenty of support for your idea but i think its nonesense. The money being passed to a son/daughter has already been taxed.

There will be more than enough taxes on the income of ordinary workers or the better off for that matter in this country. Marginal rates already approaching 60%. Surely the state takes enough?
 

Nermal

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The unfair exemptions to this tax for farmers and business owners should be removed before rates and thresholds are altered.
 

locke

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You'll get plenty of support for your idea but i think its nonesense. The money being passed to a son/daughter has already been taxed.
What if the choice is having your estate taxed when you die or paying 10% extra income tax now?

In general, inheriatance tax is not a bad one to look at if money is needed. Aside from the OP's points about not disincentivising work and reducing inequality, money raised through inheritance tax isn't as likely to be money taken out of the economy.

Increase income tax and you reduce spending.

Increase inheritance tax and you are usually taxing money that wasn't going to be spent anyway.

It can also be keep money in the state when it was destined for descendants in the US, Australia or Britain.
 

hurling_lad

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Is there any estimates of the revenue that such a move would make, or are people mooting this purely because of the social desirability of redistributing wealth?

Any idea what impact a tax bill of 25% of the value of a family business would have on that business upon accession, especially the impact it might have on any non-family employees of such a business?
 

typical

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The reason this won't happen is because it effects people who vote, the old and the nearly old, most of all. Politicians don't do the right thing, they do the thing that will most likely get the elected next time.
 

Chrisco

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Is there any estimates of the revenue that such a move would make, or are people mooting this purely because of the social desirability of redistributing wealth?

Any idea what impact a tax bill of 25% of the value of a family business would have on that business upon accession, especially the impact it might have on any non-family employees of such a business?
Nothing to say that productive and non-productive assets can't be dealt with separately.
 

Nermal

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Any idea what impact a tax bill of 25% of the value of a family business would have on that business upon accession, especially the impact it might have on any non-family employees of such a business?
The owner would have to use other resources, a loan or sell some or all of the business to pay the tax bill. So what?
 

hurling_lad

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The owner would have to use other resources, a loan or sell some or all of the business to pay the tax bill. So what?
Imposing a debt burden of 25% of their value on small businesses would be likely to result in job losses - many businesses would likely even be wound up.
 

HarshBuzz

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could work as a perverse incentive to spend too

i.e. old codger thinks 'feck it, the government is going to nab half of this when I croak it so let's go nuts right now. Whoooohoooo, coke and hookers all round!'

I like it
 

johnfás

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They would perhaps be more likely to move to the UK model where it is the estate where the tax is incurred by the estate rather than the beneficiary of the estate. For ease of example let us assume the thresholds are €500,000 in each jurisdiction (they're not, but they're both close enough). Let us also assume that the rate of tax is 25% in each jurisdiction (again, it isn't).

In this situation in Ireland, if a person dies with an estate of €1,500,000, has no living spouse and the estate is split equally between three children they will each receive €500,000 each, no inheritance tax will be paid. Each child will receive 500k and the state will not receive anything (though it has been noted above that monies inherited have already been taxed... then again, can't you say that about any form of taxation? vat?).

In the same circumstance in England, the inheritance tax is paid by the estate. Therefore the first €500,000 would be tax free and the remaining €1,000,000 would be taxed at 25%, or €250,000. This would mean that the estate would be split equally between the three children, who would each receive €416,666 and the Government would gain 250k.

Of course the problem with the UK system is that it can more likely force the sale of property that the beneficiaries might have decided to sit on for longer.
 

Nermal

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Imposing a debt burden of 25% of their value on small businesses would be likely to result in job losses - many businesses would likely even be wound up.
As I said - there are other options. If the business can't support the debt burden, the new owner will have to sell other assets or some or all of the business.
 
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They would perhaps be more likely to move to the UK model where it is the estate where the tax is incurred by the estate rather than the beneficiary of the estate. For ease of example let us assume the thresholds are €500,000 in each jurisdiction (they're not, but they're both close enough). Let us also assume that the rate of tax is 25% in each jurisdiction (again, it isn't).

In this situation in Ireland, if a person dies with an estate of €1,500,000, has no living spouse and the estate is split equally between three children they will each receive €500,000 each, no inheritance tax will be paid. Each child will receive 500k and the state will not receive anything (though it has been noted above that monies inherited have already been taxed... then again, can't you say that about any form of taxation? vat?).

In the same circumstance in England, the inheritance tax is paid by the estate. Therefore the first €500,000 would be tax free and the remaining €1,000,000 would be taxed at 25%, or €250,000. This would mean that the estate would be split equally between the three children, who would each receive €416,666 and the Government would gain 250k.

Of course the problem with the UK system is that it can more likely force the sale of property that the beneficiaries might have decided to sit on for longer.
I think the estate should be the one paying it and not the individual.
 

locke

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Imposing a debt burden of 25% of their value on small businesses would be likely to result in job losses - many businesses would likely even be wound up.
You could easily structure it so that the government got a 25% stake in the business.

You could even allow for other shareholders to be given up to 2 years to buy the government stake. Then once that time is up, the government auctions its stake to the highest bidder.
 
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As I said - there are other options. If the business can't support the debt burden, the new owner will have to sell other assets or some or all of the business.
Or shut the business down entirely which is what would happen.

Business valued at 800k with a Turnover of €1.2 Million probably lucky to make 80k in the year would be required to pay €200k..............right 1st thing is dismiss all employees and wind the business up.
 

Nermal

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All spending and investment supports jobs. The fact that I won't get an exemption on my inheritance, because it's not a farm or a business, means I won't be able to spend or invest as I would have otherwise. So where's my exemption?
 

johnfás

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You could easily structure it so that the government got a 25% stake in the business.

You could even allow for other shareholders to be given up to 2 years to buy the government stake. Then once that time is up, the government auctions its stake to the highest bidder.
Easily? Goodness.
 
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You could easily structure it so that the government got a 25% stake in the business.

You could even allow for other shareholders to be given up to 2 years to buy the government stake. Then once that time is up, the government auctions its stake to the highest bidder.
In which case what you ensure happens is the business folds very quickly and act as a clear disencentive for everybody knowing Govt just going to take what it wants.
 


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