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Inheritance tax




"The idea that the rights of an individual linger even after death—the ultimate defiance of collectivism—had profound political consequences."

   --  Daniel Hannan

Why tax the dead?

You can't take it with you, so the government might as well have it. Except, you can pass it to your family, or others of your choice.

The reason governments tax people upon death, is
  • The primary asset holder is not there to complain when it has to be paid
  • The new recipients have not received the money yet so may nor consider it theirs to begin with
  • Its only paid once in your lifetime.
  • The government don't like it when people have too much savings
  • It helps with the governments goals of making people more equal financially.
Basically, there's less attachment to this money than other money, and hence less opposition. Its a soft touch.


Whats wrong with taxing the dead?

It is unjust.

Some taxes seem more pernicious than others. An example, in my view is Inheritance Tax – or Death Tax, as it should be known. Not only does it visit injustice upon the heads of the bereaved, it causes sub-optimal decisions to be taken by the individual while still alive, in order to minimise the bill.

People lose their livelihoods or family homes


One of the best examples of inheritance tax being unjust is the example of the farmer who has had a family farm for generations. The farm generates just enough to live on. The farm is in his name. When the farmer dies, the children take over the farm, but have to sell it to pay the tax bill. This adds insult to injury as well as unjustly removing the children from property that should be rightfully theirs. It is obvious to everyone that the children have more right to the proceeds of the father than the government.
 

It is cruel

When you are on your deathbed, what you need to be thinking about is how your family are going to survive, when they have to sell the farm/house or business to pay the inheritance tax.

This is exploitation at its worst.

The U.K government recoognise this to a degree, which is why firefighters who die in the line of duty, do not pay this tax.

It's demotivating

Knowing that the Government are going to get your hard earned savings, is a demotivating and may reduce the output of the person who is later to die.

It's futile


"In a regime of takings after death we can anticipate that, as people age, they will accelerate their consumption of resources beyond that which they would otherwise choose or, perhaps even more dangerously, they will make increasing numbers of gifts to others. Unlike post-mortem transfers, such inter vivos (during life) gifts would be irrevocable and, should an aged donor miscalculate his or her life span or income, would increase the risk that a donor’s resources would be exhausted before death. Moreover, to the extent that these inter vivos gifts were viewed as deliberately evading the policy of post-mortem takings, they would most likely be restricted as well. Any restrictions on inter vivos transfers would then further reinforce the incentive to consume as opposed to conserving resources.... it is well-known that many persons are strongly motivated to amass an estate that will benefit their children. This desire would be defeated by a policy of takings after death. Such a policy creates a serious incentive problem by undermining the natural incentive people have to be altruistic towards those they love and encourages the consumption of any resources a person may accumulate during his life."

   --  Randy Barnett


Its Unpopular


Tom Welsh on Ineritance Tax

Paraphrase.
  • We most beleive that the world continues when we die.
  • The interests of the dead continue to exist after they have died and should be respected.
  • The person receiving the inheritance may not have earned the money. But parents spend money on kids that is unearned, but there is nothing unatural or wrong with that.
    Besides the person making the choice where the money goes is the one who earned it.
  • It undermines the ability of the deceased to provide for their family financially at exactly the moment when they are necessarily least able to provide other kinds of support. 
  •  Inheritance tax means you pay less if you spend all the money on a holiday before you die than if you do the responsible thing and leave some of it to your kids.
  • Its an altrusitic action to give money to your children rather than spend it in your lifetime

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