Low income tax – High inheritance tax

The moral of that story is the bad financial planning between the two brothers; joint ownership or a transfer over time would have avoided what happened (as would a life insurance policy naming the younger brother as the beneficiary).


I think taxes overall should be lower, rather than raising one to lower another and then a couple of years later another politician decides to raise the latter again so the overall tax take is higher than originally.
I agree that taxation overall should be lower. This idea doesn’t mean that can’t happen as well.


The state would take less of your income when you are alive, taking it instead when you die. Same net result.


Yep, that’s a big problem; buggering off to a low tax country when rich Uncle Fred’s angina gets worse.


Absolutely, it should be nobody’s business what you do with your wealth before or after you die. It is your property and in a free society you should be able to dispose of it as you like.
Every society/country taxes your wealth, most when you earn it and when you spend it, some only when you spend it.


I’m not proposing a wealth tax (I’m not proposing anything; I’m putting an idea out for discussion.


Indeed, it has been shown time and time again that increased taxes lead to a higher rate of avoidance and evasion while lowering taxes has the opposite effect.
Yes but the state wants to raise “X” amount of tax. Lowering taxation to a level where everybody is happy to pay won’t raise “X”. I think we are both of the opinion that “X” should be much smaller than it is now but that’s a different discussion.


Businesses need people to buy their goods so spending is needed as well. Where the sweet-spot is is the big question.
 

Agree totally on the over-reliance on stamp duty/CGT/property related VAT but the event that most often triggers CAT respects no boundaries not even ecomomic cycles so I would anticpate they are less volatile (although estate valuations may fall in bad times).
 

I think you're ignoring the reality that a substantial proportion of CAT revenue comes from lifetime gifts. These by their nature are voluntary, and as such are highly sensitive to CAT rate rises. If lifetime gifts are discouraged, the effect is that they are postponed until death, and unless the person dies within a short timeframe, the State has to wait years to collect the CAT revenue.

Your point about estate valuations being depressed in bad times merely adds to the case that it's risky for the State to rely too heavily on CAT revenues.
 
Hi Chris, I'm not sure the state will be taking a share as such. Basically, the next of kin would pay a tax as they in effect have received an income in the form of a asset gift.
Yes, that is of course how the state "justifies" such a move. For me, however, this is outright confiscation of private property which is totally immoral in my books.

I totally agree, but the issue is when your wealth is passed to another person ie your kids, then perhaps they should have to pay a tax on this gift?
Yes, perhaps you should pay tax, but I cannot find a single moral reason why someone else should benefit from other people's good fortune. Just because it is the state doing the taking doesn't make it any more morally correct than if a modern day Robin Hood decided to rob one of my computers to give it to someone who doesn't have one.

It's actually not such a paradox at all, but that is a totally different discussion. The problem is indeed where is the right balance between saving/investing and spending. But there is a very simple solution to this and that is to let people decide for themselves. No one person or group of people are able to make an accurate assessment of what that level should be.
In Ireland's case, people here probably did about 25 years worth of spending in a 10 year period. That means that there will have to be a long rebalancing period to reduce levels of debt and increase savings. That means that Ireland has to export more, spend less on everything and save more, i.e. have other people elsewhere do the spending.

The moral of that story is the bad financial planning between the two brothers; joint ownership or a transfer over time would have avoided what happened (as would a life insurance policy naming the younger brother as the beneficiary).
Yes, there certainly was bad planning there, but at the end of the day, the lives of ordinary people should not be made more difficult than it already is.

I agree that taxation overall should be lower. This idea doesn’t mean that can’t happen as well.

The state would take less of your income when you are alive, taking it instead when you die. Same net result.
This is where I am a bit cynical. Raise one tax to lower another, and very soon after it is argued that the other needs raising again because it is too low. You simply cannot trust politicians.

Every society/country taxes your wealth, most when you earn it and when you spend it, some only when you spend it.
Maybe I should be clearer as to how I would define wealth. In my books it is your assets owned, rather than assets earned. Once you pay taxes on assets earned you add it to your wealth.
Anyway, collecting taxes on spending is a much better way than on earnings, as this (a) encourages earning, (b) encourages investment rather than spending, and (c) gives the public a very powerful tool to reduce government spending, as they can control the amount of money flowing to government through their spending habits.

Yes indeed that is the problem. Everyone wants the services but when it comes to paying for them the general attitude is let's take it from someone else. Back to Bastiat's good old quote: "Government is the great fiction, through which everybody endeavors to live at the expense of everybody else."
Businesses need people to buy their goods so spending is needed as well. Where the sweet-spot is is the big question.
Indeed, but nobody can manually figure out where that level should be. Everybody has to figure it out for themselves how much savings and debt they want, and this results in an overall average level. Politicians should be the last people to say things like "people need to spend more and save less to get the economy going".
As I already mentioned Irish people went on an almighty spending binge over a ten year period, now is the time to pay that bill, and pay it as quickly as possible, because an economy straddled with huge debt will never significantly improve.
 
Noonan was evidently looking over old posts on AAM , saw your idea and called a special meeting of cabinet this morning to discuss it. Someone leaked the news to ajapale.
 
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