Alan Shatter's campaign to abolish Inheritance Tax

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The good news for a lot of people who want to pass on wealth without triggering tax is there are a couple of ways to do it. You can support your kids in full time education until 25, you can pay for their wedding, you can give them 3k a year all their lives and you can then give them 335k without them incurring any tax at all. I am sure there are others too, these are just the ones that come to mind.

One thing I am sure of now is that I will not wait until I am dead and gone to treat my kids (and potentially their kids) to the luck I had in being born when I was which allowed me to accumulate wealth on which I paid no tax. I will release the wealth in my home by planning well ahead of time to downsize, support them as per above and then get enjoyment out of watching them benefit from this support. Not have them bickering and fighting after I am gone trying to divvy it all up and being mad they have to pay tax.
 
Purple said:
That's the opposite of socialism. You think that families should be able to retain inter-generational wealth untaxed. That will inevitably lead to a concentration of wealth amongst a minority.
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Well I didn't say I was a socialist.

And I think like most people the answer is somewhere in the grey as opposed to black and white for or against CAT. I don't think there are too many people who believe CAT should start at the first euro and be at a much higher tax rate. The vast majority of people agree with some level of tax exemption and I suspect a very high percentage of people would agree with a certain level of cap that may at least tax those who inherit enormous sums of wealth and for generations may not even need to consider ever working. My arguments about family helping family fall pretty flat if it's someone transferring hundreds of millions. Although I am sure there are other ways people do this...

So the question is really what is a reasonable exemption.

The threshold seems to have risen yearly from 198k in 1990 to 542k in 2009. I presume this was based on inflation / house value. Then we had 3 decreases in two years to bring it to 332k? Was this a reasonable threshold rate? It probable exempted most houses even if only one child. If that value was reasonable surly it means todays rate is too low?
 
Purple said:
It's like the story of the Commissar visiting the communal farm in Soviet Russia. He's being shown around by the farm manager who is trying to impress him. The Manager asks a peasant in the field if he understood communism and the Peasant replies "Yes Comrade"
The Manager asked, "Comrade, if you had two houses, would you give one of them to me?"

The Peasant replied, "Of course, Comrade!"

He then asked, "If you had two horses, would you give one of them to me?"

"Of course!" replied the peasant.

He then asked, "If you had two coats, would you give one of them to me?"

"No, comrade!" The Peasant said.

Surprised and embarrassed, the first Manager asked, "Why not, Comrade?"

The Peasant replies "Well if one gets damaged, I will freeze to death. I don't trust the state to provide me another coat."
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I fixed that for you.
 
faketales said:
Well I didn't say I was a socialist.

And I think like most people the answer is somewhere in the grey as opposed to black and white for or against CAT. I don't think there are too many people who believe CAT should start at the first euro and be at a much higher tax rate. The vast majority of people agree with some level of tax exemption and I suspect a very high percentage of people would agree with a certain level of cap that may at least tax those who inherit enormous sums of wealth and for generations may not even need to consider ever working. My arguments about family helping family fall pretty flat if it's someone transferring hundreds of millions. Although I am sure there are other ways people do this...

So the question is really what is a reasonable exemption.

The threshold seems to have risen yearly from 198k in 1990 to 542k in 2009. I presume this was based on inflation / house value. Then we had 3 decreases in two years to bring it to 332k? Was this a reasonable threshold rate? It probable exempted most houses even if only one child. If that value was reasonable surly it means todays rate is too low?
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The State will always find ways of wasting money and delivering poor levels of service. The permanent, un-sackable, un-nameable, un-accountable employees of the State charged with spending other people's money on services and supports for other people will never deliver good value for money. I don't understand why anyone thinks it is a good idea to give them more money.

I'm not a big fan of taxed. They are a necessary evil.

My starting point with how we tax people is that labour should not be taxed at a higher rate than inherited or unearned wealth/income. If we can get the marginal rate of income tax below 30% then lower the rate of inheritance tax.

Work should be the way people acquire wealth. Working should always pay. Abolishing inheritance tax is the same as having our very generous welfare system in that it makes working and earning a living less attractive.
 
The Horseman said:
How did you get that from my post?
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You introduced the concept of children who have no relationship with their biological parents into a conversation on the fairness of children having to pay tax on a windfall / inheritance. I'm would imagine it is quite rare for such parents to leave very significant sums to such children.

While you are correct in that children omitted from a will can indeed contest their lack of provision, the parent's responsibility to provide ends once they reach adulthuood / leave full time education. It's rare enough for an adult child to be successful in overturning the expressed wishes, you can read plenty of case history on that in the many farming children who feel hard done by when one sibling gets it all.

As the majority of parents live beyond their children becoming independent, and the majority of parents maintain good relationships with their parents, you're really resenting an edge case.
 
faketales said:
Exactly. I would consider myself left wing but am not exactly in favour of CAT.

My rational is that money earned by the family should be able to stay within it without further tax. The family is the core of our society. If I want to spend that money on myself or on my son (regardless of age) the tax man shouldn’t be involved.

If I do rather well in life and want to look after my close family by for example buying my parents or brother a car or perhaps a house why should the tax man get involved in how we as a family want to spend our money. My parents may have forgone earning to stay at home and mind me. Perhaps I want to repay my brother for being there at a difficult time.

Families make all sorts of decisions of care about one another that have financial impacts that are waves because they are family. Yet when there is an opportunity to repay the tax man is looking to get involved.
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I would think that the annual gift threshold of €3k plus the lifetime threshold of €32.5k allows sufficient scope for the expression of gratitude by most people of normal means. Not forgetting that money paid towards normal welfare or maintenance of family (medical, nursing home care etc) is disregarded as well.

The appropriate level for the thresholds is certainly up for debate, but I really can't understand how anyone who considers themselves a lefty can square away the idea that the wealthiest in society ought to be facilitated in providing for the future generations of their families to potentially to live substantially tax free, or with a far lower burden of tax than productive members of society, all off the back of one person's success and / or luck in business. That is an inescapable consequence of allowing a free for all on intergenerational wealth transfers.

faketales said:
I fixed that for you.
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You're lucky you didn't do that to @T McGibney :eek:
 
torblednam said:
I would think that the annual gift threshold of €3k plus the lifetime threshold of €32.5k allows sufficient scope for the expression of gratitude by most people of normal means. Not forgetting that money paid towards normal welfare or maintenance of family (medical, nursing home care etc) is disregarded as well.

The appropriate level for the thresholds is certainly up for debate, but I really can't understand how anyone who considers themselves a lefty can square away the idea that the wealthiest in society ought to be facilitated in providing for the future generations of their families to potentially to live substantially tax free, or with a far lower burden of tax than productive members of society, all off the back of one person's success and / or luck in business. That is an inescapable consequence of allowing a free for all on intergenerational wealth transfers.


You're lucky you didn't do that to @T McGibney :eek:
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I’ve clarified that my principal of being able to support family certainly fades away when we are discussing millions over multi generations.

However the current threshold hasn’t changed in 15 years. Which is the equivalent of a large decrease. If a number is agreed on as fair then it should move with inflation.

Personally I think the numbers should be a bit higher. No one is living a life where they never need to work or contribute to society on the back of 350k. The reality is for most people is it will make their retirement more secure / comfortable. Perhaps a few years early.

I’m left leaning but believe that the family first and then a state to support.

Some people seem to see inheritance as if it was a complete stranger gift the money.
 
faketales said:
Personally I think the numbers should be a bit higher. No one is living a life where they never need to work or contribute to society on the back of 350k.
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To accumulate €350k through work one would have to earn €700,000. That's €17,500, a year or €336 a week every week of a 40 year working life.

The average weekly wage in Ireland is a little over €900. That means the average working person had to save one third of their earnings every week that they work in order to save €350,000.
 
Purple said:
To accumulate €350k through work one would have to earn €700,000. That's €17,500, a year or €336 a week every week of a 40 year working life.

The average weekly wage in Ireland is a little over €900. That means the average working person had to save one third of their earnings every week that they work in order to save €350,000.
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Save or just pay a mortgage for 25 years.
 
Purple said:
To accumulate €350k through work one would have to earn €700,000. That's €17,500, a year or €336 a week every week of a 40 year working life.

The average weekly wage in Ireland is a little over €900. That means the average working person had to save one third of their earnings every week that they work in order to save €350,000.
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You're forgetting the power of compounding - or as Einstein put it
Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it
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Except it isn't one third - it would be a lot less

And, Yes, I understand that the average person will never have a pension pot of € 2M or anything like it
 
To make any appreciable difference to Income Tax by how much would CAT have to be raised?

To decrease income tax by 1% in 2025 would cost €1602m.

CAT paid in 2023 was €634m
 
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Sophrosyne said:
To make any appreciable difference to Income Tax by how much would CAT have to be raised?

To decrease income tax by 1% in 2025 would cost €1602m.

CAT paid in 2023 was €634m
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Those are indeed facts (I'm sure you wouldn't cite incorrect figures) but what point / argument are you making based on them...?
 
torblednam said:
Those are indeed facts (I'm sure you wouldn't cite incorrect figures) but what point / argument are you making based on them...?
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Income tax 1% reduction - both rates page 4.

CAT paid 2023

The idea posed, by some posters at least, is that increased capital taxes would lower income tax.

My point is that all capital taxes would have to take a huge hike to make any meaningful income tax reduction. The consequences of enormous increases in capital taxes would I think be economically undesirable for numerous reasons.

Tinkering around the edges of CAT is not worth talking about in that context.

Besides, it is by no means certain that Inheritance Tax will be abolished.
 
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