Alan Shatter's campaign to abolish Inheritance Tax

Purple said:
Most peoples wealth in this country was gained through property price appreciation. That isn't after tax income, that's just capital appreciation.
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Mine isn’t. And nobody ever talks about the interest paid. All of the purchase, capital plus interest, has been funded by after tax income. Like lots of people, if I need €50k to upgrade bathrooms, I need to make €100k, of which Jack Chambers snaffles €52k.
 
Gordon Gekko said:
The point of Agricultural Relief and Business Property Relief is to keep family businesses intact and to protect employment. There should be further changes to stop non-farmers buying agricultural property solely with a view to pushing value through the relief inappropriately.
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If I inherit a farm or a business worth €10m I will pay about 3% CAT on it.

If I sell the business after 6 (?) years I will pay CGT on the increase.

I should be charged for CAT like any other inheritance. So on €10m I would have a liability of about €3m. It's not a lot. It would not be payable until the business is sold.

Brendan
 
Brendan Burgess said:
If I inherit a farm or a business worth €10m I will pay about 3% CAT on it.

If I sell the business a few years later I will pay CGT on the increase.

I should be charged for CAT like any other inheritance so on €10m I would have a liability of about €3m. It's not a lot. It would not be payable until the business is sold.

Brendan
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How many indigenous businesses are sold for €10m+ in any given year? I'd say it's at most a handful.

Most inherited or gifted going-concern businesses ultimately cease trading and are never subsequently sold. What happens the deferred tax bill then?
 
Brendan Burgess said:
If I inherit a farm or a business worth €10m I will pay about 3% CAT on it.

If I sell the business after 6 (?) years I will pay CGT on the increase.

I should be charged for CAT like any other inheritance. So on €10m I would have a liability of about €3m. It's not a lot. It would not be payable until the business is sold.

Brendan
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Then it would never be paid though, or at least rarely. The aim of the legislation is to keep business assets in families and to preserve employment.
 
I attach the Tax Strategy Group's summary of the Commission on Tax and Social Welfare's views on capital taxation

7. Commission on Taxation and Welfare


119. The report of the COTW examined Ireland’s capital taxes policy in detail. The Commission placed emphasis on the importance of broadening the tax base and in particular recommended that the share of taxes from capital and wealth should be increased. This is in the context of 2.5% of tax receipts currently coming from capital taxes. The COTW made the case for significant changes to current capital taxes policy. One theme which emerged from the COTW report was that the various reliefs provided for in respect of both CAT and CGT interact in a way which provide valuable relief to those who qualify with a consequence that the amount of tax collected on the transfer of assets is diminished.


120. For CGT, the Commission made recommendations related to the treatment of assets on a death, restriction on principal private residence relief and lifetime limits on disposals to children who qualify for retirement relief. For Capital Acquisitions Tax, the commission made recommendations related to group thresholds, gifts and inheritances generally, the treatment of foster children and reductions in the availability of agricultural and business relief.


121. In relation to savings taxes, the Commission recommends that deposit interest should be treated the same as other forms of income for tax purposes over the medium term.


122. The Department will, over the medium to long term consider the wider range of issues
highlighted by the COTW. In particular, the recommendation’s regarding specific reliefs will
be considered as each of these reliefs falls due for their periodic review.
 

Attachments

  • Tax Strategy Group on capital taxes.pdf
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T McGibney said:
You know that's not how CAT works.
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Of course, I know that.

But you are suggesting that someone who inherits a farm or a business which subsequently falls in value should not have to pay tax.

I am suggesting that the tax should be calculated at the point of inheritance. What happens after that is not relevant to the taxation paid at the time of inheritance.

Brendan
 
Brendan Burgess said:
But you are suggesting that someone who inherits a farm or a business which subsequently falls in value should not have to pay tax.
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No I'm not.

I'm suggesting that your proposal, viz.
Brendan Burgess said:
I am suggesting that the tax should be calculated at the point of inheritance. What happens after that is not relevant to the taxation paid at the time of inheritance.
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would ruin many people who inherit businesses that ultimately fail (ie most of them).
 
Gordon Gekko said:
Mine isn’t. And nobody ever talks about the interest paid. All of the purchase, capital plus interest, has been funded by after tax income. Like lots of people, if I need €50k to upgrade bathrooms, I need to make €100k, of which Jack Chambers snaffles €52k.
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Mine isn't either, though my pension doubled in value in 10 years, during which there was almost no CPI Inflation. My house did the same thing. None of that wealth was earned so none of it is after tax income.

The rest of my wealth was earned but it wasn't earned by my children so why should they not pay tax on it? If I buy a sandwich with after tax income they guy who I buy it from still had to pay tax on it. It's the same thing.
 
Brendan Burgess said:
Of course, I know that.

But you are suggesting that someone who inherits a farm or a business which subsequently falls in value should not have to pay tax.

I am suggesting that the tax should be calculated at the point of inheritance. What happens after that is not relevant to the taxation paid at the time of inheritance.

Brendan
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So after 3 generations the tax liability could be greater than the value of the farm, or is the debt due subtracted from the value with each generation?
 
Hi Purple

The principle is that people who inherit wealth should pay CAT on it, whatever form that wealth takes.

If I inherit a farm worth €2m , I should pay about €600k CAT on it. If I don't have it I don't have to pay it while I am farming. If I cease farming, then the bill becomes due.

If it is worth €3m after 10 years when I die, and I leave it to another farmer, he inherits €3m less €600k (+ some interest). Again, he does not need to pay it until he ceases farming.

It's not that complicated.

But it would stop people inheriting businesses and farms , keeping them for 6 years, and paying only 3% CAT while much more moderate inheritances are taxed at 33% and marginal income is often taxed at 52%.

Brendan
 
Purple said:
Mine isn't either, though my pension doubled in value in 10 years, during which there was almost no CPI Inflation. My house did the same thing. None of that wealth was earned so none of it is after tax income.

The rest of my wealth was earned but it wasn't earned by my children so why should they not pay tax on it? If I buy a sandwich with after tax income they guy who I buy it from still had to pay tax on it. It's the same thing.
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It’s not really the same thing at all. The sandwich guy is in business with the aim of making taxable profits.

I also take issue with the flippant way that people (not necessarily you) flippantly say ‘he/she invested in a pension fund or a property and it went up’. The person took risk. Everyone wants a cut of it when things go well but the pensioneer or the investor or the businessperson is a lonely soul if/when things go awry.
 
Brendan Burgess said:
If I inherit a farm worth €2m , I should pay about €600k CAT on it. If I don't have it I don't have to pay it while I am farming. If I cease farming, then the bill becomes due.

If it is worth €3m after 10 years when I die, and I leave it to another farmer, he inherits €3m less €600k (+ some interest). Again, he does not need to pay it until he ceases farming.
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So your family is down over a million in CAT within 10 years, all because they suffered successive bereavements?

Would it not be more honest just to confiscate all private property and shoot everyone who objects?
 
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