Brendan Burgess
Founder
- Messages
- 53,198
If the business is valued at €2.335m as in my example, it should be generating profits of around €200k a year before tax. And profits are what is made after paying the directors salaries for feeding their children. If it's not generating that level of profit, it will not be valued at €2.335m
And they generate almost nothing material to government coffers.
Those are not realistic figures for a farm, 2.3 million generating 200k profit after you have already deducted salaries etc.
You’re just proving the point that these businesses are less profitable therefore less productive.
You’re just proving the point that these businesses are less profitable therefore less productive. The favourable CAT treatment keeps them hanging on a decade or so more than they would otherwise.
This is not a long-run good! Look up “creative destruction”.
Exactly.In this scenario of mass farm failure wouldn't all the land end up owned and controlled by a small group of large (potentially foreign) companies with a rural landless class working land they don't own?
That seems like something from the 19th century and not something to aspire to.
Even if capital tax receipts doubled, they'd amount to little more than a rounding error in exchequer receipts.But that is because of the huge exemptions. If we reduce the value of business and farming assets by 90%, then of course there will be very little tax generated.
If we abolish capital gains on death, then there will be very little Capital Gains Tax.
But if we get rid of these nonsense exemptions, then we would generate some material capital taxes.
Brendan
In this scenario of mass farm failure
Is it really worth destroying family farm and business livelihoods for that?
How can you say this Brendan?Except that this would not happen.
we should be looking at making the existing regime more generous.
What's so special about nurses that they shouldn't be paying the same tax as everyone else?But the fact that someone can inherit a farm worth over €2m , pay no CAT on it, and then sell it after 6 years is just plain wrong when nurses are paying 52% on their overtime earnings.
A family business could be worth a lot because of the land value of the premises. The business may not make that big a profit. If a big CAT liability is levied the chance of the next generation just closing the business will be increased. Many family businesses require significant restructuring and modernisation by the next generation. Taking a big lump of capital out of the business just when it's needed the most is not a good idea.That is really a question of public policy where we would differ.
I think passing on wealth free of taxes is simply not fair when marginal income is taxed at 52%.
People inheriting businesses worth millions of euro should be paying CAT.
People inheriting farms worth millions of euro should be paying CAT if they sell those farms.
Brendan
I'm slightly too young to have ever seen it in practice, but is what Brendan's proposing akin to rollover relief, or could be fixed through the CGT system i.e. rather than imposing CAT at point of receipt, you would adjust the CGT base cost for assets that had been the subject of the valuable CAT reliefs... that way, if / when the farm / business is sold a tax charge crystallizes.
Doesn't the median Irish field get sold every 300-400 years or so?
Most Irish family businesses are never sold either. They either are taken on by a family member or just close down.
Your suggestion would cripple future sales of farmland and going-concern businesses. Boomtime for liquidators.
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