Alan Shatter's campaign to abolish Inheritance Tax

[Zion2022]

I’m not so sure about the difficulty of moving away. We’re talking about people with money here, let’s call a spade a spade. Lots of people with money retire abroad, or at least have a place abroad. Lots of kids study or work abroad in places where gifts aren’t heavily taxed, or aren’t taxed at all. It’s just a case of aligning the two. Not entirely straightforward, but not rocket science either.

Based on my understanding of CAT, it’s the recipient of the money who would need to redomicile, not just the individual passing on the inheritance. So we’re not necessarily talking about people with lots of money, we’re talking about relatives of people with lots of money.

Add in that in Ireland there’s a lot of very wealthy people who don’t really see themselves as such because it’s all tied up in a PPR.

People typically receive inheritance at roughly age 50-60. Often peak career stage, maybe kids finishing out school/college. So these people would need to take a good guess at when their parents are going to die, move themselves & family to a different country and wait for that dreaded/glorious day to come….all to save 33% on money over a very generous threshold. These people must also be happy paying 52% on earned income to be here in the first place.

Throw in that you retain ‘ordinary residence’ for 3 years after leaving so you need to be gone out of Ireland for at least 3 years before the big day…easier to structure if it’s a gift before death but still a sizeable commitment and requires the parent to be willing to part ways with a substantial part of their wealth before death.

I think you’re talking mega levels of wealth to make all of that worthwhile…and even at that, would you really uproot your family to get €100m instead of €67m?

And in any case. Very wealthy people are masters at avoiding tax anyway. Doesn’t mean the taxes shouldn’t exist. Extreme cases make for bad policy.

 

[Bronte]

So if a business person or farmer dies, their successor gets lumbered with a huge tax deferral that will sometime have to be paid?

How would that work? Who in their right mind is ever going to advance business capital investment or working capital finance to a such a successor whose entire collateral is effectively mortgaged to the State?

Is the failure rate in second- and third- generation firms in this country not bad enough as it is?

Many in this country and many on this site are almost obsessed with finding new and ingenious ways to tax others (and it's always others) as long and as hard as possible, while remaining blind to the general inefficacy of public expenditure generally and public expenditure waste in particular.

Bike shed anyone?

 

[Bronte]

During the meeting he (Alan Shatter) described the tax as a “resentment tax” favoured by people who were “jealous” of those who had “lawfully accumulated assets”.
He said it “was an “invention of the 1970s ... a sort of socialist dogma that there was something wrong that families should ... provide some financial assistance to other members of their family”.

Can't fault him there as agree wholeheartedly.

Very rich man, with influence wants to put pressure on lawmakers so his accumulated assets can be passed on tax free.

BTW I hope he succeeds. Can’t stand the idea of more taxes on what we’ve paid income tax on already.

 

[Gordon Gekko]

Based on my understanding of CAT, it’s the recipient of the money who would need to redomicile, not just the individual passing on the inheritance. So we’re not necessarily talking about people with lots of money, we’re talking about relatives of people with lots of money.

Add in that in Ireland there’s a lot of very wealthy people who don’t really see themselves as such because it’s all tied up in a PPR.

People typically receive inheritance at roughly age 50-60. Often peak career stage, maybe kids finishing out school/college. So these people would need to take a good guess at when their parents are going to die, move themselves & family to a different country and wait for that dreaded/glorious day to come….all to save 33% on money over a very generous threshold. These people must also be happy paying 52% on earned income to be here in the first place.

Throw in that you retain ‘ordinary residence’ for 3 years after leaving so you need to be gone out of Ireland for at least 3 years before the big day…easier to structure if it’s a gift before death but still a sizeable commitment and requires the parent to be willing to part ways with a substantial part of their wealth before death.

I think you’re talking mega levels of wealth to make all of that worthwhile…and even at that, would you really uproot your family to get €100m instead of €67m?

And in any case. Very wealthy people are masters at avoiding tax anyway. Doesn’t mean the taxes shouldn’t exist. Extreme cases make for bad policy.

It’s like you didn’t even read my post. I literally spoke about parents retiring abroad and kids studying or working abroad at the same time.

Also, one could argue that, say, a €1m saving on €3m is more attractive than your extreme example of a €33m saving on €100m.

 

[Brendan Burgess]

Why is there no international movement to change the tax laws so that Irish citizens get taxed whether they live here or not?

Isn't that what the USA does?

And let the Double Taxation treaties ensure that people aren't taxed twice.

And bring in an estate tax for Irish citizens who die while resident abroad.

But it would be a bit hypocritical when we are a tax haven for overseas corporates.

Brendan

 

[Zion2022]

It’s like you didn’t even read my post. I literally spoke about parents retiring abroad and kids studying or working abroad at the same time.

Also, one could argue that, say, a €1m saving on €3m is more attractive than your extreme example of a €33m saving on €100m.

I just don’t see it as likely to be a widespread phenomenon that people with kids of studying age (I.e. parents 50-55, kids 20-25) both up sticks & pick universities based on locations with favourable inheritance laws in order to save CAT on a €3m inheritance.

Sure it might happen in a few fringe cases but it would be vanishingly small. Most 50 years olds with €3m to give to their kids are likely to be flat out, head down in the middle of an exec career or running an SME. Not pondering inheritance tax their kids might have to pay in 40 years time. It’s definitely not a risk that you would be terribly concerned by when setting tax policy.
Sure we nail people for 52% marginal income over 70k it’s not like everybody has left yet!

From my experience it’s only those with really extreme levels of wealth who typically engage in such drastic tax avoidance strategies.

 

[Brendan Burgess]

Sure it might happen in a few fringe cases but it would be vanishingly small. Most 50 years olds with €3m to give to their kids are likely to be flat out, head down in the middle of an exec career or running an SME. Not pondering inheritance tax their kids might have to pay in 40 years time. It’s definitely not a risk that you would be terribly concerned by when setting tax policy.

Agree fully.

We design a lot of policy to discourage something which rarely happens, and thousands of people pay less tax as a result.

Brendan

 

[Gordon Gekko]

I just don’t see it as likely to be a widespread phenomenon that people with kids of studying age (I.e. parents 50-55, kids 20-25) both up sticks & pick universities based on locations with favourable inheritance laws in order to save CAT on a €3m inheritance.

Sure it might happen in a few fringe cases but it would be vanishingly small. Most 50 years olds with €3m to give to their kids are likely to be flat out, head down in the middle of an exec career or running an SME. Not pondering inheritance tax their kids might have to pay in 40 years time. It’s definitely not a risk that you would be terribly concerned by when setting tax policy.
Sure we nail people for 52% marginal income over 70k it’s not like everybody has left yet!

From my experience it’s only those with really extreme levels of wealth who typically engage in such drastic tax avoidance strategies.

Again you’ve chosen to ignore what I wrote and you’ve gone down a rabbithole in relation to specific ages that I never referenced. I said ‘study or work’.

You’ve also referenced ‘drastic tax avoidance strategies’, something I never referred to. I spoke about retired people having a place overseas and kids studying or working abroad.

 

[Zion2022]

Again you’ve chosen to ignore what I wrote and you’ve gone down a rabbithole in relation to specific ages that I never referenced. I said ‘study or work’.

You’ve also referenced ‘drastic tax avoidance strategies’, something I never referred to. I spoke about retired people having a place overseas and kids studying or working abroad.

Ok sorry I didn’t follow. You’re talking about a set of people where parents have gotten rid of their Irish ordinary resident status (through their retirement planning) and their children have also, coincidentally got a job or are studying in another country for 3+ years where there is no/low CAT. They then as a family see this as an opportune time to pass on wealth free of Irish CAT?.

1. I’m confident this would be a tiny tiny percentage of people
2. If this set up was not made purely for the purposes of avoiding CAT, it was merely just their life plans anyway, then their capital would have left Ireland anyway and therefore shouldn’t be considered a downside to Irelands CAT.

 

[Gordon Gekko]

Ok sorry I didn’t follow. You’re talking about a set of people where parents have gotten rid of their Irish ordinary resident status (through their retirement planning) and their children have also, coincidentally got a job or are studying in another country for 3+ years where there is no/low CAT. They then as a family see this as an opportune time to pass on wealth free of Irish CAT?.

1. I’m confident this would be a tiny tiny percentage of people
2. If this set up was not made purely for the purposes of avoiding CAT, it was merely just their life plans anyway, then their capital would have left Ireland anyway and therefore shouldn’t be considered a downside to Irelands CAT.

It doesn’t matter what percentage of ‘people’ it is.

What’s more relevant is the percentage of people with meaningful amounts more than €335,000 per child to give away.

 

[clinteastwood]

Fourth tax is the income tax that the publican pays.
Fifth is the VAT he pays when he spends your hard earned on expanding his collection of fake moustaches.
This game can go on forever.
It's almost like the State needs a continuous flow of tax money, from a variety of sources...

Yes it does, it will need millions to take care of you when you, your spouse and your sisters /brothers get sick, old and need 24h nursing.

 

[clinteastwood]

It doesn’t matter what percentage of ‘people’ it is.

What’s more relevant is the percentage of people with meaningful amounts more than €335,000 per child to give away.

There are bugger all % people who fit this percentage.