Labour broke it’s no-higher-taxes promise with the extension of the bright line test.
It broke its no-new taxes with the one on utes.
Now it’s looking at bereaking the no-new taxes promise again by taxing the dead :
There are a couple of pieces of evidence to suggest may Labour may want to go to the next election proposing an inheritance tax.
The first is the Government’s decision to allocate $5 million over two years to Inland Revenue in the Budget to assess the income and wealth of high-wealth individuals.
An IR spokeswoman confirms that work should shed light on issues including the amount of inherited wealth.
If the Government is going to consider an inheritance tax, commissioning such research was probably going to be a necessary first step. . .
Taxpayers’ Union Campaigns Manager Louis Houlbrooke lays out five reasons against the idea:
Incentives: A death tax would discourage New Zealanders from saving and investing their earnings. Less capital would be built up as older New Zealanders choose to spend their savings instead of building an economic legacy for future generations.
Fairness: A death tax is a double tax. Someone would spend a lifetime giving up their earnings via income tax, only to have their remaining earnings taxed again as savings upon their death.
Complexity: The biggest beneficiaries of a death tax would be accountants and tax lawyers, who would be engaged by the wealthy to thread investments through complex exemptions and loopholes in the tax, such as exemptions for farm assets, trusts, and gifts prior to death.
Gift tax was axed a few years ago because it garnered so little.
Revenue: Any revenue from a death tax would be meagre. Of the OECD countries to have implemented death or gift taxes, an average of just 0.5 percent of total tax revenues is generated by those taxes. This means that even if our government decided to make a death tax revenue neutral by cutting income tax, the income tax cut would be nearly imperceptible.
Problem definition: A death tax, or indeed any kind of wealth tax, fails to address the actual causes of rising inequality: specifically the shortage of housing which has pumped up the value of assets held by the upper and upper-middle class.
If only the government put some effort into carefully managing the money it already gets rather than devising additional ways to part us from more of ours.
Instead of looking at ways to take more money from taxpayers the government should be analysing its own spending and reducing the burden of tax, reducing the amount needed in the public purse and leaving more money in the public’s pockets.