The Tycoon Report

True inherent problems with inheritance

Dear readers,

I am sure the inflammatory article written by Bob De Dea, 'Inherent problems with inheritance tax', will have invoked a reaction from many readers of the Tycoon report. I do not normally react to opinions or ideas but this article was so outrageous that I feel compelled to respond.

So what is inheritance tax really? It is the most immoral tax ever conceived! An individual works and pays tax on their salary, to whom does the net income belong? The individual then invests some of their money and pays tax on any dividend, interest and capital gains, to whom do the net proceeds belong? There are various forms of consumption tax which means every time money circulates or changes hands it is once again taxed. So an individual has paid tax every step of the way, on their salary, investments, savings and consumption, the remaining money belongs to that individual irrespective of the amount. It should be the individuals choice to do whatever they wish with their remaining money, be it to give it to charity, bet it all on black at the roulette wheel or give it to their heirs, governments have no moral right to take anything further.

The next point worthy of discussion is to look at the effect of inheritance tax and the cost of collection. It is my belief that it destroys more wealth and ultimately tax revenue for a country than it can collect. The money spent on tax planning, trusts and of course the relocation of assets are very destuctive to wealth, not to mention the misery of having to deal with the IRS or equivalent at at time of grief. The truely wealthy are able to afford the best advise and are usually financially nimble whereas the middle classes are the ones whose wealth will be destroyed by inheritance tax. Inheritance tax, far from being a redistribution of wealth, polorises the haves and have nots and divides people into two classes the wealthy and the rest of us.

The final point I would like to address is the fact that Mr De Dea seems to suggest that a government taking a large chunk of someones inheritance will mean that the common good will benefit, yep, I disagree again. How good are governments at managing our money? The more they have the more they spend, giving a government more money is like giving an alcoholic more booze. Lets examine the efficiency of spending. If you buy something for yourself, you will buy what you need, it will be the right size and color, it will fit your needs and be at the right price. If you buy a present for a friend, you may have an idea of size and color (but not necessarily) and you don't know if it is what they truely need or want. You may also pay a little more or get less value for money than if you were buying for yourself. The third scenario is if a third party asks you to buy something for one of their friends that you don't even know. You have no idea what to get because you don't know their needs or preferences so you might easily end up buying something totaly inappropriate. This third scenario is how governments spends our money. They take our money to spend on someone else without knowing what is needed. All the data that governments have is historic and governments the world over are not known for their fiscal efficieny.

So no thanks Mr De Dea, I would rather redistribute my wealth (if I have any) myself.

John Lillitos