Modelling indicates that an inheritance tax on the most prosperous percentile of estates will collect billions and help counter rising wealth inequality.
But it’ll have to get past voters for the proposal to get up. It won’t be that easy. Labor may have partially lost the federal election last year due to a false rumour that a ‘death tax’ will be imposed. Australians are curiously averse to taxing the homes, cars and boats of the very wealthy when they die for a country that prides itself on being egalitarian.
Professor John Managan, an economist at Queensland University, wonders if COVID ‘s experience will change the minds of people.
Young people largely complied with social distance rules during the pandemic and stayed home, sacrificing their jobs and gaining authority to delay transmission and save the lives of older Australians.
Young people owe a debt to these older generations, Professor Mangan said, and not just because of COVID. Other reasons include the fact that young people appear to have poorer employment opportunities, less access to affordable housing, and more debt than they had at their age in previous generations. In general, baby boomers have grown considerably wealthier, although the household income of individuals under 35 has stagnated since 2004.
“Young people are owed that debt anyway,” Professor Mangan said.
“The fact they’re now paralysed in a generational sense because of COVID makes it a very strong argument.”
The “most obvious and easy” place to start is the inheritance tax, he said.
Although legally distinct, the words “estate tax” and “inheritance tax” are sometimes used interchangeably. The estate tax is paid by the estate of the deceased (i.e. not by a person), while the beneficiary of that estate pays inheritance taxes.
That doesn’t really matter to us now, in any case. Australia does not have any form of levy; it does not levy inheritances or deceased estates. In this article, as they have much the same effect,’ inheritance tax’ refers to either one.