The Premier of Victoria Jacinta Allan – a member of the socialist left faction of the Labor Party, like her predecessor Dan Andrews – wants us to have death taxes, also known as inheritance taxes. Somehow, she thinks that this is a neat idea and a fair thing for governments to foist upon the masses. One media story about this proposal goes like this:
Victorians claiming estates worth up to $250,000 will have their probate fees waived, but those handling assets of more than $2 million are set to pay thousands of dollars extra under changes announced by the Allan government on Monday. The biggest increase in costs will be for estates worth between $250,000 and $500,000 – up 645 per cent. The fees for estates in that range, currently about $69, are set to rise to $514. Fees for estates valued at more than $500,000 will jump between 180 per cent and 625 per cent.
Probate fees are essentially the administrative costs paid to the court to validate and approve the distribution of an individual’s estate. The changes mean that Victorians handling the estate of a deceased loved one worth more than $2 million could be paying almost double – or in some cases more – the equivalent charges in NSW and South Australia.
The state government argues the changes are needed to cover the cost of handling large, complex estates, including those that are challenged in the Supreme Court. But shadow attorney-general Michael O’Brien criticised the government for announcing it on the eve of the Melbourne Cup and argued the new fees – to be introduced on November 18 – couldn’t be justified.
“This is effectively the imposition of a death tax by stealth, to have massive increases in the amount of money that grieving families have to pay when a loved one dies to get probate,” O’Brien said. “This government will stop at nothing to raid the pockets of dead Victorian and grieving families because Labor can’t manage money.”
Plenty of other critics can be cited here. Liberal MP Jason Wood said this about the move:
State Labor will push ahead with fee hikes of up to 650 per cent to process wills and it’s rightly being dubbed a ‘death tax by stealth. Even ignoring concerns that this could lead to increased cases of elder abuse. This is what happens when Labor goes on a spending spree with no economic plans – they come for more of your tax money. Now watch Albo – he will go follow the same approach, he’s already spending big and he’s committing to spending more, the most recent being $16 billion for a HECS cut – which will mean $16 billion in higher taxes.
And business journalist John Beveridge said this about the plan:
If you are looking for proof that Victoria’s Allan Government has run out of time and ideas, the mooted “stealth death tax” it is looking to introduce should be exhibit A. Proving once and for all that it has learned absolutely nothing from the ill-fated and eventually High Court banned electric vehicle tax, the proposed increases in probate fees are staggering in both size and “soak the rich” opportunism.
And, like the stupid EV Tax which saw owners taking pictures of their odometers and sending them in to work out how much they had to pay, this tax rise is also highly impractical and prone to avoidance. After all, when the increases range as high as 650% for a service which most lawyers complete in under an hour, the size of the “windfall” extra $11 million for the State Government is ridiculously small for creating such a frankly upsetting new death tax that will hit people at the most inopportune time.
Already lawyers are warning that it could cause some people to refuse to be executors of larger estates due to the up-front bills that will need to be paid, possibly as an interest free loan, and the reluctance of even large law firms to be on the hook for such large amounts of money long before an estate is finally settled.
Overseas experts can also be drawn upon here. As Edward J. McCaffery said in a lengthy piece entitled “The Moral Case against the Death Tax”:
Polls and practices consistently reveal that people in the United States and elsewhere oppose the idea of death taxes: Canada, Australia, and Israel, for example, have abolished such taxes. The death tax can be thought of as the opposite of a sin tax: it is a virtue tax. It is a tax on intergenerational altruism and thrift.
It is time to forget complicated “carve-outs,” complicated plans for taxing capital gains at death, or simple reform plans that leave the death tax in place. The optimal solution is to get rid of death taxation at its theoretically flawed root. We should consistently tax people as they spend, not as they work, save—or die. A consistent, back-ended consumption tax imposes a levy on our use of resources. If mom and dad work hard and save well and then pass on their left-over wealth to their children—not having needed to spend it themselves—we can and should tax the children when and as they spend the money. If we want some progressivity in our tax system, we can achieve it perfectly well under a variety of consumption tax models. We don’t have to tax savings or savers two and three times, at the highest tax rates in America today.
We especially don’t have to tax wealthy individuals who go to their graves leaving behind a store of capital unspent on their own personal whims. These are perfectly good and noble Americans, and it is little short of a sin that their distant Uncle Sam should be dancing on their graves. In short and in sum, for moral reasons above all, it is high time to kill the death tax.
Lastly, Black American economist and social commentator Thomas Sowell has written on this topic. In one place he says this:
Luck may well have played a role in enabling some people to provide valuable goods and services. Others might have been able to do the same if they had been raised by better parents, taught in better schools or chanced upon someone who pointed them in the right direction. But you are not going to change that by confiscating the fruits of productivity. All you are likely to do is reduce that productivity and undermine the virtues and attitudes that create prosperity and make a free society possible.
There seems to be some notion around that only purely individual merit can justify differences in income and wealth. But we are all huge beneficiaries of good fortune that we do not deserve. By what merit do we deserve to be living more than twice as long as the cave man and in greater safety, comfort, health and prosperity? We just happen to have been born in the right place at the right time. As Hamlet said, give every man what he deserves and who would escape a whipping?
The question is not what anybody deserves. The question is who is to take on the God-like role of deciding what everybody else deserves. You can talk about “social justice” all you want. But what death taxes boil down to is letting politicians take money from widows and orphans to pay for goodies that they will hand out to others, in order to buy votes to get re-elected. That is not social justice or any other kind of justice.
This is just another reason to say goodbye to Premier Allan and her useless Labor government. We do not need this death tax. As has already been said about all this madness: “In Victoria, four things are certain: births, taxes, death, and then more taxes after that.”
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