Canada doesn’t have an inheritance tax. For the sake of democracy, that needs to change.
For the record, we don't have an inheritance tax, we have an estate tax. So yeah, your grandmother's jewelry may not be taxed, but property and land are treated as sales and you're taxed on that. Gifts are considered income, so there's no gift tax, there's income tax.
Edit to add: if you file your taxes properly and include your grandmother's jewelry as "gifts", which they are, you'll have to pay income tax on them.
Edit again to add: A Canadian's estate can be taxed between 30-50%. This amount decreases based on charitable donations and legacy projects. (These are off my memory from a discussion with some estate lawyers several years ago, I'll try to find some sources...)
Edit for sources...CRA is pretty in-depth, more than I think we need here, so feel free just to look up the various taxes on the CRA site. Some tax software actually has some pretty good summaries, but I'm not advertising for them, so yeah...
Some corrections on what I had. So when a person passes away they still need to file one last tax return, which basically assumes they sell everything at market value. Property is usually taxes at 50%, everything else is just income. Deductions for charity and such and made. Once taxes are paid, the remaining is distributed to surviving family or as according to their will.
Never mind Canada. We should be confiscating estates larger than $1 million in the US. Fuck the aristocracy.
Not only that but a $1M estate is hardly a mark of the aristocracy! The average value of houses in the US is $200k, and in many metropolitan areas that is often significantly higher so that confiscation policy is going to be squarely targeting the middle and upper-middle class rather than the 1% (which deal with estates in the hundreds of millions to billions range).
@spctrvl already raised the same question.
I am all for redistribution of wealth from the 1% and preventing an aristocracy from forming, but that $1M mark (even with a primary residence exemption) is still an absurdly low bar to set. If you're reasonably smart with your money, $1M + a house is not that out of reach for even most working class people to accumulate by the time they die. And as for why you shouldn't completely remove all incentives for accumulating some degree of wealth and being able to pass that security on to your children, I think that should be entirely obvious.
@spctrvl already raised the same question.
I'm the kind of all-American idiot who thinks that software development is a sensible day job for wannabe novelists, so while it might be obvious to you I'd appreciate an explanation. :)
He raised the question, sure, but even your reply suggesting a primary residence exemption still sets the bar insanely low IMO, which is why I mentioned that. As a software developer in the US, you are likely earning approx. 100k/yr so it honestly surprises me you think $1M is a reasonable limit to set for estate confiscation since you could easily reach that amount purely in savings (let alone assets) in 15-20 years of reasonably steady employment, frugal living and sound investment.
And as for why removing all incentive to accumulate some degree of wealth and pass it on is a horrible idea, you merely need to look to any failed communist state in the last 100 years that has attempted to level the playing field like that in terms of wages and inheritance to see how that idea goes horribly awry. Desire to better one's position and provide security for your children is what drives economies and often drives innovation as well. And in the US that security is even more critical to maintaining a healthy middle class since you lack public healthcare and your social safety net is almost non-existent compared to most other Western countries.
Now with all that said, where the US is right now, with CEOs earning 300x more than the median income and the top 1% controlling 40% of the Nations wealth, is not particularly healthy either... but to remove all incentive for people to better themselves and their family's position is not the answer. And IMO setting that cap to $1M is absurd even now, and in 40 years will be even moreso due to inflation.
I wish. Try being a developer outside Silicon Valley, Seattle, and NYC. The money isn't terrible, but it isn't that great either.
That's something we could fix by taxing the rich harder and putting the Pentagon on a starvation diet.
You know what really drives innovation? Publicly funded pure science. The private sector isn't going to risk losing money on R&D unless they can guarantee a profit.
No other Western country has needed to completely confiscate estates over $1M to fund their public healthcare so why do you feel the US needs to? And given your choice of the $1M mark, your definition of "rich" is obviously completely at odds with mine since $1M in end of life assets is not a whole hell of a lot these days and a far cry from the amount the 1% deal in, which is who we really need to be targeting IMO.
I don't disagree with you about publicly funded pure science being a great thing, but I also don't see profit as a completely corrupting influence on innovation either.
Like I said, money is power. If you're rich enough that you can exert more influence by making donations than other people can by voting and writing letters, then you're too damn rich and need to be dragged back down into the bucket with the rest of us.
Well, excuse me for being old enough to think of a million dollars as a shitload of money.
Show me a profit margin above 1%, and I'll show you a bunch of rent-seeking parasites.
There are places in the US alone (thinking of San Diego and San Francisco; NYC and most of LA could probably be included) where relatively modest homes go for well over a million dollars. That's a terribly low amount of money to literally confiscate from someone just because they were able to earn it. In one of the lowest cost-of-living areas in the country (NE Ohio), I have friends who live in houses that cost well over $300K, and they're modest houses, usually 3-4 bedroom and 2 or 2-1/2 baths. My buddy Frank is the president of a large local union, and earns $150K+ per year. In twenty years (around retirement), he'll have well over a million dollars in savings (he gets bonuses and other large payouts from his job), all earned with 20+ years hard work as a lineman electrician. He spent over two months in Jersey after the hurricane, working as a lineman to get the power back on. There's no way it could be considered fair to seize that from him. He inherited none of that money and is entirely self-made.
I suspect we are done here since nothing either of us can say will possibly bridge that gap between us and so all we will wind up doing is getting into a fight if we continue. Nice talking to you though and thanks sharing your perspective.
If you bring back an estate tax stringent enough to both encourage philanthropy and prevent the transfer of excessive wealth between generations (to prevent the rise of an aristocratic class), such a tax will be branded "confiscatory" by conservatives and reactionaries enamored of plutocracy.
So why not just anticipate them by saying that, to curtail the power of the rich and prevent an aristocracy from subverting the republic, the United States will outright confiscate all estates valued at more than $1 million, with only the primary residence exempt?
Eh, I'm 100% on board with the expropriation of excessive wealth, but I think a million is quite a low bar. There are plenty of people who don't crack the top 1% living in million dollar homes just because of the inflation of property values in and around cities. I'd say just set the bar the same as the US inheritance tax threshold, around 5.5/11 million depending on whether the estate is that of a single person or married couple.
We can modify the law so that either the first $1,000,000 or the primary residence is exempt from the estate tax, whichever is higher. As for inflated property values; it's my understanding that the land value tax proposed by Henry George is supposed to fix that.
The LVT is a good idea. And the exemption of primary residences could work so long as you were judicious in making sure people weren't operating large businesses out of their homes or otherwise hoarding capital in them for tax reasons.
Good point. We'll have to make sure estate tax collectors are armed with search warrants signed by Federal judges and the authority to kick down doors.
To be clear, are you advocating for a 0% marginal tax rate on the first $999,999 of an estate, followed by a 100% marginal tax rate on estates above $1 million?
I'm all on-board with taxing wealthy estates as a way of preventing a permanent aristocratic class, but I think there's room for a much gentler slope to the progressive tax rate.
0% on the first million. No need to begrudge the rich that one last dollar.
I don't think any individual needs or should be allowed to possess a net worth greater than a million dollars. Money is power, and anybody who possesses too much of either is a threat to everybody around them.
My main problem with your idea is pegging it to a nominal value. COL varies drastically across the country, and prices are always experiencing inflation. That’s my problem with most taxation thresholds though - many don’t take into consideration COL and the time value of money.
We can write the law so that the threshold is automatically adjusted for inflation and remains a million constant dollars.
That doesn't address the issue of cost-of-living variations across the country. $1 million in NYC is easier to obtain because of higher salaries, and also doesn't go nearly as far, compared to $1 million in Kansas.
I think that would be very easy to work around and very hard to enforce in general.
All they have to do is give the money away before they die. If they do via philanthropy, great. If they just give the money to their kids we'll get a cut via income taxes. But if you're stupid enough to die while sitting on a shitload of hoarded wealth like a dragon, well, tough shit.
Right now? Just me and my cats.
Nah, seriously though. This proposes more money to the government, where would that go?
This is the best example of saying "I know nothing about how taxes work in the real world" and "I hate people with money because I'm poor" in the quickest way.
Please assume the best about fellow Tildos until proven otherwise.
"I know nothing about how taxes work in the real world" could easily be "I know how taxes work in the real world, and strongly disagree with it".
"I hate people with money because I'm poor" could be "I hate people with money because I'm wealthy enough to have my personal needs fulfilled, and believe anyone pursuing more than that is doing so for the wrong reasons".
I definitely could have been a little nicer but it reads like a mix of middle school communism and the hatred of an incel but with money instead of women.
You're right I don't know their life, but certain phrases give you a hint.
Could you please elaborate?
I agree that demifiend's $1,000,000 limit on inherited estates would have disastrous consequences for any economy, but this post in isolation is hostile and doesn't add to the conversation.
@spectrvl and @cfabbro wrote courteous and detailed explanations of why confiscating estates worth >$1M would be a crude and needlessly punitive approach to combating inequality.
I would criticize demifiend's parent comment as well for being low-effort, but it looks like they expanded upon their point in replies to the post.
Tell yourself whatever you like.
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No it does not need to change, not everything needs to be taxed to hell and back. Estate tax is already a thing as another user mentioned.
I would love to see any kind of analysis on the amount of wealthy people that simply move their money out of the country or gift it before they die to avoid things like this. It seems like as long as they are wealthy they will find a way to pay some smaller amount to keep the mass of it. Or just leave to a country that won't strip their entire momentum from their family.
Yeah I was just throwing a random example out of something that could be a loophole not specifically trying to say that you can avoid these taxes in Canada just by gifting stuff instead.
I just meant it more in a "they will find somewhere to put it you can't get to if you're trying to take too much"
I would be interested in that too, especially anything that crosses boarders.
Additional info (disclaimer, not an expert, just seen enough of my extended family trying to sort through this): Short of purposefully misfiling your taxes, you can't really side steps these taxes (estate and gift) in Canada, which I believe is sort of why we have an estate tax instead of an inheritance tax. If you decide to gift your stuff to your children, your children pays the tax on that instead of your estate.
You can gift it to charity, and get a tax break instead, so I guess you can always gift it to your children's charity or something too.
I wish I'd known this before paying a boatload of taxes the last time I inherited something. /s