If nothing is certain except death and taxes, why not get them out of the way at the same time? I’ve often wondered why an estate or inheritance tax is not used in Australia. To me it seems a logical and comparatively fair way of performing the burden of taxation. Income taxes make generating wealth more difficult, so why not shift the burden off those actually generating new wealth and place it increasingly on to those who are getting it merely due to chance of birth?
Surely raising taxes this way is more efficient? Taking it off those who have windfall gains rather than those who are actually generating the most must be more efficient. In principle I can’t see any arguments against it that don’t also apply to income tax. I can understand there may be considerable practical difficulties in actually doing this, but this does not seem to be the reason people are against it.
So can anyone give me a good reasons for not having an inheritance tax in exchange for lower income tax? Or is it just a fantastic idea that we should go back to?