Page 99 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

Death and Taxes BY MONOCLE RESEARCH TEAM
In essence, tax can be simpli ed into two categories: those that occur before one’s death and those that occur after. Of the two, it is surely the estate duty that is levied after one’s death that is the more
odious. ese are the taxes that have brought aristocratic families to their generational knees; that have led to the re sale of chateaux, unravelled balanced equity portfolios and disrupted the ownership structures of major private rms worldwide.
Estate duty – or ‘death tax’, as it is known – has been on the frontline of the war that has been waged for centuries now, between the concept of competitive free-market capitalism and the socialist ideal of fair distribution of wealth. e capitalist argument is simple: one can understand to some extent the necessity for tax on one’s income and even on one’s capital gains during one’s lifetime. But it is something entirely di erent to accept the idea that one’s wealth – at the very point of departure from this mortal coil – should require a signi cant haircut.
In the case of Europe and the US, this haircut constitutes up to 40 percent of net asset value. During one’s lifetime, the balance between the capitalist argument (innovation, entrepreneurship and the creation of jobs) and the socialist agenda (fair distribution of wealth, free healthcare, social grants, and education for all) is to some extent achieved. Estate duty, at the point of one’s death, pushes the balance between these opposing arguments out of alignment.
Piketty’s Proposed Solution
omas Piketty, the French economist who shot to fame after making a study of inequality and publishing his ndings in 2014 in a door- stopping tome, makes a very compelling point with regard to capital gains tax that is instructive in considering death tax rates. As a sidebar to his broad geopolitical research, he makes reference to the Forbes list of the 400 wealthiest families. He essentially asks the question as to whether the capitalist argument that the rich ‘deserve’ their wealth is valid. e
“Estate duty – or ‘death tax’, as it is known – has been on the frontline of the war that has been waged for centuries now, between the concept of competitive free- market capitalism and the socialist ideal of fair distribution of wealth.”
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