'Tis pretty clear that a specific inheritance tax is a bad idea. But is there any good reason why inherited income should remain exempt from income tax? Or why inherited assets should not be subject to capital gains tax when sold?

Dear Aidan,

Indeed I cannot see why inherited assets should not be subject to capital gains tax when sold.

now "why inherited income should remain exempt from income tax?":

- Well, if you could find an inherited income, then it should certainly be income-taxed, but I don't think that you can find any such animal.

Inheritance is not an income, it is after-tax wealth that is simply moved within the same family from one pocket to another. Imagine being taxed if your pants were torn and you had to move the money from its pocket to a new pants... Now imagine that over the years you wear off and change 20 pairs of pants and subsequently have to pay tax on that same money 20 times over...

still you all miss the point here, I am not talking about an inheritance of property or other asset, I am talking about the cash inheritance received once the asset has been sold off.

At no stage have I mentioned taxing the value of a 'non realized' profit as Im strictly talking about an asset sold off, mostly to developers and the likes.

Lets take a farm. It has been run as a business for decades and improvements such as sheds and other income producing assets have been written off. So the gain is no longer an 'after tax gain' at all.

Where I live a 5 ac block that is ripe for development sells for about 3 million. So lets assume it sells for $30 million in thirty years from now. Let's further assume that the only beneficiaries are two great grand children. Should that inheritance to these grand children remain tax free.

Remember, my suggestion (in todays values) is for the first half million to be tax free, then 48c/$ for the balance.

At what point do we say fair is fair and at what point do we look at sharing the wealth, especially if the only reason these two received so much was because they were born lucky.

rehctub, "at what point do we look at sharing the wealth, especially if the only reason these two received so much was because they were born lucky"

Socialism.

Dear Rehctub,

The fact that the grandchildren are lucky is irrelevant:

If it is your money, then you ought to be able to do with it whatever you want, including to give it to whoever you want. Some people are motivated to work only because they want the income for their future generations, rather than for themselves in person, or for any other cause for that matter which endures after their death: if you don't allow them to do so, then why would they have worked hard and saved all their lives in the first place?

Thus we are not talking about the rights of the grandchildren - we are talking about the rights of the grandparent!

(of course, it's a different matter if the grandparent haven't yet paid tax on those profits, in which case they are not truly his/hers yet)

well, I guess all I can say if fair enough!