On the other hand, the other section argues that measuring and enforcing wealth and inheritance tax is a tedious task. Also, overtaxing the rich may prompt them to move to countries that are nicer to them. Further, it is argued that wealth tax is a double tax as the government takes its share when the income is made.
Here’s how the major economies are taxing the rich
India: The country doesn’t have an inheritance tax which means the government doesn’t take a penny when an individual inherits an asset from a person who has died. Also, India abolished the wealth tax in 2016. The then finance minister removed the wealth tax to “bring more transparency into the system and simplify the complex tax laws”.
The United States: As many as 44 states of the country don’t have an inheritance tax but an estate tax — which is the amount that’s taken out of someone’s estate upon their death. The estate tax is taken by the government when assets are worth over $11.7 million. Depending upon the value of the assets, the estate tax rate ranges from 18 percent to 40 percent. Meanwhile, the states of Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania levy an inheritance tax as well.
The US currently doesn’t have a wealth tax but it was a poll issue in the 2020 presidential elections. President Joe Biden supports the idea of imposing a wealth tax on taxpayers with more than $1 billion in assets or more than $100 million in income for three consecutive years.
China: China doesn’t levy an inheritance or a wealth tax but the country has a fairly high income tax rate for its wealthiest. Those who earn more than 960,000 yuan ($150,000) a year as wages pay a 45 percent income tax. The top tax rate for privately-owned businesses is 35 percent and the country also levies a 25 percent corporate tax.
Japan: While there is no wealth tax in Japan, its inheritance tax rates are progressive. Depending on the value of the asset, the inheritance tax rate ranges from 10 percent to 55 percent. In fact, at 55 percent, Japan’s inheritance tax rate is the highest in the world, followed by South Korea (50 percent), Germany (50 percent), and France (45 percent).
Germany: Depending on the relationship to the decedent and the value of the asset, the inheritance tax rate ranges from 7 percent to 50 percent in Germany. However, the country hasn’t had a wealth tax since 1997. Nonetheless, the country’s “rich tax rate” (Reichensteuersatz) is 45 percent and it applies to individuals who earn more than €250,000 per year.
The United Kingdom: There is no wealth tax in the UK but there is a 40 percent inheritance tax if the value of the asset is £325,000 or above. However, this inheritance tax is not applicable if you leave your assets (above the £325,000 threshold) to your spouse, civil partner, a charity, or a community amateur sports club.
(Edited by : Thomas Abraham)