Posts Tagged ‘inheritance’

Rich kids set to inherit higher taxes

Tuesday, December 14th, 2010

Some members of the Democratic Party in the United States, not to mention a good portion of the American people, are upset that President Barack Obama caved in to pressure from the Republicans to extend the Bush tax breaks for the wealthiest Americans. The issue speaks to one of the most contentious aspects of capitalism as it operates in a democracy: Are people who benefit the most from the democratic free enterprise system obligated to pay a larger share toward its maintenance?

Sorry, you can't take it with you

A corollary to this debate is how much of their wealth should citizens be allowed to pass on to their heirs. In a purely socialist system, ideally it would be zero, but many who don’t necessarily advocate socialist government often support heavy taxation of inheritances for ethical and moral reasons: Why should the child of a rich person have special advantages in life just because of birth? Other people (usually the rich) counter that in a laissez faire economic system, no one has a right to tell anyone else what they can or can’t do with their money.

The Japanese government is now thinking about raising the inheritance tax. As everyone knows the country is running out of money, and already the Democratic Party of Japan has cut the corporate tax, increased the amount of the child allowance, and put off any increase in the consumption tax indefinitely. Because the widening income gap is becoming more of a topic in the news, the DPJ probably feels the public will be receptive to a boost on taxes for richer people.

Continue reading about inheritance tax revisions →

You too can be Hatoyama!

Monday, December 21st, 2009

Tell mom what you want for Christmas

Tell mom what you want for next Christmas

The government wants to increase the tax exemption on gifts that parents give to their children, so if your folks were inspired by the largesse of Yasuko Hatoyama to her three kids — one of whom is the prime minster and got into hot water because of that largesse — they’ll be able to give you up to ¥20 million tax free, if land minister Seiji Maehara gets his way.

According to the media, however, he may not get all he wants. Maehara is in charge of keeping the housing market humming, and following the Liberal Democratic Party’s lead last spring, when the former ruling party allowed tax exemptions for gifts of up to ¥6 million as long as they were spent to buy or improve residential housing, he wants to increase the exemption in the next budget.

Basically, the idea is that there is some ¥1,400 trillion not circulating in Japan, but rather just sitting in people’s bank accounts or in their mattresses (or, to put in Japanese terms, in the tansu, or wardrobe). About half of this dormant money is in the possession of Japan’s elderly. Normally, when these people die, the money goes to their offspring, who, in turn, just put it into their own back accounts or in their own wardrobes. Since people live quite long in Japan, their children usually are already settled with their own homes when their parents die. The LDP’s scheme was to persuade these older people to give some of their money to their kids (or grandkids) earlier, while they’re still alive, at a time when they are thinking of buying homes.

Continue reading about tax exemptions for monetary gifts →

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