Clive Palmer has reignited the “death tax” myth ahead of Queensland’s election, warning Labor would impose a hefty inheritance tax on a dead person’s assets.
He’s invested in lurid yellow billboards, mass text messaging and video adverts playing on TV channels and radio stations who, unironically, run them in between panel discussions on the ethics of Palmer’s tactics.
But Australia hasn’t had an inheritance tax in more than 40 years. We’re one of the few OECD nations without one, and — despite attempts in 2019 to frame Labor’s franking policy as a death tax — it hasn’t been on the policy agenda of either major party for some time.
The history of death taxes
The OECD average inheritance tax is 15%. Italy has one of the lowest inheritance tax rates in the world at 4%, while Japan has the highest at 55%.
When Australia abolished the inheritance tax in 1979, just 9% of deaths were liable for the tax. Most people paid 3% of their estate’s value.
Interestingly, there’s evidence that dozens of those eligible for the death tax managed to cling on to life until the new year when the tax was no longer in force.
Death tax as a political tool
As Palmer’s campaign has shown, there’s no national law that demands political advertising be factual (though South Australia and the ACT have some rules).
Both major parties have engaged in misinformation. Labor produced the “mediscare” campaign in 2016, warning the Coalition would privatise Medicare, while macabre images of the grim reaper popped up last year warning of Labor’s franking policy.
It was effective, with voters struggling to separate the so-called death tax from some of Labor’s other policies. This year, however, it seems the argument is less effective.
Australia isn’t the only country to use death taxes as a political scare campaign. The US generally has an inheritance tax of 40%, though high thresholds mean it affects just 0.2% of Americans. The first US$11 million left to heirs goes untaxed.
Despite it being rarely implemented, Republican politicians often use fears of a death tax to their advantage. President Donald Trump attempted to repeal the tax in 2017, saying: “to protect millions of small businesses and the American farmer, we are finally ending the crushing, the horrible, the unfair estate tax, or as it is often referred to, the death tax.”
The taxes are a constant source of consternation in the UK. Inheritance tax sits at 40% for estates worth more than £325,000 (AU$594,000). In 2015, the conservatives’ landmark policy reduced the rate while in 2017 the government proposed (then scrapped) a sharp rise in asset distribution fees.
Death taxes are also making headlines in South Korea following the death of Samsung chairman Lee Kun-hee. Inheritance tax is set at 50% in the country, meaning Lee’s family could owe billions.
Why is the death tax such an effective scare campaign?
Dr Lindy Edwards is a former economic adviser to the Department of Prime Minister and Cabinet and senior lecturer in international and political studies at UNSW Canberra. She told Crikey Australia’s lack of inheritance tax was at odds with our egalitarian history.
“It’s probably one of the most just taxes in terms of equal opportunity, and creating social equity,” she said.
Most people balk at the idea of a death tax because they think they’ll be disproportionately affected.
“I think the taxes speak to quite a primal sense to people wanting to provide for their kids … the heritage they want to hand down is being attacked,” she said, adding most people don’t fully understand how inheritance taxes would work.
“People look at things in terms of how it affects them. I’m not sure people understand the extent of income inequality in Australia, or just how much wealth is transferred between generations.”
The article still does not explain why anyone would believe the death tax lie. Especially when you consider the source, Clive Palmer who very few would ever actually vote for.
The article offers no evidence that anyone does (believe the lie). Perhaps they don’t. Worrying about what other people believe has become the political class’ primary activity, IMO.
This is the same lie which kept those marginal seats in Queensland in LNP hands during the federal election.
The sooner Face Book is not allowed to claim what it publishes to be “News: the sooner Face Book campaigns will melt.
Ratty is right about death tax and Facebook in the last election. I was stunned how many otherwise intelligent people told me that Labor was going to introduce a death tax last election, because they read it on Facebook. No amount of convincing, debate, argument, clarification or any other means of communicating could convince them to the contrary. They had read it on Facebook!
I’ve since recalibrated my assessment of their intelligence.
Palmer is only trying to boost his own ego and yet he is made to be looking like a bigger fool than he is,
I have been reading where he is in court for using Twisted Sisters song in his electoral campaign and that is not going to well for him.
Also where he is taking W,A to court over lockdown and how his name was brought into disrepute by McGowan and yet Palmer thinks he can slander others.
McGowan is taking him to court on the same charge, hope he cleans Palmer out.
This insidious snake needs destroying!
Having worked in ATO’s “EDGD” section last century I confirm that Gift Duty was an appalling waste of resources but that no decedent ever complained about Estate Duty. And that tax did raise big bikkies but was sent to the dustbin of history to be revisited only by wealthy chancers…
The irony is, if I remember correctly that Bjelke-Petersen started the ball rolling on abolishing inheritance tax.
I’m not sure irony is the word. While Bjelke-Petersen might not be so widely admired in other parts of Australia, in his homeland he is revered. Palmer’s death tax nonsense is probably hoping to suggest Labor plans a disgraceful assault on the glorious legacy of Queensland’s greatest son.
We love Joh so much we sent his party to opposition and kept it there for all but a single term. Yeah real JBP fans up here.
Yes; absent Bjelke-Petersen, the LNP was too diminished to attract support. It rather proves my point.
Kiwi born, ruled in Qld, died in Taz.
Clive Palmer was cousin Joh’s spin doctor, if that helps.
Not sure he is still revered. Anyone under 50 wouldn’t have heard of him, and many of those over 50 know that the only reason he escaped gaol was because a young nationals on the jury was the last holdout, and juries had to arrive at unanimous decisions in those days.
That’s possible, but by the same argument Russians should not have heard of good old ‘Uncle Joe’ Stalin, but over recent years the old brute’s popularity has been steadily rising. And while being convicted and sentenced should, normally, be damaging for a politician, it could be Bjelke-Petersen missed a trick by fixing the jury. There are plenty of examples of successfully playing conviction as persecution or even martyrdom. It even worked for Charles I of England, who was reviled for making war on his own country (the number of deaths was proportionally worse than the Great War for England), tried, sentenced & beheaded; then, to the total consternation of his enemies, monarchists rapidly elevated him to quasi-sainthood through expert spin-doctoring.
He’s not revered by everyone in Qld, I know a few people who were quite keen to dance on his grave when he died…
Australia has a quasi death tax in the form of a tax on superannuation funds left to non dependents.
And your are adult children are unlikely to be dependents under tax rules. The tax payable is I think 10 percent plus Medicare Levy.
So if you have advance notice of your likely demise get your money out of super.
A tax on super funds left to non dependents! How awful. Anyone from the UK was typically stunned to learn that anything from super funds can be left to non-dependents. Until very recently the arrangement there with superannuation was compulsory purchase at retirement of a lifetime annuity. When you die, it’s all gone.
Anyway, it’s really hard to see any good reason that super funds can be left to non-dependents without some really serious taxation. The tax concessions are supposedly justified because it provides for the person who owns the fund, replacing or adding to the state pension. Super is not meant to fund tax-exempt wealth transfer across generations, principally a great benefit for the seriously rich.
Super was supposed to be to live off in retirement, but is now used as a cheap way of increasing savings for inheritance and not using capital super as intended I think. Should be taxed well I think as inheritance.
Thomas Piketty’s Capital has a fair amount to say on inheritance taxes and related topics. Well worth a look.
Ay thing labelled a death tax gets a huge and irrational response. So, do not tax estates. Instead, just include any inheritance, bequest or gifts above a certain value with all other unearned income when calculating income tax each year. Income tax is familiar. Nobody confuses it with a death tax.
Totally agree that significant income from inheritance, say over $1 M capital or $0.5m cash should be taxed at 20% at least because we dont need more rich bludgers. Family business can sell some shares to pay the tax. Farmland could have a higher cap. Shame its so unpopular…the rich get richer…