Death and Taxes – A Farmers Nightmare


Keating promised his tax cuts were L.A.W. law, Gillard promised no carbon tax under her government and Bill Shorten swears that he will not introduce a inheritance tax. But farmers have long memories and political promises are dun der cheap and the cost of new taxes such as a carbon tax or a inheritance tax are oh so cheap politically for a labor government to load onto farmers.

One thing we know is that labor leaders have lied big time when it comes to reversing tax promise and their friends the Greens have higher taxes and inheritance taxes are long term policy. Plus there was the Gallop state government with its short term brilliant idea of taxing the rich with a land tax on all houses worth over $1m. Its just in the DNA of the ALP to redistribute family wealth to families that have a history of spending more than saving.

Australia became the first rich country in the world to abolish death duties – that is, taxes upon the estates of decedents, or the inheritance of beneficiaries. In liberal circles their abolition was commonly understood as politically regressive, an anomaly which would soon be overtaken by history.

Thirty years later and the situation seems more complicated. Israel abolished the taxes in 1981, New Zealand in 1992, Sweden in 2005, and Austria and Singapore in 2008. From 2003 the US progressively cut its top rate for estate taxes.

There were three main objections to estate taxes in Australia. First, the taxes „weighed heavily on even very modest estates, with inflation exacerbating the problem of low exemptions‟ Second, high land values and „assertedly low return on farming property‟ caused particular agitation among farmers. Finally, estate taxes (in the words of a government inquiry) were „avoided by well-advised persons with ease‟, and „paid principally from the estates of those who died unexpectedly or who had failed to attend to their affairs with proper skill‟

Creation Estate taxes were the first significant direct taxes imposed in the Australian colonies, between 1851 in New South Wales and 1895 in Western Australia (Smith 2004: 24-7).

Colonial assemblies understood the taxes as both a source of revenue and a Parliamentary 6 declaration of colonial prosperity and progress (Mills 1925: 83).

The mobilisation of labour during the late nineteenth and early twentieth centuries reconfigured parliamentary politics, whereupon Labor politicians became the principal advocate of direct taxation. Following the outbreak of World War One, the Fisher Labor Government introduced the Estate Duty Assessment Bill, providing for a progressive tax ranging from 1 percent for estates valued £1000 to 15 percent for estates valued £70,000 and over, with a concession for widows, children and grandchildren at two-thirds of normal rates. Government speakers adopted two main justifications for an estate tax.

Post-war amendments took into account the claims of widowers (1953), step-children, adopted children, and children born outside of marriage (1957). In the 1970s the distinctive claims of surviving spouses received dedicated attention. Special consideration for family relationships was consistent with death duties and family provision legislation in the states. From the late 1960s there was growing public acknowledgement that the collection of estate taxes in Australia was inefficient and unfair, and mounting political pressure to do something about it.

In 1970 an independent stood successfully for the Australian Senate on the single platform for the abolition of death duties. In 1971 a newly-established Senate Standing Committee made death duties the subject of its first inquiry. Between 1972 and 1975 another government inquiry addressed estate taxes in the course of its investigation of the tax system. For the most part it was understood that the tax required an overhaul, but a case for abolition also took shape.

Abolition 9 In 1977 the Bjelke-Peterson Coalition Government in Queensland abolished state duties, and the Liberal Prime Minister Malcolm Fraser promised abolition of federal duties in his successful re-election campaign.

The Estate Duty Assessment Amendment Bill 1978 precipitated the first substantial debate on death duties since 1914. During the debate Labour Opposition speakers deployed the same mix of fiscal and political arguments as advocates in 1914, but with different emphasis. Of 50 arguments, 30 (60 percent) were political. Above all, speakers framed their case in terms of „equity‟ and the moderation of accumulated wealth.

Speakers from the Coalition Government were narrower in their arguments than the opponents of 1914. Their arguments were overwhelmingly economic (21, or 68 percent), celebrating small business and individual initiative against excessive regulation and taxation. For example, a Western Australian back bencher derided Labor’s Marxist blinkers‟, declaring that its blind ideological contempt for and hatred of individual economic and financial success leads it to call for that success to be ground down and taxed into subservience‟.

There was no shame in Australia becoming an international anomaly: When will the Opposition learn that progress as equated with socialism has long been discredited? If Australia is alone in its tax policies it is the case then that this country alone is moving towards the advancement of the individual citizen. That, in my view, is real progress. (Australia, H of R, 10 May 1978) 10 Table At a material level, the taxes failed profoundly. They made a relatively small contribution to state revenues. More to the point, they had little impact upon the distribution of wealth, notwithstanding punitive top rates in the US (and the UK).

On the contrary, they gave rise to a new institutional architecture – including family trusts, family offices and family councils – directed towards the transmission of dynastic wealth (Harrington 2009).


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