Wealth transfer tax

What is the problem that this change would seek to address? 

More and more, there is a big difference in wealth between the richest families and average families in New Zealand. Kids from the least well-off families in New Zealand start at a disadvantage, and it is getting harder for young families to buy a home unless they get gifted or inherit wealth from their parents - wealth is transferred to them. Effectively this is untaxed income. People whose parents don't own a house or other valuable assets are at a big disadvantage, through no fault of their own. 

We can tackle this inequality by taxing large inheritances and gifts over a certain amount. The revenue can be used to fund things that support everyone to build a better future for themselves and their loved ones, like public schools and free health care. 

How do inheritance taxes work?

There are lots of practical ways to tax gifts and inheritances, and most developed countries have some kind of inheritance tax. New Zealand used to have an inheritance tax, but many people used to avoid paying the tax by gifting their wealth to their families before they died, so we would need to close this loophole. An example of an inheritance tax that fixes this problem is Ireland's 'lifetime transfer tax'. 

A lifetime transfer tax requires people to report how much they receive from significant gifts and inheritances over their life. Once a person has received more than a certain amount, any gifts they receive from then on are taxed like any other income. 

Kids could still receive gifts or inheritance from their parents - but people with ultra-wealthy parents would pay tax once the amount they receive meets the large gifts or inheritances threshold.

Why would this be better?

Understandably, people want to be able to pass wealth on to their family when they die. But, this needs to be balanced with making sure we don't bake in inequality from one generation to the next, meaning kids from the least well-off families can never get ahead! 

Overall, a wealth transfer tax would help close the gap between the super rich and ordinary families. Making our society more equal will help everyone to live better lives and build a stronger economy.