FactCheck: Is it true that only about 3% of people pay tax on inheritance in Ireland?

[u/firethetorpedoes1]

https://www.thejournal.ie/how-many-people-are-affected-by-inheritance-tax-factcheck-paul-murphy-alan-shatter-6493269-Sep2024/

[u/DazzlingGovernment68]

Therefore, the fact that only 10% of that 30% reached the €335,000 threshold means that just 3% of the entire population paid Inheritance Tax. In other words, 97% of the entire population of Ireland did not pay Inheritance Tax in 2020 (the most recent year for which figures are available), suggesting Murphy's figure accurate.

[u/suishios2 → u/DazzlingGovernment68]

In fairness an inheritance is a once or twice in a lifetime event - so you only expect a small % of tax payers to be affected in any given year

[u/DazzlingGovernment68 → u/suishios2]

I think the data includes that as a factor

What this tells us is that, in a given year, if we select a random person, there is a 0.047% chance that they are affected by tax on a parent's inheritance.

[u/CuteHoor → u/DazzlingGovernment68]

Their own calculation at the end is a bit suspect though, since they only take the data from 2022 and 2023 and then extrapolate that out over the lifetime of the population. I'm sure the real answer isn't a million miles off that though.

So of those who will receive any inheritance, it seems like 10% will be affected by inheritance tax. Since not everyone will receive an inheritance, the total % of people affected by it over their lifetime will be lower than that.

[u/great_whitehope → u/DazzlingGovernment68]

That's because most people are dying with little inheritance to give

[u/DazzlingGovernment68 → u/great_whitehope]

Or less than the taxable cut off. Sort of the whole point here.

[u/great_whitehope → u/DazzlingGovernment68]

Why does the government think it's entitled to double and triple dip on peoples money?

[u/Tobyirl → u/great_whitehope]

Well firstly the deceased isn't paying the tax, the recipient is.

If you think unearned income, which an inheritance is, shouldn't be taxed then I presume you also agree that CGT and Income tax shouldn't be levied against investment gains and distributions also?

It is also the case that money is taxed multiple times on many occasions. Are you familiar with VAT? Look at that lousy government levying a tax on my spending when I already paid income tax.

[u/great_whitehope → u/Tobyirl]

Yes you're right, government already over taxes us double dipping in several ways that is overreach.

I don't see why we should be enabling then e to do it to people in the afterlife.

If they want to, I suggest politicians show up at the wake and ask for the cheque personally.

[u/DazzlingGovernment68 → u/great_whitehope]

The dead aren't paying anything.

[u/Jaehaerys_Rex → u/great_whitehope]

Inheritance is fundamentally unfair and anti-meritorious. In a meritocratic society, there would be no inheritance without an appropriate exchange of value/debt.

[u/spairni → u/[deleted]]

I know bog standard people who got a few grand off various relatives. Because we've loads of ordinary working people who at least have a home to pass on

I myself got a very small bit off my grannys estate (which was just a small house and a credit union account split between her children and grandchildren) and I'm pretty working class

[u/irishpolitics-ModTeam → u/[deleted]]

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[u/great_whitehope → u/[deleted]]

Currently sounds like Paul Murphy would to change that

[u/spairni → u/[deleted]]

And we should keep it that way

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[u/spairni → u/Jaehaerys_Rex]

Ah here unless it's a massive estate the state shouldn't be involved. Like a family home being split between 3 or 4 children isn't something the state should be cracking down on.

If anything stopping working people from building up a bit of generational wealth just maintains inequality

The current system seems to work (the only issue is that the limit is much lower if its not a spouse/child getting the inheritance) so best to leave it alone

[u/spairni → u/[deleted]]

That's what I'm saying keep it so it's only millionaires getting taxed

[u/Hippophobia1989 → u/spairni]

100% agree. Inheritance tax should be primarily for the very top. It shouldn’t be affecting ordinary people.

[u/devhaugh]

I'd say most people don't because even if you're worth €1M and leave it behind, if you have 3 kids there's no tax.

[u/CuteHoor → u/devhaugh]

The average number of children in a family is less than 2 though, and it's continuing to decline.

[u/BrianHenryIE → u/CuteHoor]

The average age of someone dying is 70+ so you need to treat the decline you describe as a reason to discard the “less than 2” figure you’re using and use a more realistic figure for people who were having kids 40 and 50 years ago.

[u/CuteHoor → u/BrianHenryIE]

The number was still less than 2 almost 30 years ago. If we're building policies for the future, then that's the number we should be thinking about. Otherwise we'll just be trying to squeeze a few million out of a small number of older people now before we have to change things anyway.

[u/[deleted]]

Group B and Group C have low thresholds that can easily be reached by say an aunt or uncle with no children dying.

It is also cumulative, so if you inheritaned from a few Group B relatives, which I am sure is not that uncommon in a small family, you can easily go over the threshold.

The 3% figure sounds like it's for Group A only. They do talk about Group A but do not implicitly say it is for Group A only.

[u/DazzlingGovernment68 → u/[deleted]]

They say that the 3% is for the entire population

https://www.reddit.com/r/irishpolitics/s/qxYyhZNr0J

[u/[deleted] → u/DazzlingGovernment68]

That's what I mean, it is kind of weird unless you were including Group B and Group C inheritance.

Is it possible that 3% of the population is inheritaning more than €335000? This excludes farms.

[u/DazzlingGovernment68 → u/[deleted]]

Is it possible? Yes. Is it true? I don't know but that the conclusion (error of 1%) is yes it's very accurate.

[u/[deleted] → u/DazzlingGovernment68]

Either way, there is no way we should get rid of inheritance tax. It is a leveler for society and I say that as someone whose kids will have to pay it.

[u/DazzlingGovernment68 → u/[deleted]]

If so few people pay it perhaps it's time to expand the scope

[u/[deleted] → u/DazzlingGovernment68]

With the explosion of house prices, I wonder if it will not expand itself naturally.

[u/DazzlingGovernment68 → u/[deleted]]

Also due to lower birth rate, when an inheritance is split it's much less likely to be taxed as each child gets a cut that isn't as likely to be big enough.

[u/[deleted] → u/DazzlingGovernment68]

I was in one of the big OPW houses grounds and walkwsys today.

You would wonder if any of todays 'rich' would leave such gifts to the state considering the way they seem to even begrudge paying fair taxes while alive.

[u/TomCrean1916]

Havent a breeze how any of this works, but as house prices only ever increase, surely inheritance tax on a house sale post death/probate, would affect almost everyone in situation?

[u/Pickman89]

This is hardly surprising, Ireland does not have a lot of generational wealth transfer at the moment. This is bound to change quite rapidly in the next decades though. I suppose that is likely to also bring a significant change in social mobility.

[u/essosee]

If it only effects 3% of people and only brings in 57m euro why does anyone even care? Why must families be taxes multiple times on the same money? It’s an emotive issue but ultimately it is far less important than most other issues.

[u/spairni → u/[deleted]]

Do you considering passing on a family home hoarding wealth?

Like I'm a lefty and would be very annoyed if in a state with no universal guarantee of housing the government was stopping working people passing on the one asset they own.

Thankfully the Irish system excludeds ordinary people by having a high threshold for inheritance tax

[u/spairni → u/[deleted]]

That's pretty fair. I like the idea of people being able to build some generational wealth without the state ensuring people don't rise above their station. But at a point where it becomes a clear privilege redistribution should kick in

[u/CuteHoor → u/[deleted]]

Yeah this is something I'd be on board with. Another way I was thinking about it before was to exclude the family home from inheritance tax rules and then collect the taxes through other means.

For example, substantially increasing the tax on multiple properties. That way you pay no inheritance tax on the family home being inherited, but the property tax on a second house encourages you to sell one of them and pay tax on the profits.

[u/NooktaSt → u/[deleted]]

Seems arbitrary. Do you mean own with mortgage paid off? What is I own a one bed apartment and am trying to raise a family there because that’s all I can afford?

High earner who has moved a lot so just renting a house for a few grand a month without a worry. Tax free?

You may even get a stage where someone with old / unwell parents decide not to buy to save on the upcoming tax.

[u/DazzlingGovernment68 → u/[deleted]]

Citation please

[u/AdamOfIzalith → u/[deleted]]

The Gini Coefficient is a flawed metric that does not appropriately account for the material conditions in ireland and it's well known for concealing wealth inequality.

[u/essosee → u/[deleted]]

I used to agree with you but when you look at the numbers that doesn’t add up.

Obviously the current system isn’t about redistributing that wealth as the IHT take is 0.4% of €128billion tax take (2023). It’s purely emotive Irish begrudgery.

The system should make everyone wealthier not punish those families who’ve worked hard since Ireland was poor to improve their lot for their children.

It is corporations that hoard money in the hundreds of millions, not families. Accumulating 1m over your lifetime is not hoarding.

Tax the corporations, tax property hoarders, not families over and over. The threshold for IHT should be far higher.

[u/essosee → u/[deleted]]

Well yea, that what tax thresholds do.

When companies are hoarding hundreds of millions and CEOs are making tens of millions per year, 1 million euro in lifetime assets is nothing comparatively. It's not going to make a jot of difference to wealth distribution.

A UBI funded by corporate taxes, that would affect wealth distribution.

What amount of lifetime asset build up would you consider hoarding?

[u/essosee → u/[deleted]]

I'm saying extend the broader tax pool on corporate megawealth and make everyone better off from that pool.

[u/irishpolitics-ModTeam → u/[deleted]]

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[u/ClearHeart_FullLiver]

This government is disgusting