3 ms·

In France, the tax is not on the amount of restate but on the inherited income, ie each kid gets taxed on his share. So if there are n kids, the amount of tax p

In France, the tax is not on the amount of restate but on the inherited income, ie each kid gets taxed on his share. So if there are n kids, the amount of tax paid is nT(K/n), not T(K). Since T is progressive (convex), nT(K/n) < T(K). Given that the first 100k are not taxed and that there are three kids, only about 14 millions will be taxed at the 45% rate, not 20. Note that we are talking about each kid making 6,67M€ (four centuries of minimum wage, three centuries of median wage). If they earned their money through their labour instead of through their birth, they would actually be taxed more (IR + CSG + CRDS). As for the grandkids, there are a bazillion ways to reduce the tax bill: life insurance is not inheritance-taxed, you can donate money to your kids before your death (about 300k€ per kid every 15 years before it’s taxed - if there are three kids, three grandkids per kid and everyone does a little tax planning you can give 9 grands kids * 300k€ * say give them money at 0, 15, 30, 45 and 60 yo that’s 13,5M€ originally from the grandma that won’t even count as inheritance, etc.).

TacticalCoder 3y ago
> In France, the tax is not on the amount of restate but on the inherited income, ie each kid gets taxed on his share. Yes but the "progressivity" is harsh. Anything over 500 K per kid is already at 30% of taxation and anything over 1.7m is at 45%. Also for one grandma, the n for the number of kids tends to not tend towards infinity but more towards something like 2. So although you're right that it's not 45% on 20 m EUR (actual painting seems to be worth a bit more than that but it's to simply) but it's close. Because with two kids and the 100 K EUR excluded, you're still quickly at insane brackets rates. For one kid I have the actual rate (I now did the computation) at 43% (instead of 45%) and for two kids I have the actual rate at 41.6%. I understand that you're technically right to talk about n kids but it's a bit disingenuous to talk about "progressivity" of the tax rate when the effective tax rate is likely going to be 41.6% or 43% instead of the 45% I took as a shortcut. And at 90 years old sadly the inheritance planning ain't going to be very effective. Even her kids are likely already 65 to 70 y/o, so their own inheritance planning won't allow many donation every 15 years. It's still very much: (french IRS): "Thank you grandma!".
- addcommitpush 3y ago
  I think you will find the CAE note on inheritance taxation quite interesting: https://www.cae-eco.fr/staticfiles/pdf/cae-note069s.pdf https://www.cae-eco.fr/staticfiles/pdf/cae-note069s.pdf. Note the the top 0.1% of individuals, who receive on average 13M€ over their lifetime -
gwervc 3y ago
Still, the untaxed 100K threshold is quite low, it's a shame that a lifetime of work is so heavily taxed. Especially given how the government is spending it... My personal theory about this high inheritance tax is that it's real purpose is to keep people in a slave-like state in respect to big corporations and the state itself. Having too many people escape the rat race and thus having time to think for themselves or freedom to go elsewhere is seen as a real danger for those in power.
- addcommitpush 3y ago
  If you look at the effective inheritance tax rate (ie tax paid on actual money flow from dead people to inheritors), even the top 0.1% of all inheritance is around a 10% rate. See figure 2 in https://www.cae-eco.fr/staticfiles/pdf/cae-note069s.pdf https://www.cae-eco.fr/staticfiles/pdf/cae-note069s.pdf. Note the the nominal tax rate is around 30% - the difference is because a lot of stuff is not taxed, or partially taxed. I think the issue is that French inheritance taxation has both a very high facial rate and massive amounts of exemptions / loopholes. People that think they can grok the fiscal system in a few minutes look at the high nominal rates , not the loopholes.

TacticalCoder 3y ago

> In France, the tax is not on the amount of restate but on the inherited income, ie each kid gets taxed on his share. Yes but the "progressivity" is harsh. Anything over 500 K per kid is already at 30% of taxation and anything over 1.7m is at 45%. Also for one grandma, the n for the number of kids tends to not tend towards infinity but more towards something like 2. So although you're right that it's not 45% on 20 m EUR (actual painting seems to be worth a bit more than that but it's to simply) but it's close. Because with two kids and the 100 K EUR excluded, you're still quickly at insane brackets rates. For one kid I have the actual rate (I now did the computation) at 43% (instead of 45%) and for two kids I have the actual rate at 41.6%. I understand that you're technically right to talk about n kids but it's a bit disingenuous to talk about "progressivity" of the tax rate when the effective tax rate is likely going to be 41.6% or 43% instead of the 45% I took as a shortcut. And at 90 years old sadly the inheritance planning ain't going to be very effective. Even her kids are likely already 65 to 70 y/o, so their own inheritance planning won't allow many donation every 15 years. It's still very much: (french IRS): "Thank you grandma!".

addcommitpush 3y ago
I think you will find the CAE note on inheritance taxation quite interesting: https://www.cae-eco.fr/staticfiles/pdf/cae-note069s.pdf https://www.cae-eco.fr/staticfiles/pdf/cae-note069s.pdf. Note the the top 0.1% of individuals, who receive on average 13M€ over their lifetime -

gwervc 3y ago

Still, the untaxed 100K threshold is quite low, it's a shame that a lifetime of work is so heavily taxed. Especially given how the government is spending it... My personal theory about this high inheritance tax is that it's real purpose is to keep people in a slave-like state in respect to big corporations and the state itself. Having too many people escape the rat race and thus having time to think for themselves or freedom to go elsewhere is seen as a real danger for those in power.

addcommitpush 3y ago
If you look at the effective inheritance tax rate (ie tax paid on actual money flow from dead people to inheritors), even the top 0.1% of all inheritance is around a 10% rate. See figure 2 in https://www.cae-eco.fr/staticfiles/pdf/cae-note069s.pdf https://www.cae-eco.fr/staticfiles/pdf/cae-note069s.pdf. Note the the nominal tax rate is around 30% - the difference is because a lot of stuff is not taxed, or partially taxed. I think the issue is that French inheritance taxation has both a very high facial rate and massive amounts of exemptions / loopholes. People that think they can grok the fiscal system in a few minutes look at the high nominal rates , not the loopholes.