I just realized that Malaysia has no such law, Inheritance and gift tax, compare to S'pore, Taiwan, Hong Kong, etc.

So whatever transfer from parents to children, from few hundred to few millions, will be tax free?!?

Yep, it is tax free although I believe you still need to pay legal fees and stamp duties when you transfer property from one name to another. In my opinion, it's one of the greatest forms of injustice in Malaysia and allows the rich to get richer, but that's probably a minority opinion, especially in this forum full of rich people.

Thank you for the confirmation...so there is no need to do the tax planning for the rich ppl

No wonder those rich politician continue to 'eat money' as they have no such worries

If you transfer property, you will be still subjected to RPGT, unless you elect to use a once in a lifetime RPGT exemption.

I don't really understand what you mean by not having a need to do tax planning for the rich, on the contrary, there is more room for tax planning for the wealthy generally.

There is no direct correlation between tax and politicians. If you 'eat money', that is corruption and is against the law. Has got nothing to do with tax.

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Added on

Forgotten about no gain no loss transaction, so yeah, the RPGT will not suffer any tax if the transfer is between a parent and a child.


This post has been edited by legiwei: Jul 5 2010, 08:52 PM

how does the "rich get richer" following this logic, wankongyew?

if they have a lot of properties to transfer, won't they need to pay a lot of legal fees to transfer those properties to their kids/wives/relatives?

They indeed need to pay legal fee...so? How much is the legal fee? will it cost 50% of your property value?

Inherent tax will tax u almost 50% of the inherent value...government take the money in form of taxes and use the money to develop our country or help those poor...

So now, rich ppl not subject to taxes, thus government earn lesser...government earn lesser mean spend lesser on us, or cut other subsidies...poor man suffer in the end...

Lack of inheritance and gift taxes makes it much easier for wealthy families to accumulate wealth and pass it from generation to generation. Legal fees are no substitute. As TarePanda has noted, the costs involved are on a completely different scale. To add insult to injury, Malaysia doesn't even have capital gains taxes.

Please note that I am not a socialist. I consider myself a libertarian. Plus while I do not think of myself as being rich, I do have substantial assets. So imposing these taxes will only hurt me personally, but I support them nevertheless as I consider it justice. I find it particularly unthinkable that Malaysia would consider imposing a GST, a type of tax that disproportionately harms the economic interests of the less well off, while not having any gift and inheritance taxes at all. The irony of the situation is that the truly elite has successfully persuaded the middle classes to side with them instead of the truly poor in such matters.

Also, if you pay attention to other recent threads on this forum, such as the one about how much money you would leave to your children if you were rich, a significant majority also stated that they would pay for their children's education and give them enough money to get started with life but would not give them enough money to be rich. The rest of the money would be given to charity. I have my doubts about how many would actually go through with this if push comes to shove, but the basic reasoning is sound and seeks to achieve the same brand of justice.

This post has been edited by wankongyew: Jul 7 2010, 11:02 AM

I paid tax and i used the money to buy properties, and to give them to my children when i pass on. The money has been taxed before, and i see injustice if i have to pay inheritance tax. I became rich for a reason - because i worked very hard, and there's no reason to penalise me just because i have become rich. All this money's not corrupted money.

Well say, i agree that one become rich for reasons, hardworking, smart, etc etc....

But there are ppl are poor for no reasons...mostly because the environment and systems...

And it's no to penalize those rich ppl...it's to balance the society by re-distribute the wealth over poor family so that the poor got chances to get good education and thus our country become more stabilize and improve...

Just my 2 cents

Most of money from inheritance tax, if enforced in Malaysia, will not be re-distributed to the poor family but instead will go into the politicians-in-power pockets.
It's up to one conscience to allocate certain amount of their asset to help those in need, but it shoudnt be made compulsory.

If that's the way you feel, why don't you redistrubute your weath to poor people, "so that the poor got chances to get good education and thus our country become more stabilize and improve..." ?

Well say and reasonable comment.

But if look for another perspective, their siblings, children need not to work hard for the money, nor being taxed before, suddenly can get millions without a sweat, so the inheritance tax make a case in this issue.

I am not saying which way is right, don't get me wrong.

Also, if people became rich by working hard, garbagemen and hypermarket staff would be millionaires lol

The truth usually lies somewhere in between, and it's something socialists and capitalists can never agree on.

I would say no tax below 3 million ringgit. Above that, impose a tax with slowing increasing % up to a certain limit.

If you don't agree with 3 million, maybe you would like to state another figure?

This post has been edited by howszat: Jul 8 2010, 09:19 PM

Say the government were to go ahead with your suggestion to only impose tax above rm3 million.

Going by this suggestion, the general population that will be taxable will be low.

This means there will be a significant drop in the govt's income and will have to find ways to finance the shortage.

Whatever the solution is, the cost will likely be passed back to us, say inflation or loss of money value.

Something for you to think about. Incidentally, our very monetary system is built upon such shaky foundation, it was not built to be sustainable. But that is another story all together.

We are talking about inheritance tax, not income tax, aka if the parent passed away or whatever, and the son/daughter or beneficier getting the money one will be taxed on inheritance tax, on top of income tax that had been paid by the parent.

That's why i stated the political issue at 1st plc...

Such system will be only work if we have a clean gov / system



Erm...I'm not a rich person so i have no right to say "redistribute my wealth to the poor"

But I have promise myself to donate to those needy, if i have excessive income.

Of coz, Warrent Buffet and Bill Gates do inspire me to has this kind of thinking

So what if they get free money without needing to work hard for it?
These assets are not stored in cash at home. Its spread out into properties, stocks, businesses, etc that each has its own individual taxes.

The children/siblings would still need to work to double up the money.

How much income is excessive?

But if the parents willingly give the children the money without working hard, I don't see how inheritance tax is justified in this case.

I refrained from posting further in this thread because I felt that it was becoming more political and hence might be viewed as something more appropriate for Real World Issues. However, since a moderator has deigned to participate, I suppose it has the LYN Seal of Approval and therefore it is safe. As expected, most of the posters in this forum object to the imposition of inheritance and gift taxes (the two of them go hand in hand, it would silly to impose one without the other for obvious reasons). I will try to address your arguments is a fair and reasonable manner. Generally, as I see it, there are two main lines of argument:

1. The Malaysian government would waste the additional income anyway.

This is a facile argument that I am tired of encountering again and again. The main problem is that it is a general catch-all that can apply all too readily to oppose anything and everything undertaken by the Malaysian government. Why even pay any income tax at all if this is genuinely your position? Why pay sales taxes? Why not simply insist that the Malaysian government provide all manner of free goods and services to citizens since the powers-that-be have so obviously stashed so much money in their socks? Why not come right out and advocate armed rebellion?

While I am certainly no fan of the government and I acknowledge that our government works very poorly, I, for one, am glad that we do have a government. We may not have the kind of government that we would prefer, but at least, we're not Somalia, or Zimbabwe, or Afghanistan. I appreciate that the government has provided me with essential services that I do make use of. I went to a government-funded primary school and while I wished that the government gave more money to the Chinese independent secondary school that I later went to, I'm pretty sure that they did get some government funding. Similarly, my wife is schizophrenic and regularly collects medicine for her condition for free from a government hospital. I can cite many, many more examples but I think you all get what I mean. All of this costs money and that money has to come from somewhere.

Secondly, this line of argument seems to assume that such policies take place in a vacuum and that everything is a simple either-or proposition. Instead of saying, "I oppose inheritance taxes because I am convinced that the government would only waste the money anyway", wouldn't it be more constructive to say, "I support inheritance taxes but only on the condition that the funds raised be used to lower income tax rates and to prevent the imposition of a general sales tax." You are also perfectly free to state something like, "I support inheritance taxes in principle but I do not trust any BN-led government to administer them and therefore I advocate delaying rolling them out until after the BN is out of power."

This discussion should be about the merits and flaws of inheritance taxes itself, not about the corruptness of the government administering it. Pretending otherwise is simply a cheap way of deflecting my argument without really offering any real counter-argument of your own.

2. Inheritance taxes are injust because my money has already been taxed once when I earn it!

First of all, whether you like it or not, double taxation is already a reality. You remember paying sales taxes in restaurants, right? This is going to get worse when the GST comes into being and that's how it works all over the world. Secondly, in Malaysia, it's not necessarily true that your money has already been taxed once, because Malaysia has no capital gains taxes! If you make a fortune by for example trading on the stockmarket, like Datuk Ishak Ismail recently did with Kenmark, you don't need to pay any income taxes on your gains at all and when you leave it all to your spoiled brats, they don't need to pay any inheritance taxes at all. Win-win! This is why Malaysia is a great country for capitalists. In fact, in countries that do have a capital gains tax, this is one major argument in favor of inheritance taxes, Without them, there would be a tax loophole when the capital gains are never realized when the original owner is alive and therefore never taxed.

But most importantly of all, arguing about the principle of double taxation is ultimately a pointless distraction. I can for example satisfy your desire to not have double taxation at all and still raise sufficient money for the state by arbitrarily raising one type of tax to ridiculous levels. For example, I could agree not to have inheritance taxes or sales taxes at all but in exchange I would raise income tax rates to, say, 70%? Would that make you happy? This is why when discussing taxes, you abandon silly talk about whether or not double taxation is right in principle. Instead, you pay attention to overall tax burdens after all of the different types of taxes are taken into account.

Given that we need a government, and given that governments need taxes to function, and given that we must distribute that tax burden across the entire population, most people agree that the best solution would be to impose progressive taxes. This is the principle that the rich should pay more taxes, not just as an absolute figure, but as a proportion of their wealth and income, than the poor. And it turns out that inheritance taxes are generally found to be the single most progressive tax possible.

Anyway, I have more to say about actual implementation details and why it's silly for middle-class people to oppose inheritance taxes, but that's all the energy I have for today.

I respect your views. In a clean, or reasonably clean government, more people will agree with inheritance tax. However, when the other opposite happens, most people will be reluctant to pay additional taxes, eg GST, inheritance and gift tax etc. Theoretically inheritance tax is reasonable but looking at our government wastage, i will very reluctant to pay. I am just being very practical.

This post has been edited by newbie99: Jul 9 2010, 12:36 PM

wow..well said!!! Most general public always shun tax giving the lame excuse that our government is ineffective. Somehow, I strongly believe they will not pay tax even if our government is as effective as Singapore's. People who drive BMW often complaint about tax without even realising that without tax money, there will not be road for them to drive their BMW.

Btw, it is also paramount for the general public to understand that just because they work hard and earn a lot of money doesn't mean that their children should be allowed to inherit all the wealth without working at all. The existence of a inheritence tax will effectively reduce the offspring of those rich people who will live off the inheritence. This will increase national productivity. Remember, a currency is only as valuable as the goods it can buy.

Furthermore, for those who said they became rich only by their hard work, do u think u cna achieve ur status if not for the existence of the right infrastructure. government school which gives at least the basic education , political stability which create business and jobs,etc..

So the BMW drivers pay their taxes for building the roads. Then the roads are also used by people who did not pay or pay very little taxes. Did those people realise they are using roads they haven't paid for?
It's their money, they earned it. So why not? It's not your money, so on what basis do you have to right to say what other people should or should not do with their money?
Big jump in logic there. So people with lots of money will be very unproductive. Simple solution to this, just tax everybody until they scream, and productivity will shoot through the roof.
Ok then, don't work hard. So the govt will collect very little taxes and all the country's problems will be solved.

Regards,
-Devils' advocate

Frankly speaking, I will oppose those inheritance tax. What I earn is what I suppose to earn.

Whether I will end up giving it to charity or my children, it should not be taxed at all. If I ever give it to my children and one day Msia implement this tax, I will definitely move all my wealth to those tax haven and get a PR.

You guys realize that this is just a psychological tic, right? I mean, if you oppose inheritance taxes because it's your money and you think the government has no right to it, then logically, you should also oppose income taxes because what right does the government have to money that you've earned through your efforts? The only difference is that because you think of income taxes as being deducted before you get the rest of your income, so only the balance that reaches your hands feels like it's really your money. But for inheritance taxes, it feels like the money has already reached your hands and has stayed there for some time, then it feels wrong to you that you have to give some of it back when the government asks for it later.

Again, this feeling of wrongness is merely because we're psychologically conditioned to grudgingly accept that only the net money, after all statutory deductions and taxes, is really ours (when in fact, all of it is really ours) and to vehemently reject giving back money once we're grown used to the idea that it is ours. But logically, if the government has a moral and legal claim on your income when it is being received, then the government can also have a moral and legal claim on your wealth later if such is deemed to be for the good of society as a whole. The other factor is that we have no experience of living with inheritance taxes so it is an unfamiliar concept that we are instinctively hostile towards.

Deleted.

Dreamer

This post has been edited by dreamer101: Jul 10 2010, 10:55 AM

Please take aside the political issue, whether there is tax or whatever tax, we shouldn't take in political issue, or wastage issue. This is another front, which is more political.
Here, we would like to discuss about finance part of story.

Remember chicken and egg issue on building management maintenance fee.
People claim apartment being not well managed and refuse to pay maintenance fee. Without maintenance fee, how can a building can be well managed.
Tax is a commitment and part of our capitalism world, which is inevitable. Just how well the tax being structure and seems fair across. <-- which is what we want to discuss here. Whether how the tax money is used, it is another front, which should be in RWI.

Inheritance tax won't affect individual that earn the money, so double taxation issue is not there to start with or their problem. So the claim of double taxation is weak actually, no offence.
Large amount of money made by rich actually be come from capital gain, which is tax free. While if their children is inherit those money, they (the rich one) might contribute minimal tax as compared to ordinary middle class people.
The ideal tax system, is the more you earn, the more you pay.
So, in this issue, somehow, not quite right already.

Also, whether I or you suppport or oppose doesn't affect we directly, unless you/we will be inherit large sum of money afterwards.
It is the beneficier issue aka their or our children specifically.

Inheritance tax impose on certain amount the exceed the threshold like x million, sounds good on paper, but it opens up loopholes to be abused for sure.

This post has been edited by cherroy: Jul 10 2010, 11:34 AM

You are missing the essential points.

One already pays tax based on income. The higher the income bracket, the more tax you pay. You pay this throughout your earning life. On top of this, you pay another layer of tax because you have earned and saved all the money. You could easily not bother to save or not bother to work to earn that much in the first place, and not pay a cent of inheritance tax. Those are facts. What one "feels" is irrelevant.

The practical reality is you pay taxes because it pays for all those government services that benefits everyone. The point is about the fairness of the taxation system and how much tax you end up paying, and how much govt services you get in return. The point is never about whether tax money is "really ours" or "not really ours" - those are meaningless phrases.

i assure you most country got inheritence tax including UK.

Malaysia is considered one of the most tax lax countries int he world. In United States, there is income tax for federal, income tax for states and local council not to mention various duties and depending on the states inheritence tax.

And if you said what u earn is what u supposed to earn, why don u move to country like Somalia, whi9ch have no tax at all. Let's see how you can thrive there without any government intervention. It's just the same context where you join a trade union and benefit from the collective infrastructure, you have to pay for it. it's that simple.

But as above my post, you are not going to be taxed again, it is your children or beneficier pay the tax, when they inherit it.

why must u always insist one paying and getting the equivalent in return. The purpose of taxation is to enable the wealth of the country to enjoy by whole population. Are you saying that just because you are rich and pay lots of tax, the police should only protect you and those poor man can killed wantonly.

How would you feel if you look at a rich man kid which go to private school and the country does not have any public school to go to causing you to forever unable to compete with him.

Public goods such as national defense, public security and education will not exist without tax.

No, that's not what I'm saying. The Police is meant for everyone, not just the rich.

However, let's look at it from another view point. The whole population has a responsibility to contribute to the wealth of the country, and not just sit back and wait to enjoy the wealth that comes from other people's tax money. The focus is what you can do to help the country, and not what other rich people can do to help you.
Irrelevent. The situation does not exist and that's not what I'm advocating.

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Added on July 10, 2010, 12:19 pmThe pool of money it comes from has already been taxed at source, ie income tax.

A bit like company dividends which have already been taxed at source. So when the share holder gets it, the source taxation is taken into account.

Of course, all depends on the actual mechanics of the inheritance tax calculations.


This post has been edited by howszat: Jul 10 2010, 12:19 PM

tThat I highly agreed. However, you must also be made to understand that money does not equal wealth. When government collect tax, at least there is transparency of how much government is taking from us. If government does not collect tax, government could just simply print money which will lower the purchasing power of the money that we have in the bank. it will still be a form of tax.

furthermore, what you are arguing is equity vs effciency which has been one of the longest form of argument in the economic field.

anyway, don't look at the country form a lifetime perspective.you may be rich now and paying tax and the poor may not be and yet both of you still enjoying the same public goods. nevertheless, no one can guarantee the same will be for your descendants. at that time, the poor man's next generation might be rich whereas yours might be not. and at that his descendant will be paying for yours.

tax must never be excessive until those who are lazy can be comfortable. I do not support welfare state like netherlands at all. nevertheless, I advocate the right amount of tax in order to support the education, national defense, security and education. And based on UK government's research, right amount of tax will stimulate productivity. imagine that u have earn like 10000 a month and without tax, you can use it to buy house easily and by the time ur house is fully settled, you will tend to work less and enjoy life. if there is like 30 percent tax, this force u to work for longer years in order to pay ur hse and then only u will retire.

Btw, look at another view point. Inheritence from the parents can be regarded as an earnings to their children. As such, having to tax it is perfectly reasonable. Not to mention is something that they themselves did not work for.

if you are saying that this is double taxation, why don we abolish income tax? aren't the money we earn from doing business is also money from others who they themselves having assesed for tax?

True to what you said.
I'm paying my income tax as minimal as possible as I'm really not happy with all those government moral and legal claim on my income. Therefore I say if Msia implement inheritance tax, I will move my wealth to tax haven. And if I can't move my wealth to anywhere, I will find a way to minimize my inheritance tax.

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Added on July 10, 2010, 1:20 pmI do have my right on my wealth right? You can say I'm wicked/selfish/demon, but still if possible I'm not paying any inheritance taxes. If worst come to worst, I will try to pay as minimal as possible.

Btw, Why should I move to Somalia? There are other countries out there in the world which offers better condition than Somalia. Do I look stupid enough to go to Somalia just because of inheritance tax where by others countriy offering no inheritance tax also?

This post has been edited by edyek: Jul 10 2010, 01:20 PM

i agreed with paying as minimal as possible based on law. Tax planning is encouraged as these is seen as method to improve economic effeciency. Government created tax law in order to influence certain behaviours on the public and responding to such law by implementing tax planning, it is actually good for the country.

And btw, I'm not saying u have no rights on your wealth. i am just saying some1 is wealthy will never be 100 percent due to their hardwork. Certain condusive factors must be in place too.

Furthermore, i believe that this discussion is on the merits and demerits of implementing inheritance tax on society as a whole, not you and your family alone. Inheritence tax as like all tax is merely a form of tax of which to sustain the country's infrastructure. Population is increasing year by year and if the capacity of our infrastructure do not increase, I'm afraid it may not be able to service the population.

And all in all, i feel inheritance tax would be more justifiable than income tax as it is a tax on the receipts which is not related to the hard work the recipients.

I understand this perspective, this is to avoid a person to pay double taxation.
But for inheritance tax, it is different.

A single person only pay once the tax involved.
You earned an income, you pay income tax, then you won't pay it again.
It is your children if inherit your money without a sweat that pay the inheritance tax.

If look from individual perspective when you have an income (in this case, you inherit, still consider an income for those inherit the money), then you only being taxed once.
So, there is no double taxation on individual.

In Malaysia, we don't have capital gain tax which is already a big advantage especially for the rich and wealthy group of people, as capital gain generally is the major source that make people rich.
While when the rich passes the wealth to their children or beneficier, within the whole process, the money/wealth/income is not being taxed once.

Also inheritance tax is not on your but your beneficier of your money, so you as individual won't be affected at all.

Inheritance tax can be better than income tax in term of moral perspetive.

Income, we need to work hard for it, so somehow we feel the pain in paying the tax, as those money is something we work hard for it.
Inherit, you get something without a sweat, doesn't it deserve to be taxed more than income tax?

Malaysia did have inheritance taxes not long ago when Tengku Razaleigh was FM if I am not mistaken.

I guess our government concluded that the rich manage to find a way to go about the inheritance tax and decided to abolish it. I doubt the government would reimpose inheritance tax in the future as it would only affect individuals mostly in the middle class and not the really rich people. If whichever government were to impose it, I assure you we will get a new government comes general election.

As far as Capital Gain Tax, I think our government abolished it in order to attract foreign investment/funds (eg Malaysia as Second Home, Overseas Funds like Credit Suisse Group AG, etc ) as we really need foreign funds as our economy have been going nowhere for more than a decade. Anyway if our government does imposed Capital Gain Tax on shares/mutual funds, I wonder if we working class people would be getting less dividend from EPF.

Also if the government were to reimpose Capital Gain tax for properties, rest assure the property market would be affected and thus our economy. That's why our government did a 180 degree U turn on Property Gain tax last year.

Having said the above, the "rich families" are paying some form of "inheritance & capital gain tax" in the form of income tax. Most rich families are rich not because they have tons of cash but have shares in companies (which are passed to the next generation), and these companies would be paying income tax (which include disposal off their investments/assets and the shareholders which inherited the shares would be getting less). Therefore the abolishment of capital gain tax actually benefits the not so rich hardworking wage earner individuals that are smart enough to invest in whatever they invest in.

As for GST, well I guess it would definitely affect all but the rich would be paying more taxes too as their transactions value are higher. If you ask me, the present tax system is unfair, less than 3.8% of the entire Malaysia Population pays income tax and that includes me. From my point of view, the other 96% of the population of Malaysia is enjoying my hardwork. With GST, all those individuals running illegal businesses/getting corrupt money would also be paying taxes and thus contributing to the "well being" of the country.

Investment and asset disposal still fall under capital gain, which is non-taxable.
It is company operational income subjected to income tax.

So if a wealthy and rich person rich because of shares of company or investment, little tax are paid in between.

Yes, I agree inheritance tax is difficult to carry out, due to a lot of loop hole. On paper looks good only, implementation is not.
Yes, GST can be a better system and fair.

But if the rich earn a lot and not spending, under GST system, they won't pay much tax either, as GST work based on the more you spend, the more you pay the tax.
Some may argue, I only earn merely Rm1500 per month, I still need to pay tax with GST system, while existing income tax system based on income, I don't need to pay the tax at all.
There is no perfect system.

Asset disposal is taxable for an investment companiy. For example say a company bought a piece of land for RM100,000 50 years ago and dispose it for RM10,100,000 today, profit from the sale is 10,000,000.00 which is taxable under income tax. For companies, property gain tax does not apply.

This is an enforcement / corruption problem. If the truly rich routinely use their resources and political connections to dodge the inheritance tax, then the correct solution is to fix the enforcement / corruption problem, not to repeal the inheritance tax. That the truly rich will go to such lengths to avoid tax means that it does seriously impact then and constitutes an argument of favor of the inheritance tax, not against it. It is also contradictory for you to argue on the one hand that the rich are resourceful enough to dodge the tax and on the other hand that the inheritance tax does not really apply to them because their wealth is locked in companies as you state below. If the inheritance tax does not apply to them, then they wouldn't need to dodge it, would they?

This is incorrect. Inheritance tax applies to all financial assets and this includes shares in companies. When a parent leaves behind shares in any company to a child, inheritance tax would be imposed on the child based on the value of the shares transferred. You are also incorrect in asserting that inheritance tax applies primarily to the middle classes instead of the rich. Economists generally agree that inheritance tax is the most progressive form of taxation possible, for example:

http://www.policyalmanac.org/economic/arch...tance_tax.shtml

The GST is a regressive tax. As I've previously posted, to be progressive, a tax system must levy a higher effective rate on the rich, not only as an absolute figure, but as a proportion of total income and wealth. The GST is a flat tax on consumption, but because lower income people spend a greater proportion of their income, the effective tax rate on them is higher as a proportion of their income even though of course richer people still pay more in absolute terms.

However, as you note, governments all over the world still love the GST precisely because it is so difficult to dodge compared to other forms of taxes. In Malaysia, this is compounded by the large size of the shadow economy. But to me, this is another form of injustice. Why would the government impose a regressive tax to solve its budget woes when it has yet to go after the unpaid income taxes of tax dodgers?

Economists... who? To me, they are only good in publishing papers that does not contribute to the general well being of the human race. Economists are not scientists and their theories are based on assumptions. The western world have the best schools that produce so call economists and we all know those countries are going broke and guess who is to blame if not the economists.

Anyway, for your information, we did have inheritance/estate tax before but not gift tax. The example I mentioned on shares was to point out that a person who owns company shares from his/her ancestors will be "taxed" when they dispose off assets. I can easily give you another example here in Malaysia where a child can inherit a property and not being tax, i.e. dad buys land under son's name or gives son an asset or cash (1 followed by how many zeroes also can) as a gift out of love (well if one hates his child then I guess child won't be getting anything from dad).

wonkongyew, I blur lah on this progressive or regressive tax mentioned by you, both so called taxes goes to the government and we (economists included) have no control as to how they spend it.

As for capital gain, I have mentioned as to why I think our government abolish capital gain tax. Why do you think the government did so? Guess where and how does EPF dividend money comes from? Impose capital tax and you would see foreign funds disappearing and guess what will happen to our economy.

Anyway, we can talk about this tax and that tax but I think our government won't be imposing any new "taxes" for next few years in view of the political climate which is unstable. But what they will definately do is reduce subsidies and allow increase in TNB rate, Water rate and Plus rate etc etc.

lol..i believe everything exist for a reason...the reason we have businessman as they provide the social function bringing goods from one market to another ..we have banks as they act as financial intermediaries. as such, similarly, the reason economist exist because they are employed and get paid which means the society demands for them. how can you say they did not contribute to well being of human race.

and please do not blame the economist for the countries going broke...even the best possible economic theory will not help if the government does not take proper action due various political consideration...

and come on, let's face it. economic is study of human behavior. theories might no longer work because of change in behaviours of the society as whole.

Actually, it's not necessary so. In fact, bsed on your example, it is more likely to be not taxable due to the long holding period, the disposal will constitute a capital gain subjected to RPGT. We will have to look into the badges of trade to determine if the transaction is income or capital in nature.

Hmmm... it seems to me that imposing inheritance tax is unfair too as income is tax twice. Why not just increase the tax rate of the higher income bracket group if you like to tax the rich more. In developed nations, it will be as high as 50% but there have a very good social programmes in place from that. In Malaysia, highest income bracket group get tax at 27%, if you earn RM500k, approx RM100k will go to tax, pretty alot to me. In Singapore, the tax rate is much lower if im not mistaken. I think you have to also take into consideration the position of our country, whether it is feasible to implement such form of taxes and the implication that comes with it. And if any case, I do not think inheritance tax will be able to replace tax like GST as implied by you.

Whatever the case to be, at the end of the day, taxes are supposed to be used for get general benefit of the public, like having better infrastructure, healthcare, education, transportation system etc. If none of this is taking place, taxes being paid will be wasted IMO.

I agree that some economist are the reason why we are in this shit today. We now have today a monetary system that is build on a foundation that is not sustainable, where usury takes place in the form of interest which results in inflation to a point where it will buble and the weakest in the supply chain will be phased out.

However, I have come to know that not all economist in the west share such a view. May I suggest you to look into Austrian Economics. There are also very critical of US in particular the manner in which they finance their budget deficit.

true, i agree..the existence of capital market is the cause of financial crisis that happens.. but we must also remember, without the existence of capital market and the funds that arises which are used to finance various enterprises, there will not be economic development and the increase of standard of living as we had seen today.

furthermore, why wouldn't it be good for those weakest in supply chain be phased out? those weakest are usually inefficient or their product or services are no longer demanded by the society. phasing them out avoid the wastage of resources. remember, every resources diverted to one function is one less for the others.

Trust me, our IRB will find ways to tax a company for disposable of property/land. If a company sold a piece of land in 1999 when it was a tax free year, IRB will tax you under RGPT and after 1999 it is back to Income Tax. Can't run away from paying taxes, hahaha

Besides the rich paying higher income tax, the rich also tend to pay more taxes when they are alive than others for the same level of service. For example, the super rich tends to buy higher cc cars where they pay exorbitant tax when purchasing it and then higher road tax yearly. A 5000cc car road tax can buy Kancil. But yet their cars still have to go thru pot holes and they get stuck in traffic jams. In US, all pay the same amount for road tax and cars are not taxed like here. The rich also pay higher assessment rate for their bungalows (since their land value would be higher as they would be living in a "upper class" neighbourhood ) which in turns subsidies the cost for providing services to other areas and yet their household rubbish is also collected the same number of times a week as others. One can say this is unfair too.

Dude, this is exactly what I meant by the term "progressive", which I take it that you do not understand. Once again, a progressive tax is s system in which the rich pay a greater proportion of their income and wealth as taxes by virtue of being rich. You are not supposed to get more or better services in return for your higher taxes. In fact, the poor people are supposed to get more and better services than you. This is usually justified on moral grounds. However, from what I understand, you advocate a flat tax and you do not believe that the rich should subsidize the poor. Well, at least you're honest about it.

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Added on July 13, 2010, 11:21 amHigh income taxes is considered a disincentive to work and distorts the labour market. All taxes distort the labour market of course, but it is generally agreed that income taxes are the worst on the score. Consumption taxes are actually the least distorting, but, again, they are regressive. The effects of inheritance taxes on the labour market should be somewhere between consumption taxes and income taxes.

This post has been edited by wankongyew: Jul 13 2010, 11:23 AM

In respect of your first statement - thank you for trying to educate me. But then again does the two words i.e. "progressive tax" has any real world meaning or simply two words put together by some economist? My wife understand the two words "progressive tax" as she is an economist (she claims to be one since she has a economics degree but I respect her because her's is Bachelor of Science, hahaha) whereas I couldn't care less about the so called definition of "progressive tax" as it is of no relevance to me since a richer person "usually" ends up paying more taxes than a person earning/having less no matter how you want to term the tax.

What I realised from your posting is that you make assumptions on what I posted or simply don't know how to interpret the words that I have posted. I did not in any of my post agree or oppose to any form of taxes but merely in all my posts made general comments. In actual fact, I am one of the few paying all kinds of taxes imposed by our government and daily when buying cigarettes So I guess you should thank me for providing you safety and comfort in you life. And I thank you the same if you pay income tax.

I myself do not consider myself rich and in no way did I say that I deserve better service nor against subsidies ( make me wonder now can NEP be termed as a form of subsidy?). I understand and support subsidies as without it this country would be in kayos. Please reread the words I posted. But I must say that I am grateful to the super rich (my bosses) for giving me a job so that I can enjoy life in comfort.

And as for your claim that it is morally correct for poor to get more and better service than the rich when the rich pays for the service, boy which economic school of thought is that! You might as well say that it is morally right to go rob the rich so that a poor will get more than the rich . You are supporting double standards and that's morally wrong

In many other countries, it is exactly these people who probably earn more relative salary than you do.

We could/should have that here too but how many of us would give up foreign labourers for increased cost of living?

111

If money is supposingly merely as a means to trade, then supply of money should commensurate with the level of production. Hence, there should not be a problem to provide the required financing in order to allow a business enterprise to grow. There are other alternative better models that are capable of supporting economic development and a better standard of living.

You're very right indeed. However, if the goal of every economist is to make the economy free of inflation, deflation, bankruptcy, loss of currency value and all other problems that we are currently facing, then our current model will never be able to achieve that for a simple reason, it is mathematically impossible.

Also, talking about wastage of resources, our current economic model isn't exactly efficient either. Having said that, it's was never build with that purpose on mind either. In fact, it is supposed to be the exact opposite.

If the IRB raise an assessment against you on your disposal of land, just appeal to the SC then, you will have a very strong case. There is actually a landmark case on that transaction that you've just mentioned and the court ruled in favour of the tax payer.

I'm just surprised that with the knowledge that you have, you consider it feasible for us to implement inheritance taxes as a solution which you rank higher than GST, taking into consideration the many possible ways for tax avoidance through careful tax planning too. But again, each has their opinion.

wankongyew has the brains of an idiot. Is no one else able to tell this?

Comments like no inheritence tax makes the rich richer is just mind bogglingly stupid. Like edyek has said, if such taxes were implement, money would simply shift overseas.

Any argument that tries to put this into "moral grounds" is just pure hypocrisy, why don't u sell ur home and build a charity house, and then dedicate ur entire life to taking care of the disabled.

The whole idea is that the rich somehow owes the rest of the population a living. The reality is that most of these people got rich by building businesses that provide a productive service to people, as well as creating jobs for the community. If you plan on punishing the rich on taxes, then they will either find a way around it, or they will move away. Neither is good for this country.

The key problem all is and will be the bias and racist policies of the government. All this talk of taxes/ inheritence taxes is all bullshit. The problem is hard to pin down, and if there is any problem it is negligable.

I do believe that economics are relevant to the real world and I do believe that defining terms with mathematical precision is important in order to avoid talking past each other. I understand that you are more casual in your approach to this discussion, but to me, it is pointless to put effort into any discussion unless all terms used are explicitly defined and understood by everyone.

Economics is not about morality and therefore this is not anything that is taught by any economic school of thought. Economics is about efficiency. Morality is traditionally the domain of religion and while I'm not religious, I think you would be hard pressed to find any mainstream religion that does not mandate that it is morally good for the rich to sacrifice for the poor. This is, however, off topic.

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Added on July 14, 2010, 10:34 amYou are correct. Given the current state of the country's institutions and the extent of corruption, it is currently unfeasible to implement inheritance taxes in Malaysia. My comments were intended more for long-term planning than short-term solutions. Good government institutions with high integrity and low corruption are things that are naturally good to have in any case. But as I mentioned in my post on the second page of this thread and as the moderator has suggested, this thread should not be about how good or bad the government is or how corrupted the country is. It should be about whether or not inheritance taxes are a good idea in general.

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Added on July 14, 2010, 10:56 amI'm not interested in personal charity. That's all well and good but charity is flighty, unpredictable and ultimately unsustainable. The intent should be to create a stable, sustainable, efficient and just system. Growing economic disparity may be "fair", but it is not stable or sustainable for example. Extremely large generational transfers of wealth leads to a class of aristocratic elites with commensurate political influence and this ultimately harms the democratic foundations of society as well as the meritocratic values that so many in this forum seem to cherish. Inheritance taxes are only one of the many elements required, but I believe it to be an essential one.

Once again, this is off topic, but I find it hilarious that while I am perceived to be arguing in favour of a leftist position here, at the same time, I'm arguing in favor of a capitalist position on an American political forum (basically I oppose minimum wage laws). I want to assure you that I am not trolling and that I am sincerely arguing positions that are genuinely my views. I am just amused to find that the consensus here seems to be so far to the right compared to what I see in the Americans (few Americans would dare to say that the rich has absolutely no obligation to help the poor, for example). I guess it is just the Finance & Investment forum and that I would be likely to see less rightist views in Kopitiam for example.

This post has been edited by wankongyew: Jul 14 2010, 10:57 AM

no one said about punishing the rich. it's just that the argument is since the rich has earn more money and this is with the use of country's national infrastructure although i'm not denying that is also due to their hard work and brains, they sure contribute more to the national coffer.

btw, whatever policies that are implemented, the people allow it. we the silent majority has condone it for too long. why blame the machinery (aka government) when the inventor ( people) do nth about it. anyway..this is not a political thread..just my opinion though.

btw, all your shifting of money have no meaning if there are proper enforcement. Income Tax Act has a provision whereby the director general cna use his discretion to ignore a tax planning mechanism and apply the income tax as if the tax planning structure has taken place.

Shifting your money overseas will not help if such tax is in place and provided there is a law similar to the one in USA. Just ask the Americans.

Incidentally, just in case anyone is curious, Americans are liable for US income tax even if they live and work in other countries unless of course their country of residence has a tax treaty with the US. The IRS is quite aggressive in going after this money too. I just pointed this out as an example that when there is a will, there is a way.

If Malaysia really implement inheritance tax and there is no way to avoid it, I will try to pay as minimal as possible.

So how about giving us some mathematical model(s) that support your claims on inheritance tax and the so called definition on "progressive tax".

What you said is exactly correct in the first statement above and therefore why did you mention about morals when replying my quote on the subject of subsidies?

You claim you're not religious and yet you said it is morally correct to give more to one group than the other. And as far as I know, most religions advocate equality and encourage charity but never imposed on its followers to take from the rich so that the poor will have more than the rich. Therefore you may think you're an expert on economics but please refrain from commenting on religion and moral issues here.

I am personally aware of rich Chinese (of taoist faith and Christians) who contribute ( or as you term it sacrifice which is inappropriate as no mainstream religion impose on its followers to sacrifice for others ) a lot of their time and money and those who can't afford to contribute money, they contribute their time and energy to their place of worship for all to use regardless of their social standing. Therefore it is inappropriate for one to link the poor or rich or whomever to religious issues.

In every community here in Malaysia, you will find that the local Chinese businessmen contribute a lot of their wealth to schools (for the benefit of all races) and therefore the rich in this country have been and will continue to contribute to society regardless of whatever tax that may be imposed. That's true progressive action (new defination by yours truly ) by the rich that is not subjected to government misuse.

wankongyew, I do think you are smart (but too assumptious) and would like you to answer the question thrown to you earlier as to why you think our government abolished Capital Gain Tax. Are you a Malaysian in the first place?

Gen-X,

1) Chinese donated BILLIONS every year to keep the 90+% privately funded schools operating. And, those schools are OPEN for every races.

2) Chinese contributed 80% of the income tax of this country.

3) Meanwhile, the TAX PAYER funded schools like MRSM and UiTM are 90+% and not open to EVERY RACES.

If we want to talk about MORALITY, we should say that GOVERNMENT should take LESS MONEY from Chinese. Chinese had done more than enough for this country. Other group should do their part too.

Dreamer

wait a minute..are u sure the capital gain tax is abolished? i am under the impression that government have reintroduced real property capital gain tax recently? and i have just read the acccountants magazine

^You are correct. RPGT was never abolished but exempted when the recession came. It was reintroduced a few months back.

**Edited**

Above are true (except maybe for the BILLIONS every year part) and you no need to tell me. My post on rich chinese contributing to schools was merely was to point out that the poor do progress and benefit from the rich and they eventually with education can also be rich that's all.

Anyway, I just edited, actually deleted a statement from this post because I did not want to go into detail of race and politics. But after thinking about it for like 2 seconds decided to add to your above post as follows: If inheritance tax which is supposed to be "a progressive tax" as defined by wankongyew, then in this country the so called objective of "progressive tax" will never work. In actual fact the so called inheritance tax which equates to progressive tax (definition according to wanyongkew) in this country will be benefiting a single race more and eventually will own everything. Like I said, economists theories are based on assumptions and are simply a thought or idea and like a lie, if said over time to many people, some people may actually believe it to be true.

wankongyew, I also have to add that yes economics have practical use in real world and nowadays many economists in the west use mathematical models and simulations (these economists have some background in science and advance calculus) based on actual data and not assumptions/ thoughts/ideas. I was referring to the two words put together to make a definition which has no real world meaning, like I said read carefully the words I use.

This post has been edited by Gen-X: Jul 15 2010, 12:18 AM

Once again, this is a political issue dealing with the specifics of the current government of Malaysia. The subject of the thread should be about inheritance taxes only, divorced from speculation about whether or not the funds earned from the tax will be put to good use. I'm not going to reply to this or any further statements that tries to tie the subject of inheritances taxes together with the perceived evilness of the government, nor about which race will benefit from the taxes.

I said "mathematically precise definition". I did not in any way refer to mathematical models. In my own words, I also defined a progressive tax as one in which the rich would have to pay more, not only as an absolute sum, but as a proportion of their income and wealth, compared to the poor. This is now the third time that I have posted this definition.

But if you prefer, the following is the definition from Wikipedia:

As for the progressivity of inheritance taxes, there is a wealth of papers on the subject. For example, the following articles talk about the various taxes in effect in the US and their relative progressivity:

From this paper, for example, I quote:

Similarly, from this website, I quote:

I also think that it is odd that charity is used as an argument against inheritance taxes. If anything, the most charitable donors are the ones most in favor of them, for example, from this news article:

But I guess the problem is that in Malaysia everyone wants to talk only about how evil the BN government is, which is not interesting to me because there is nothing new to be found there. But no one wants to talk about policy implementation details which are interesting to me. For example, what do you think the inheritance tax rate should be? What do you think the exemption amount should be? Would you be happier with an inheritance tax instead of the GST? What about lower income tax rates in exchange for a GST? Apart from making it known that I support inheritance taxes, these are the sorts of questions I was originally most interested in talking about. But then I didn't start this thread anyway.

This post has been edited by wankongyew: Jul 15 2010, 11:02 AM

perhaps estate less than 1 million should exempted and whereas 1 mil and above should be taxed at a progressive rate starting from 5 percent?

btw, i believe we should have all kind of tax but the rate should be reduced to a level that is just enough for our national budget. a more comprehensive tax system encompassing all kind of tax will reduce the possibility of any one person able to evade taxes.

wankongyew: whatever you posted above in trying to justify your support on the the definition of "progressive tax" just reconfirmed what I said in my earlier post, Economists are just people who publish papers(articles included) that do not benefit the human race in general and Economists are not scientist

Once again I would like to repeat here, whatever tax you call it, it is still tax and we have no control as to how the tax collected is spent.

In respect to Inheritance (Estate) Tax rate, boy what have you been reading? I have given you a few examples on how it can be avoided here in Malaysia and since there is no Gift Tax here it makes the imposition of Inheritance Tax by itself will not meet its objective.

You've missed my previous question. Can inheritance tax replace GST especially in the context of Malaysia? When I say Malaysian context, I'm not implying on our political situation, rather it's the economy I'm talking about.

Again, I'm surprised with your proposal to lower tax rates for GST. (Btw, we already have sales and service tax which is equvialent to GST but has a smaller scope) You will have to lower tax rates significantly in order to match tax rates from GST. One is based on your income, the other is on the gross amount on your consumption.

Consumption tax contribute significantly to the government's revenue and cannot be removed or the results could be devastating. In fact, the government's all around the world will only try to find means to increase it.

Most govt's are operating in a deficit to finance the economy one way or the other and this is actually a form of tax. All stimulus package is unlikely to bring everlasting effect due to the nature of the monetary system and eventually, budget deficit will lead to increased in borrowings which will lead to inflation (yeah, stock and property could go out as well which people view it as a good thing but didn't realise that their buying power is actually lowered) and default will be inevitable. All of this are also taxes which people don't see.

From my point of view, your solution are not very practical.

This post has been edited by legiwei: Jul 15 2010, 08:52 PM

although i'm not someone from the economic background,i find ur comment high offensive... fi their papers do not benefit the human population, would ppl pay so much attention to it.. are u saying you are among the smartest people and those people in every government are idiots. how arrogant!!

and for god sake, no one said economist are scientist ..economics are social science and it's different from science... certain people even classified economics as art..

btw... u think u can believe science...do u know science are also sometimes inaccurate.. what has been all time truth are suddenly destroyed with new experiments very day..

Knight_2008, I apologize to you if I have offended you but my post was in reply to wankongyew's quote relating to Economists, Inheritance Tax and definition of "Progressive Tax".

However I must say that what I said is a fact in regards to benefiting the human race i.e. a Scientist's work can be applied to any part of this world (if the right resources are there) whereas an Economists' work may and only apply to a certain region (and therefore not benefiting the human race in general). And if I am not mistaken, you mentioned something like the study of economics is related to study of human behaviour (which changes with time and human actions are unpredictable) whereas Science does not.

And you are right too that scientists' works are also destroying the earth, but am I willing to give up driving my car, posting here, give up all my electrical gadgets.etc etc...... I think No.

This post has been edited by Gen-X: Jul 15 2010, 09:37 PM

i don mean scientist work is destroying the world, it's human which misuse their work..but it's just that science is not definite too... just like decades ago , we learn that light move in form of wave and suddenly now they found out it isn't...so we can't say something is useless just because it's not definite.. when a branch of study is new, that will be the problem..

furthermore, economics is basically the study of how resources are applied to maximize human happiness in this world...basically, it learns about how human divide the world resources, who gets to enjoy how much of it and how to allocate it to its most productive use...

and believe me when i say economics complement science..economist all over the world understand that world resources is finite and human population is growing...so the only way will though the progress of science and technology that we can maximise the usage of each unit of resources..

through study of economics, capital market are created and manipulated with the creation of suitable environment and this leads to investment in various enterprise which in turn funds scientific research in order to benefit human race,.

wankongyew,

<<Once again, this is a political issue dealing with the specifics of the current government of Malaysia.>>

We are talking about INHERITANCE TAX in Malaysia. So, it has to be DISCUSSED and DEBATED in the context of Malaysia,.

<<But no one wants to talk about policy implementation details which are interesting to me.>>

Which are IRRELEVANT unless and until we have a government that can implement any policy effectively.

What is the POINT talking about stuff that CANNOT be IMPLEMENTED??

Dreamer

Actually, the current "economic model" that is adopted assumed that resources in the world is infinite and thus we could have limitless growth. If you notice, the goal of every corporation and every country for that matter, is to grow, regardless of the size that they have achieved and even if it is at expense of the people. They do not care if the growth is beneficial, so long the figures add up.

I will also have to say that because of money, it has actually slow our progress down. Most of the significant discovery that has benefited us today is contribution from the past, there hasn't been anything significant to date. We are still using combustion engine powered by oil. If say there is a new discovery that could use water to run the engines or say anti levitation technology, this will be a great threat to all the O&G companies that has invested greatly and generating billions in revenue and will do everything in their minds to stop it.

The truth is that the economic model that we utlise today is really IMO to enslave us into a monetary world. How many of the people out there are actually doing a job that is truly beneficial or contribute to the society. Heck, most of the people in this world are probably involved with administrative work which in effect is quite useless and they probably hate it too, doing it just to make money so that they can get enough to eat, or buy whatever that they want. How many people actually really use their brain or involved in activities that could actually contribute progress.

This post has been edited by legiwei: Jul 16 2010, 01:16 AM

The problem with this approach is that it stifles all debate. Let's take public transport for example. This is another cause that is dear to my heart. I would like to have a comprehensive, well-integrated public transport system in the Klang Valley. I would like such a system to be subsidized as I do not believe that usage fees for public transport alone will cover the cost of the infrastructure and operation. On the other hand, do I trust the current government to implement such a system? I don't think so, given how much investment would be required and how likely the government is to hand these contracts to crony corporations and how prone they are to appoint key managers according to political closeness and familial relationships instead of competence.

But does this mean that I cannot discuss public transport systems at all? Can't we at least talk about an objective to aspire towards, to understand what each of us expects out of the transport network and how it should be paid for? We all know there is little hope of getting it implemented, but surely we can see still talk about what we would like a future government that we do trust to do?

i assure you that the current economic model is not as such...if not we wouldn't have the conference in copahagen.. nevertheless, i admit there are certain political forces at work that distrupt the implementation of effective economic policies...there are many stakeholders involved and certain stakeholders with more influence will be able to affect the policies to their advantage..

btw, you are correct in that most of what we enjoying are from last generation..but this will the same for our children where what they enjoy will be fruits of our generation discovery..and do u know how much petrol have evolved throughout the century...even for diesel they have started to use 4m in europe which are even more effective and caused less pollution den regular petrol.//

and do u mean IMF? if so, please do not blame IMF..if not for the country's own financial management problem, IMF will not have a chance to interfere..

and let me tell u something important money...one of its main function is storage of value...in ancient times during barter society..there is very little avenue for trade as perishables cannot be brought to far land...as such everyone produce just enough which is less than what they could have produce..this leads to under-utilisation of capacity.. as such when bad harvest comes, there is no ready stock nor they have anything to trade for food.. thus famine results..

with the advent of monetary system, man produce more, of which they could sell and gain money..this money they can store and trade stuff in the future when times are bad... furthermore, as money can last very long, it can be carried to far away land and thus effectively u can trade food which will perish in3 days locally and go to distant land to purchase goods and come back..

those elders who created money system meant it for the good of mankind..it's just that certain people abuse the system in order to live off others..

and about admin work...what do u meant? u mean clerical, accounting?? without this system, the current system will not be effective..support system important in the sense they complement the production system..

You are smart person who is interested in world affairs...our world needs more people like you....however, you should ensure you have adequate knowledge so as not to be misled by certain fanatics and interested quarters.. if u are interested in economics and how the system works, you can get a brief idea from economics for dummies..it should be an eye opener for you

And to add something about inheritance taxes, here's a fun fact regarding the estate tax in the US. Due to a quirk in the tax laws passed by George Bush Jr., there is no estate tax for 2010. However, the tax will come back in 2011 with both a lower exemption threshold and a higher rate.

The result: pundits are predicting that a lot of Americans will kill their parents in 2010.

The primary objective of every corporation on earth is to increase shareholders wealth. If you read interview, statement or press release by the Companies, CEO or any representative, it will normally go along the lines of growth and then go on to talk about how they will achieve this. If you look from a country's economy perspective, it is normally about GDP. At present, we have a very serious environmental threat which is in direct conflict with the economy. Under normal circumstances where there is such a perceived threat, (that could potentially kill most of the people in the entire planet), all efforts will have been made to resolve such a threat. However, there isn't exactly much goin on except of a growing awareness about it from the coverage of the media. What I'm trying to say is that economic powers will always prevail even in life threathening situation. Business is still at usual with more development the better regardless of the consequences. The economic model is as such in order not to lose out, one will have to "develop/grow", regardless if it's beneficial or not. It is a very selfish model and designed to suit people that has greed in mind.

To me, that is not exactly the stuff in which I call discovery. Most discovery in the modern age is to be more efficient. It sort of improvise existing ideas to make it better but nonetheless the principles remain the same. We are still unable to develop an alternative energy source from oil and we are running out of time. With our current level of technological advancement, I'm confident to say that such a technology could have exist but are not developed further due to the system in place which is a thread to big money. As I've mentioned, due to the current monetary system in place, it has stiffle development/progress more than to contribute it. All research requires funding and corporation will only do so if it's in their interest. They will even go the an extent to fund research to falsely promote that their products is good. Pharmaceutical industry is a very good example.

I am not talking about IMF but the monetary system, a system to enslave us into material persuit. In any case, all monetary system that adopts a central bank that controls the money supply and charges interest couple with fractional banking system that also charges interest is bound to fail regardless of how well it is managed. The reason is simple, it is mathematically impossible to sustain such a system. Also, talking about country's financial management problem, what do you have to say about US?

If you say the function of money is to store value, and is how our monetary system works, that is certainly not true. The piece of money is only a piece of paper which has no value except for a promise of payment. It will only continue to be of value where people have confidence in it and believe that a RM5 will be able to buy them say a bowl of noodles. But in effect, it has no value in itself, not backed by any commodity or gold which was the case in the past. Money in itself is not a consideration but were made to be believed so. Fiat money is actually debt, where currency in issue is very much correlated to the debt of the country.

In any case, paper money represents very little of the total money in circulation in the entire world, most of the it will only appear as figures in computers.

There are actually better models than the current one but the question is will the people be willing to change for it? But I guess I could have answered this question myself, big no.


Precisely, we have alot of jobs created merely in order to sustain the system in which itself is corrupted. Jobs that do not add value and is a means to survive. They probably do not enjoy it. How many people actually gave up their dream in order to persue something that has more economic value. Can you imagine a nation that do not use money? Of course that is a far fetched idea and not feasible but I will leave it as it is. And no, when I say don't use money, I'm not recommending us to go back into the days of barter trade either.

But there are other monetary system that still uses money but are at least sustainable but will still require a significant change.

Interestingly, very often ideas that are contrary to mainstream knowledge will be riducled and the people labelled as fanatics. Btw, a big majority of my post about about the unsustainability of the current monetary system is not just merely an opinion of my own but by economist too.

This post has been edited by legiwei: Jul 16 2010, 10:39 PM

have u ever heard of adam smith's invisible hand theory. it states that when everyone pursue his or her own objectives, this will result in maximum happiness in everyone. An often-quoted passage from The Wealth of Nations is: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."

however, this is subject to conditions such as there must a strong legislation where property rights is respected and government intervene whenever market imperfection arises.. for example to due with pollution, imagine the air is own everyone whereby the trustee would be the government...as such, in order to pollute the air, we have to pay a cost...as such all price of goods will include the pollution cost and the higher price in itself will drive down demand lessening pollution...all production causes pollution and as such, only goods that are really needed will be produced..the problem with society is that everyone can pollute for free and the cost of pollution is not included in the cost of goods due to weak legislation which in turn leads to high demand which cause unnecessary pollution..



let me ask u question, would a businessman wants to fund a research to discover new energy source... i believe as most reasonable man will that he will.. the discovery of new energy source will make some1 extremely rich..as such, though it will benefit the businessman will benefit,but the society will still benefit as a whole..nevertheless, heard of something called antimatter...this technology is being developed as we speak and is said to be one of new sparkle of hope...one of the research centre at the forefront of such development is CERN which is essentially funded my many big corporations..the experiment itself requires a tunnel which is more than 16 miles in length to be developed and who funded this if not for corporations.. while i am not so naive as to suggest they do it for society, but it is precisely the monetary system which will give them opportunity to wealthy when technology are discovered that encourage such development which will benefit humankind as whole..



money is never equivalent to wealth...it's merely a vote... a vote whereby we human possess which we will cast it in order to direct which resources are to be used to produce what..which means a currency is only as valuable as the goods it can buy...monetary system only starts to go havoc when it is printed recklessly..

and to say gold is a perfect system might not be true..it has some cons as well which will too difficult to explain here...however, i draw ur attention to this quote from Warren Buffet, "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head"



though support job which do not seem to add value, it is very useful....look at this when 10 person produce each 100 units the amount of goods produced will be 1000...with 1 of the 10 doing supporting such coordinating resources, they 9 ppl productivity will increase and if each produces 140 units as result, the total would be 1260 units..wouldn't society benefit as a whole with more abundant goods but produced using same of human capital.

and about people giving up dreams due to economic system..imagine this situation whereby everyone just pursue their own dream without regards to needs and want of society, certain profession will be in abundant when it is not needed in such amount whereas certain critical profession will not have enough people, how would the world become? furthermore, not everyone are good in certain field though they might be interested in..our imperfect economic system to a certain extent enable only those suitable for a profession to join and direct those unsuitable to their profession where their abilities are better used..

and btw, everyone is entitled to their own opinion..i'm merely saying that u should read 2 sides of the story..never concentrate on mainstream nor other sources in isolation..

Have we derived the topic of this thread?

Seems like the arguements on the later part is more on economics than inheritence and gift tax.

Right, I guess I've deviated significantly from the topic.

lol..my bad

those developed countries in the Europe that adopt inheritance tax (including other forms of taxes like council tax,poll tax) still enjoy the best quality of life in the world...despite their income being halved paying taxes
opposethat to the USA, !!!


i was glad that I had the chance to live in the UK for several years, they pay taxes with full knowing that they didnt have to worry about their healthcare, etc.....

^Out of curiousity, why didn't you stay on? I think I pretty much agree that the quality of live over there is pretty good. Further, buying power is very high, where at times you could even convert it back to RM and yet it's still cheaper.

Btw, US also has inheritance tax too.

I guess it's not really about the type of taxes that you have that determine the wealthfare of the nation.

not as easy to migrate..no matter where you go you will most likely miss the place you are born

My friend, if one day the government change the policy? As I've always says, Government is the last person/thing you can trust.

hi all..

how about if inherit prop & cash from parent and later give large sum money back to parent in the form of (cash, transfer to their account) would parent will will subject to tax?

any idea anyone?

don't think got any tax. Only the bank would ask parents why got "big" amount transfer into their account, where the source of income etc.. last time it's 50k, but now I heard 20k also can create suspicious to the bank if involved personal saving account

there is no inheritance tax in MY.

Only Capital Gains Tax in MY is RPGT

yes...i am aware that there is no inheritance tax in malaysia...from understanding...
inheritance is like parent to children...now how about after children received the money later give large sum to parent..can this consider inheritance as well ( parent inherit money from children??)

you can call its Gift

Normally England - Parent to Child is inheritance,

Child to Parent is Gift

But do bear in mind, if parents or children give Property to each other, there is potential RPGT

oh..ok thanks for your advice cfa28 bank side not so worry as i can proof the origin come from inheritance...so is not "unknown money"

Dear cfa28, been reading all your informative replies and now I would like to ask a quick question.

Receiving a lump sum amount of money (as a gift) from US relative to buy a property in Malaysia, do I need to declare anything to any authority in Malaysia or they will come to me eventually?

Things have been done: printed out a form which we googled online: Declaration of Gift & Solvency, has all the details filled up, relative in US signed, witness signed and notarized in US. In short, this document saying this is a gift to me in Malaysia ... etc. Even have the photocopy of the bank statement in US. All these sufficient to let me buy the property in Malaysia with peace of mind?

Thank you.