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.

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 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.

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.

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 pm
I 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?

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.

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

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.

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?

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.

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.

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.

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.

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.