Inheritance tax, what it is, how it works in the world and to whom is it really convenient | Milena Gabanelli

How much do you pay today

Today relatives in direct line (wife, children, grandchildren) who receive an inheritance of up to one million euros do not pay. Above this figure they pay 4%. Brothers and sisters pay nothing up to 100 thousand euros, on the rest the rate of 6%. Indirect relatives (uncles, nephews, brothers-in-law, up to the fourth degree) also pay the same rate, but on the entire inheritance. Finally, on transfers in favor of all other unrelated relatives, 8% of everything is paid. Different types of goods are exempt from the tax such as Italian government bonds and those of other EU countries, companies, company branches or controlling stakes in joint stock companies, the severance pay and the services provided by supplementary pension funds, vehicles registered in the Public Automobile Register, life policies. Recently the secretary of the Pd Enrico Letta, inspired by the studies of economist Anthony Barnes Atkinson, author of Inequality. What can be done, proposed to raise the inheritance tax to 20% for assets of over 5 million euros and redistribute the recovered revenue to the poorest 18-year-olds (around 10 thousand euros per capita), the generation most affected by the crisis.

Exemptions and rates in other countries

The Letta proposal has aroused an outcry, despite being decidedly modest with respect to inheritance taxes applied in European countries more similar to Italy both in terms of population and size. In Germany, children do not pay under the ceiling of 400 thousand euros of inheritance, in the United Kingdom under 475 thousand, in France 100 thousand and in Spain 16 thousand. Beyond these figures, the percentages of the tax are everywhere progressive (the higher the rent, the higher the tax). and for direct relatives the rates reach 30% in Germany, 45% in France: for strangers, peaks of 50% in Germany and 60% in France. In the United States, those who inherit up to $ 11.7 million do not have to pay taxes. For higher amounts, however, a rate of 40% is applied. The Observatory on public accounts directed by Carlo Cottarelli simulates the case of a direct inheritance of one million euros: in Italy and in the USA the designated heir would pay nothing, in Spain the tax would amount to about 335 thousand euros , in France to 270 thousand, in the United Kingdom to 245 thousand and in Germany to 115 thousand.

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How much is the inheritance tax worth in the world

In 2020, the Italian taxman forfeited just 429 million euros. In 2018, the total revenue from the tax in Italy was 820 million euros, compared to 5.9 billion in the United Kingdom and 14.3 billion in France, countries that have a population almost similar to ours; 2.7 billion in Spain (with 15 million fewer inhabitants), 6.8 in Germany. At the beginning of May, the Organization for Economic Cooperation and Development published a long report in which it compares inheritance taxes in 28 countries on the year 2019 and invites states with a very low tax to increase it. The research reveals how nations derive from inheritance taxes on average about 0.5% of total tax revenue (it was 1% 50 years ago), and points out that tax exemptions in Italy are the highest in the world after the United States. There are great differences between industrialized countries. For example, South Korea, where the highest rate reaches 50%, is the only country to collect more than 1.5% of its overall tax revenue from inheritance tax. Above 1% are Belgium, France and Japan. Great Britain and Ireland are around 0.7%, while Germany, the United States and Spain stop at 0.5%. Italy gets just 0.2%. Worldwide, Australia, Estonia, Israel, Mexico, New Zealand, Portugal, Slovakia and Sweden do not recover anything from inheritance tax.

0.1% of the wealthiest population (50,000 people) saw their average wealth increase from 7.6 million to 15.8 million euros

On the contrary, for the poorest 50% (25 million people) the net wealth went from 27 thousand euros to 7 thousand euros. By examining the inheritance tax records submitted to the Revenue Agency, the scholars found that in the period analyzed the average amount of hereditary bequests increased from 200 to 300 thousand euros. The inheritances do not only grow in value, but their share has doubled in proportion to the disposable income of Italian families (from 9.5% to 18.5%) and is increasingly concentrated in a small number of people. Inequality is also determined by the type of investment. The richest five thousand Italians have assets between 20 and 83 million euros, invested for the most part in financial activities and in private companies, therefore excluded from taxation on the inheritance axis. The upper-middle class, on the other hand, continues to invest mainly in real estate activities, for which the cadastral value, which is not updated to market values, is authentic at the time of succession. The assets of 50% of the less wealthy are concentrated in current accounts and valuables.

To give somewhere you have to take

A more balanced inheritance tax that is closer to the rest of Europe can help redistribute at least a small part of the wealth. It also limits the concentration of assets in the hands of a few families.

clear that to affect the needs of the country is not enough. It must be accompanied by other reforms, from updating the cadastre on the basis of market prices to financial holdings, from the fight against tax evasion to a tax reform that makes multinationals pay what is due. We need to give to so many categories affected by the pandemic, but how can we give to those who have not, if not taking chi does it have a lot?

June 8, 2021 | 23:08


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