Dead money: Battle for Japanese inheritances heats up

What a wonderful problem to have! I hope that one day I am too hoping to employ someone to count all my assets because I can't be bothered to myself.

“The service itself doesn’t make money for Daiwa

Oh, come on! Mr Hosoda, your nose is getting longer by the second.

All I can picture while reading this are circling vultures: the governement and the banks - what a team!

Why should one have to pay a tax on after taxed money after they pass it own? Makes no sense to me.

Inheritance is a very inefficient way to "give" money to your children, 55% is taxed!! I'd rather use that money to send my kids overseas to get life fulfilling experiences.

“My sons are starting to give their opinion on inheritance, and I’m interested,”

Let me guess, did he said "dad, don't go out traveling in your old days, you might have an accident, also you can stop using MY future money!".

“The service itself doesn’t make money for Daiwa, but instead allows money to remain within the company,” said Kazuhiro Hosoda, managing director at Daiwa’s wealth management division. “Profits will likely expand in the future.”

Hosoda is very inspiring indeed. If I had money I would entrust it with Daiwa because I know it won't be reinvested and thus risk loss.

Interest in “shukatsu” - literally preparing for the end - has boosted death-related businesses, from try-before-you-die coffins to funeral planning.

Shukatsu means job hunting in Japanese, I do believe you mean "shikatsu".

tackling historical taboos on discussing death

Yep. Damn near everything in Japan is either taboo or carries a stigma. That's why the only things Japanese talk about are the weather and baseball.

Japan already has among the highest inheritance tax in the world with a top rate of 55 percent

Nominal rates mean little. Only the effective (actual) rate is important. The US may have a higher threshold than Japan but it gets you in other ways. So too for the UK.

the service itself doesn’t make money for Daiwa

At least he has a sense of humor.

Shukatsu means job hunting in Japanese, I do believe you mean "shikatsu".

No, in this case "shukatsu" (or "shuukatsu," if that helps), is written with the character for 'end.'

Inheritance tax is disgraceful. Work hard all your life and pay income tax, residence tax, social insurance tax and unemployment tax. Then when you die the government takes another chunk.

more onerous inheritance tax rules kick in.

Very tasteless... move to a country like Australia where there is no inheritance tax rules!

You can't take it with you when you go, so claims that 'the government takes another chunk' after you've already paid your taxes, is a bit precious. What do you care? You're dead.

The ones who get taxed are the ones who inherit. It's money they have not earned. Why shouldn't they pay taxes on it? I would be ecstatic (financially speaking- don't want anyone dying to make me rich) if I were faced with a top-rate, 55% inheritance tax; it would mean a windfall of over 600 million yen had dropped into my lap. The 240 million or so I would be left with after the taxman left would be way more than I could spend in my lifetime.

If you're struggling under the burden of 600 million yen plus in your bank account and want your family to enjoy your wealth, share it with them while you're still alive so that you can both enjoy it. Offer to pay for your grandkids' education. Foot the bill for home renovations. Take them on holiday.

And have a big family. Split that same 600 million between your remaining spouse and three kids, and the inheritance tax rate goes down to 40% for the spouse on 140 million (the first 160 million is exempt from tax), and 30% on 100 million for each of the kids.

“My sons are starting to give their opinion on inheritance, and I’m interested,”

Giving their opinion? I can't think of anything more grubby. The old fella should sell the house, take a first class cruise around the world and blow the lot!

Yep. Damn near everything in Japan is either taboo or carries a stigma. That's why the only things Japanese talk about are the weather and baseball.

And food.......

The ones who get taxed are the ones who inherit. It's money they have not earned. Why shouldn't they pay taxes on it?

I understand that this is the reasoning governments use. However, the inheritance was essentially earned (and taxed once) for the purpose of gifting out to posterity. Or should birthday presents be taxed now too?

Inheritances should be tax-free. The recipients can then spend it to boost the economy, and will be taxed then anyway. This is much better than 45% of it going to the government, which will just spend it ineffectively.

This is much better than 45% of it going to the government, which will just spend it ineffectively.

I'd rather those with hundreds of millions of unearned yen clogging up their bank accounts paid tax on it than those struggling by on minimum wage be made to pay 10% on every essential they buy. If the government is going to spend money ineffectively, let it spend money that is sitting ineffectively in bank accounts anyways, and leave the little man in peace to count his minimum-wage coppers.

the inheritance was essentially earned (and taxed once) for the purpose of gifting out to posterity

What does that mean? Who earns money 'for the purpose of gifting out to posterity'? Personally I earn money for the purpose of paying the bills and hopefully having a bit left over for fun. If you have more than you need and don't want to leave it for the taxman after you're gone, spend it on your loved ones now. Or leave it to charity in your will.

When it comes to those huge sums that attract the higher tax rates, a lot of it is inherited money in the first place; the one passing it on didn't earn it, and the ones receiving it didn't earn it. Be honest, how many of the folk on JT complaining about 55% inheritance tax have earned enough in their lifetime to be able to leave every member of their family in excess of 600 million yen each? Plus in excess of 760 million to their spouse? The tax is levied on the amount inherited by the individual, not on the whole estate.

It seems so sad that one should benefit from someone's death.

hahahaha, "The Japanese government, however, wants a bigger slice", and so do all the other governments around the world who have these insane inheritance laws. Double taxation, one when you are alive and working, and one when your dead. How about chasing all the money, corporations and people hide offshore, and also companies who flourish offering tax avoidance schemes. I know, I'm dreaming, things will never change, its crazy how financial laws are made with loopholes, to protect the 1% , maybe.

I would be ecstatic (financially speaking- don't want anyone dying to make me rich) if I were faced with a top-rate, 55% inheritance tax; it would mean a windfall of over 600 million yen had dropped into my lap.

That's not really how this type of tax works. You're not simply paying a tax on cash assets given to you by a family member. As an example, say the person you got an inheritance from was a farmer, whose business was tied up with a family property, you'd be paying taxes on both the value of the property and the value of the business. If you can't pay the taxes it means you have to sell the property and business. If, as is the case for many people in Japan, other family members were living in the property or reliant on the business for their livelihood, you'd be forced to put your family out or cut off their livelihood. Having to pay huge taxes on these types of inheritances are a big problem for a lot of people. If you haven't planned properly you'll end up leaving a huge burden for your family.

Hey, most old people have no kid if you noticed. So the idea is that banks get a big chunk instead of government. And note that families are so lacking of conversation that they just ignlre their total asset... I already gave advice to my parents. Advice between family members is what makes also a supportive family. There should be no tax when inheriting, that is obvious. So easy way to steal money by politicians.

AlphaapeJUN. 20, 2016 - 07:46AM JST

Why should one have to pay a tax on after taxed money after they pass it own? Makes no sense to me.

Income tax and inheritance tax are different things. The purpose of inheritance tax is to prevent too much accumulation of wealth to an individual, which would create an unequal society. So, most of the people do not have to pay any inheritance tax.

The basic deduction for inheritance tax is 30 million yen + 6 million yen * number of heirs. If the size of the estate is less than the basic deduction, no inheritance tax is imposed. Most people fall in this category.

The basic deduction was 50 million + 10 million * number of heirs till the end of 2014. There are certain number of affluent people who would not have been taxed till 2014 but would be taxed now. So, they are consulting tax accountants these days.

The Tax rates depend on the estate amount after various deductions.

Estate amount after deduction, tax rate

<=10 million, 10%

<=30 million, 15%

<=50 million, 20%

<=100 million, 30%

<=200 million, 40%

<=300 million, 45%

<=600 million, 50%

more than 600 million, 55%

The ones who get taxed are the ones who inherit. It's money they have not earned. Why shouldn't they pay taxes on it? No the money has already been taxed, to have it taxed again at say 55% means that its probably well over 65% total tax rate. Its both double taxation and means or closer to slavery than not.

I may have some details wrong, but there's a loophole to get around the inheritance taxes if you operate a business out of your home, so lots of people these days are building new homes with rentals in them.

Especially in Tokyo this seems to be very popular with regular Tokyo property prices high enough to put lots of middle class people within the claws of recently decreased inheritance tax thresholds.

So Japan has a shrinking population, more and more rentals being built in Tokyo, all so people can get around the inheritance tax. And people are living in smaller, more cramped residences as a result.

If it weren't for government creating these incentives for the wrong type of behaviour, how much better off would Japan be?

Basically tax is to redistribute wealth so the money is re-injected into society instead of sitting in a vault. It would be better if this tax is a special purpose tax in which the collected money can be used by the government for education and help children welfare to rejuvenate the Japanese population.

Planning ahead for these things is a very good idea, particularly if you want to save money. My mother, who is sitting on a pile of cash, informed my two siblings and I about 20 years ago that she was setting up accounts in our names into which she would deposit the maximum amount allowed as a tax-free gift each year (which I think is somewhere around $20,000). She noted that, as the accounts are in our names, we had the legal right to withdraw the money at any time, but that if we did so before her demise, we would receive not a penny more.

By the time she goes, most of her wealth will have been already transferred to her offspring; I don't expect she (or, more correctly, we) will ever have to pay a dime of inheritance tax. That is the purpose of planning ahead.

Classic case of "A person suffering from cancer worried about his hair loss."

"The government predicts the population will fall to barely 80 million by 2050 from 127 million last year."

Am I the only one disturbed by this statement more than the intricacies of inheritance tax?

"welfare for your family"...provided it exists 20 years down the timeline to inherit. Real shame!

It's money they have not earned. Why shouldn't they pay taxes on it?

@ cleo: If I had made that much money as you mention in your post, I would have been paying taxes on it over the years. Both in income taxes from working to amass that amount of money, and also on the capital gains from the interest it is earning in the banks or various investments. So that money has been more than taxed enough.

No you can't take it with you, but you should be able to pass it on to someone without them having to pay for it. What's next, if I give my brother $100 then I will somehow need to pay a "gift tax" which is on the books in the USA and he will have to pay a tax on the transaction of receiving a monetary donation from me?

Like it or not, those who are fortunate enough to amass large amounts to pass on to their heirs have paid the taxes on the income and it should not be taxed. There is a big difference in selling/buying something and having it given away to you in death.

Basically tax is to redistribute wealth so the money is re-injected into society instead of sitting in a vault.

Wealth isn't necessarily sitting in a vault, doing nothing. It might be parked in a risky but potentially profitable business venture, perhaps contributing to new jobs and employing people.

The result of taxing such wealth is that the government instead dumps the money elsewhere, maybe in laying down slabs of concrete, giving GDP a short term boost, but destroying the environment to the detriment of the rest of us over the longer term.

inheritance taxes are so the 1%ers don't accumulate ALL the wealth.

I agree govts talking is also a bad idea, the j-govt will squander this like they do the taxes we pay each day of the year.

But letting the rich vacuum the worlds CA$H is also very dangerous & they are vacuuming far too much already while pretending they cant afford to raise societies most vulnerable

This wont end well likely & its going to get worse in Japan & elsewhere............ glad I am getting older, sorry folks I aint rich!

Be honest, how many of the folk on JT complaining about 55% inheritance tax have earned enough in their lifetime to be able to leave every member of their family in excess of 600 million yen each? Plus in excess of 760 million to their spouse?

I see your point in taxing inheritance money of the hoarding millionaires and billionaires that continuously keep the money in the money without any economic benefit.

What does that mean? Who earns money 'for the purpose of gifting out to posterity'?

My grandparents worked hard, earned their living and then still had a bit left over. They did take you suggestion, in that they passed out much of what they had left except what then continued to need, to their grandchildren as an inheritance before they passed away (it was still heavily taxed in the US as an inheritance, even though it was not nearly close to the amount you pointed out above). They gladly gave it away because that was their plan from the start, out of love of their children and grandchildren.

So there you go, that's what it means. Yes, you can gift it in ways like a huge family vacation around the world or whatever, but receiving a monetary amount is more flexible (helped most of us through college). Different from how you do things, but was gratefully received by me and my cousins.

AlphaapeJUN. 20, 2016 - 01:30PM JST

Income is not the only thing that is taxed. Estate is taxed by many nations around the world. US also has estate tax, though less than 1% of the deceased pay the tax. The maximum tax rate there is 40%. Are you against US estate tax, too?

If I had made that much money as you mention in your post

A huge if. An estate of 600 million yen accumulated in the working lifetime of one person would mean you had been saving (not earning mind you, saving, the amount left over after you'd finished spending) somewhere in the region of 1.25 million yen a month for every month of a 40-year working life. if you're leaving your wealth to a spouse and two kids, you would have been saving somewhere in the region of ¥3.8 million a month every month for 40 years for them to fall foul of the maximum tax rate.

The vast majority of people who come to the end of their lives with that much money in the bank did not, with the exception of a handful of successful entrepreneurs and people who happened to be in the right place with the right idea at the right time, get it by working hard - they inherited it. Which means they have not been 'paying taxes on it over the years'. It's a windfall.

you should be able to pass it on to someone without them having to pay for it.

Why? Pass on the stuff earned by the sweat of your brow, fine, I'm all for that. Most people pay nothing in inheritance tax when their parents die because what their parents are able to leave them from what they earned falls below the minimum. But the 1%, passing on astronomical sums of money and property that they have done nothing to earn, to other people who have done nothing to earn it and thus perpetuating the landed gentry in deed if not in name, is ridiculous.

if I give my brother $100 then I will somehow need to pay a "gift tax"

In Japan, you can give your brother up to 1.1 million yen a year before the tax man comes calling.

she was setting up accounts in our names into which she would deposit the maximum amount allowed as a tax-free gift each year (which I think is somewhere around $20,000)

You have a very sensible mother. It doesn't sound like she's set up those accounts in Japan, where the maximum non-taxable gift is 1.1 million per year. Taking the Japanese maximum, that very generous 1.1 million a year over 20 years comes to 22 million yen; assuming your mother is in good health and she continues paying into the account for the next 20/40 years, you and your siblings are looking at 44/88 million yen each (plus interest) that will not be included in the calculations for your inheritance tax. Still nowhere near the 600 million the JT high earners are sobbing about, but quite helpful. Personally if I could afford to give my kids that much money I'd prefer to see them enjoying it now rather than making them wait until I was dead and the money (hopefully) had a bitter taste to it, but your mother has obviously though things through to her own satisfaction. Good for her.

No the money has already been taxed

Not a tax specialist but suppose you inherit a house valued at 50,000 units that your parents bought a half century ago for 10,000 units, the increase in value due to inflation and possibly increased demand is not earned income and has not been taxed. In Japan it is common that the largest part of your inheritance is property and if that property was originally purchased some decades ago, relatively little of its current value comes from income that has previously been taxed.

@Yubaru: Close, but both are the same pronunciation but different kanji as you can see below.

しゅうかつ 就活 Common word

Noun

job hunting; job searching

しゅうかつ 終活

Noun, Suru verb

making preparations for one's death

America taxes above $5 million, meaning that if you are a lawyer, or a business owner, or otherwise live your life well, you probably won't be taxed at death. Japan views its most hardworking people as a resource to mine until they are gone, taxing what has already been taxed (at a very high rate). I, for one, am making plans to be elsewhere when I shuffle off this mortal coil.

More jealousy from those too lazy and indolent to earn for themselves. The reality is that, in the US anyway, the majority of millionaires did not inherit their wealth- they earned it themselves. If they want to give it to their kids , to charity, or to their cat, that is THEIR business. Not yours, nobody else's, and certainly not the government's.

Not a tax specialist but suppose you inherit a house valued at 50,000 units that your parents bought a half century ago for 10,000 units, the increase in value due to inflation and possibly increased demand is not earned income and has not been taxed

That's where capital gains tax comes in. You pay tax on the value that your property is assessed at, not the value that your relative paid.

I am worth about 60,000,000 Sure wish there was another zero on the end.

The reality is that, in the US anyway, ....

How is that relevant? The topic is Japanese inheritances, the title is a dead giveaway.

But to follow up your point, $1 million is roughly ¥105 million. Leave that to your spouse and s/he pays exactly zero in inheritance tax because it's below the minimum. Which leaves me wondering again, exactly how is that relevant to this topic?

By the by, you may find this illuminating:

http://www.salon.com/2014/03/24/death_of_meritocracy_how_inheritance_is_poisoning_the_american_economy/

A 2011 study by Edward Wolff and Maury Gittleman found that the wealthiest 1 percent of families had inherited an average of $2.7 million from their parents. This was 447 times more money than the least wealthy group of people — those with wealth less than $25K — had inherited.

Those who get big inheritances can park those inheritances in investment accounts that just get bigger and bigger without them having to lift a finger.

So no, it isn't all about people being 'lazy' or 'indolent'. It's about some people getting lifted higher up the ladder than others. Even in the US.

These people who worry about inheritance tax are doing it wrong. They should have spent the money on educating their offspring. You can't tax an education, an experience, or other intangibles.

Cleo. Of course, people from rich families inherit more than from poor families. That's just reality. Sometimes life isn't fair. Some people are born smarter, taller, more handsome, more hard working, richer. Such is life. That should be incentive to work harder to leave something for your OWN kids, not moan about others and try to steal what is not yours. Pure jealousy.

Also nothing wrong with putting money in investment accounts. That provides funds that can be used by those institutions to loan to businesses to create jobs. Money isn't static or dead- it is always working.

AttilathehungryJUN. 20, 2016 - 03:32PM JST

If they want to give it to their kids , to charity, or to their cat, that is THEIR business. Not yours, nobody else's, and certainly not the government's

How is it relevant to the discussion of inheritance tax? They can give away their money or their assets as they like, if they (or the receivers of the gift) pay gift tax. Inheritance tax is levied on what is left. No one is telling the billionaires what to spend their money for.

Money isn't static or dead- it is always working.

That creates more problems. As the French economist Thomas Piketty found, interest rate is almost always greater than the economic growth rate. That means a man who lives on interest almost always earns more than people who work and innovate. Inheritance tax is an effective way to reduce the number of people who live on interest.

Attila - Life isn't fair, we all get that. No one said it was. But life not being fair has nothing to do with your earlier claims that 1) rich people are rich because they work harder (they don't, they inherit more, and 'earn' from investments without lifting a finger) and 2) the only reason non-rich people don't leave huge fortunes for their families is because they are lazy (the further down the ladder you start life, the harder you are likely to work and the less likely you are to become stinking rich). The idea that the rich are rich because they are somehow more virtuous and deserving than the average bloke lost credence yonks ago.

If it's 'pure jealousy' to expect free windfall money that hasn't been worked for to be taxed at a higher rate than average, what is it to demand that those on the very bottom of the ladder pay through the nose for virtually every breath they take and every morsel they eat, in the form of 10% consumption tax which the 1% don't even notice - Pure obscenity? Pure greed? Pure evil? Pure insensitivity?

CH3: Again, the basic premise is that it is THEIR money. Not yours. Not the government's. The idea that it is taxed again is hideous. Why do you feel like you are entitled to a place at someone else's table? Whatever they may or may not have is no relevance to you or your life.

AttilathehungryJUN. 20, 2016 - 05:07PM JST

The idea that it is taxed again is hideous

Why do you think the government can tax only on income? When people earn, income is taxed. When they spend their after-tax money, consumption tax is levied. When they buy real for their after-tax money, real estate tax is levied every year. Do you think it is double and triple taxation? Yes, it is, and "such is life." I think double taxation is more acceptable than the idea that the government can tax income only.

Will you explain why you think the government can levy tax only on income?

My wife's family went through this. Once a closely knit family, fighting over inheritence money split them permanently. The messy affair ended up in court ... and ... well ... what a mess. The court sided with the evil ones ... lying, cheating, conning is legal when it comes to divving up inheritence money.

I don't think that income tax is the only tax available. However, the idea that money is taxed simply because it is taken from one wallet and put into another is ludicrous. Inherited money will be taxed when it is spent by those who inherit it, so there is no need for a special confiscation.

@cleo

But to follow up your point, $1 million is roughly ¥105 million. Leave that to your spouse and s/he pays exactly zero in inheritance tax because it's below the minimum.

That's not what the article says. The article says the limit was recently decreased to " $280,000 from $471,000". So around ¥30 million, which when you include real-estate is an absurdly low number. It is definitely not only the so-called 1% who will be crossing this threshold.

interest rate is almost always greater than the economic growth rate. That means a man who lives on interest almost always earns more than people who work and innovate.

Interest rates are as good as zero now, so for that purported relation to hold true it means that economic growth must actually be negative. (Maybe it is?)

But there's no way that a man who lives on interest these days will earn more than a Mark Zuckerberg or even someone who manages to run a profitable business in this zero interest rate environment.

Inheritance tax is an effective way to reduce the number of people who live on interest.

Zero interest rates is serving that purpose, and loads of pensioners who saved hoping to live off interest are now having to rethink.

they inherit more, and 'earn' from investments without lifting a finger

Putting one's money in risky investments is no cake walk. There is no guaranteed way to make loads of money. But without people carefully evaluating options and risking their money, there are no jobs for virtually all of the rest of us (except those who work in government, and even they are paid for by the taxes generated from the private economy).

what is it to demand that those on the very bottom of the ladder pay through the nose for virtually every breath they take and every morsel they eat, in the form of 10% consumption tax which the 1% don't even notice

But they'll be better off with people carefully risking their wealth in investments to generate new jobs, which can then help those on low incomes earn more and live better as a result. The problem for Japan is that when people invest they do it overseas because the Japanese business environment is relatively unattractive. It's not the fault of the rich, but the government. Government taking away money from the rich does nothing to help the poor.

And other countries get by fine even with consumption tax rates higher than 10%, and even without inheritance taxes.

Striker10JUN. 20, 2016 - 05:56PM JST

It is definitely not only the so-called 1% who will be crossing this threshold.

Of the 1,273,004 people who died in 2014 in Japan, 56,239 people were imposed inheritance tax. The ratio is about 4.4%. https://www.nta.go.jp/kohyo/tokei/kokuzeicho/sozoku2014/pdf/05_kazeijokyo.pdf

In 2015, the tax law was changed and the basic deduction was reduced to 30 million yen from 50 million yen. So, the ratio is estimated to rise to around 6%.

But the ratio for those who were imposed the highest tax rate is 0.24% and is lower than 1%.

Cleo says

But to follow up your point, $1 million is roughly ¥105 million. Leave that to your spouse and s/he pays exactly zero in inheritance tax because it's below the minimum.

but CH3CHO, and what the article seems to agree with. says

The basic deduction for inheritance tax is 30 million yen + 6 million yen * number of heirs.

Which is it? Anyone know?

The article says the limit was recently decreased to " $280,000 from $471,000". So around ¥30 million, which when you include real-estate is an absurdly low number.

The tax office seems to disagree; they say that the spouse of the deceased pays no inheritance tax on the first 16 million yen. Other heirs are subject to the new lower deductions. (And why is an article on Japan Today, about Japanese inheritance tax, citing amounts in US$? Yen, please!)

https://www.nta.go.jp/taxanswer/sozoku/4158.htm

And on this page https://www.nta.go.jp/taxanswer/sozoku/4155.htm it seems there is no difference in the lower tax rates, but higher rates for those inheriting larger sums, over ¥300 million. Deductions have gone down, but they are calculated per heir, so if you want to keep your money out of government hands after you're gone, having as many heirs as possible, spreading it around, would seem to be the thing to do.

My recommendation is to spend the bulk of it before you go. That's my plan. My kids will not be rejoicing over my death, nor will they be bickering over who gets what or how much.

oikawaJUN. 20, 2016 - 07:34PM JST

Which is it? Anyone know?

cleo was talking about the situation in the US, where a millionaire may not be taxed because the threshold is around 5 million dollars. http://www.japantoday.com/category/national/view/dead-money-battle-for-japanese-inheritances-heats-up#comment_2219169

I was talking about the situation in Japan.

fxgaiJUN. 20, 2016 - 06:20PM JST

Interest rates are as good as zero now, so for that purported relation to hold true it means that economic growth must actually be negative. (Maybe it is?)

It is negative, proving Thomas Piketty's point. For reference, the recent annualized GDP growth rate of the US is 0.8% whereas the interest rate for 10 year US T-note is 1.6%, further proving his point.

But there's no way that a man who lives on interest these days will earn more than a Mark Zuckerberg or even someone who manages to run a profitable business in this zero interest rate environment.

Have you ever heard of "deflation"? Under deflation, money sitting on a zero interest account gains in real value because the prices of goods fall down. A zero interest investor earns more in real value than "someone who manages to run a profitable business" in negative growth environment. Mark Zuckerberg is an exception and you cannot deny the fact interest rate is almost always higher than the growth rate.

Zero interest rates is serving that purpose, and loads of pensioners who saved hoping to live off interest are now having to rethink.

Pensioners do not live on interest. They live by withdrawing the principal they have accumulated. By the time they die, they do not have much left in their accounts. So, I think inheritance tax is reasonable because it taxes only on the rich.

Putting one's money in risky investments is no cake walk. There is no guaranteed way to make loads of money. But without people carefully evaluating options and risking their money, there are no jobs for virtually all of the rest of us

Have you ever heard of mutual funds? You do not need to be a super rich to invest. What is unfair is to allow super riches to monopolize investment.

@luguna yes you can gift family members 1,05 million yen tax-free, ( (but this will probably decrease in the coming years) so its best to set up an account at an early date to start saving. even if you put away 2,3, 5k a year or whatever you can afford its much better than giving it to the J gov to squander

Salaries are so low, jobs so unpredictable that this money will run out in a few years. Life styles are high. There's a need to pay for the shinkansens, the national debt, amakudaris, etc. A friend, a Keio grad just quit her job to go for a masters in Canada. She finds the Japanese companies too inhuman. Brain drain. This'll add to the miseries. I've yet to find a positive future sign. Sigh.

CH3CHO

Thanks for the reply .So if you had an estate worth 100 million, and left it to a wife and 2 children, you would deduct 30 million, plus 6 * 3 heirs, which comes to 48 million, and pay tax on the remaining 52 million, at 30%, which would be 15.6 million. Would that be right?

I'm also getting a bit confused because cleo is saying the number of heirs makes a big difference but each heir only adds 6 million to the total don't they?

Ch3cho, how can the super rich monopolize investment (risk taking) when mutual funds make it possible for anyone to invest?

I just can't see how taking this money and giving it to the government can help anyone but the politicians.

The MONOPOLY game has a "Pay inheritance tax" card.

Benjamin Franklin said there are only two sure things in life, death and taxes.

However, forking over over half is just plain highway robbery, they get them coming and going!

fxfgai you are right. I am amazed at the moral posturing and judgementalism going on in this discussion. Confiscation advocates huffing that people who inherit money "don't deserve it since they didn't earn it". As if there were a moral criteria in place for inheriting family wealth...Well, if the government takes the money, it will ALSO give it to people who didn't earn it. What's the difference?

Cleo; I applaud your plan to spend your money before you go. I plan to do the same. I'll get more pleasure out of it that way, being able to see my family enjoy it. Still, what's the difference between your kids spending your inheritance now (before you die) and later (after you pass). Why should the latter be taxed and not the former, given that the activity is identical? The only difference is the health of the benefactor.

Cleo

So if there were no inheritance tax in Japan, would you be really sad? You could always donate some money if you weren't happy that the government didn't take any from you. Isn't the Japanese system of inheritance tax based on the British 'death duty' system? I'd much prefer my descendants to get the money than to have to sell half my land to pay for it.

what's the difference between your kids spending your inheritance now (before you die) and later (after you pass)

Spending it now, I get to enjoy it. Later, I don't. You answer your own question - I'll get more pleasure out of it that way, being able to see my family enjoy it.

Why should the latter be taxed and not the former, given that the activity is identical?

Whether I spend it now or leave it for later, I doubt my fortune would be enough to get the taxman to even pay attention, never mind enough to get him drooling. I'm in no danger at all of catapulting my kids into the 'idle inherited wealth' league.

if you had an estate worth 100 million, and left it to a wife and 2 children, you would deduct 30 million, plus 6 * 3 heirs, which comes to 48 million, and pay tax on the remaining 52 million, at 30%, which would be 15.6 million. Would that be right?

I don't think that's quite how it works. The tax is levied on the recipient, not the estate. So if you have an estate of 100 million left to a widow and two children, you have basic deductions of 30 million + 6x3=48 million. The tax payable on the remaining 52 million is 3.4 million for the widow and 1.45 million for each of the children, for a total of roughly 6.3 million. The rate is 15% because each portion is less than 50 million.

If there are three children, the widow's portion stays the same and the children are each liable to pay 10% of a third of 26 million, or 866,600 yen.

https://www.nta.go.jp/taxanswer/sozoku/4155.htm (You can put the numbers in and it does the calculation for you)

This doesn't seem to take into account the spouse tax mitigation system, which as I mentioned earlier means that the spouse has a deduction of 160 million, so that in the above example the widow would pay nothing in tax at all. Hmm. It seems the Tax Agency says different things depending which page you look at.

https://www.nta.go.jp/taxanswer/sozoku/4158.htm

So if there were no inheritance tax in Japan, would you be really sad?

Not a lot makes me 'really sad'....it's mainly really bad things like trophy hunting, FGM and juvenile cancer, not necessarily in that order. So I don't suppose I'd be really sad if there were no inheritance tax. But I'd much rather the guvmint tried to balance the budget by taking a fraction of their money from the idle rich than by taking a proportionally much larger amount from the working poor.

You could always donate some money if you weren't happy that the government didn't take any from you

Like I said, I doubt the taxman will get much joy out of me when I go. I won't lose any sleep over it.

Thanks for the reply cleo. Not sure about that though. I put the figures of 100,000,000, spouse and 2 children in that calculator and it came out at 8,000,000 tax for the spouse, and 3,250,000 for each of the children.

As far as I can see it wouldn't make sense to tax the heir, not the estate, as it would then be incredibly easy to circumvent IHT by adding heirs, and would be unfair as some people would be paying much more tax (even though they're dead) than others just because they had fewer dependants. It would also defeat the point of IHT as the money would then not be redistributed, and the provision for dependants has already been made with the 6 million yen allowance.

I may be wrong but that's how I see it.

"Elderly Japanese, among the world’s richest retirees..."

Not for long if they see "financial advisors. "

oikawa - if the estate is 100 million, you deduct the deductibles (30 million +6 million x3=48 million) and input the remainder, 52 million. That should give you the figures I quoted above.

it would then be incredibly easy to circumvent IHT by adding heirs, and would be unfair as some people would be paying much more tax (even though they're dead) than others just because they had fewer dependants.

I think the point is that if you're dead, you can't pay any tax. It isn't a death tax, it's an inheritance tax, i.e. the tax is levied on those inheriting, not those dying. And in a progressive tax system, it seems fair to most people that someone inheriting say one-fifth of a 100 million yen estate should not be paying as much tax as someone inheriting half, or even the whole estate.

It would also defeat the point of IHT

That depends on what you think the point of inheritance tax is. If you think it's simply to rake in taxes by the fistful, then yes allowing the estate to be spread about thus lessening the tax revenue is weird. But if the purpose is to prevent the accumulation of obscene amounts of money and property in the hands of a few uber-rich families, then getting the families themselves to spread the assets thinly to avoid tax by voluntarily increasing the number of heirs works very well. At the same time, if the family chooses to keep as much as possible in the family, then the taxman steps in and takes an amount that may or may not be equal to what would have gone to the extra heirs.

Cleo, good points. Think I've got it, cheers.

@fxgai

"I just can't see how taking this money and giving it to the government can help anyone but the politicians."

Huh? Your mantra all about paying down the national debt. The way to achieve that is to take money out of the private sector (which has the surplus) and hand it over to the government (which has the deficit).

This is exactly what you want.

Not really. First I want government to stop wasting money, but I don't think waste is the entire cause of the 40 trillion or so budget deficit. So government does need some money to operate. For collecting those tax revenues, I want broad-based low-rate taxes, so as to minimize the harm to and distortions on economic activity. Flat rate consumption tax fits the bill, whereas double taxation on wealth at high rates does not.

"I want government to stop wasting money,"

When the govt cuts spending, then less $$$ flows into the private sector. For example, the construction and operation of a public hospital entails distribution of hundreds of high-end contracts tendered in the private sector. And then the doctors and nurses salaries are spent on food, housing, consumer goods, whose providers are overwhelmingly in the private sector. Even a bridge to nowhere is built overwhelmingly by private sector operators who use the $$ on workers' salaries, etc.

So... govt spending cuts effectively take $$$ out of the private sector and keep if for the govt.

http://www.businessinsider.com/the-growing-government-deficit-actually-means-savings-for-the-private-sector-2011-2

fxgaiJUN. 20, 2016 - 09:54PM JST

Ch3cho, how can the super rich monopolize investment (risk taking) when mutual funds make it possible for anyone to invest?

I just can't see how taking this money and giving it to the government can help anyone but the politicians.

Do you remember this?

fxgaiJUN. 20, 2016 - 06:20PM JST

But they'll be better off with people carefully risking their wealth in investments to generate new jobs, which can then help those on low incomes earn more and live better as a result. The problem for Japan is that when people invest they do it overseas because the Japanese business environment is relatively unattractive. It's not the fault of the rich, but the government. Government taking away money from the rich does nothing to help the poor.

You assume only the rich can invest.

In addition, government is not a black hole of money. What it does is "redistribution" of wealth. It gives out as much as it takes.Since the poor can invest just like the rich, redistribution of wealth does not block investment.

My mother in law has been giving her children and my daughter the maximum amount of gift money for years...upwards of 15 years now. She also started a tax sheltered education account of I believe 15 million yen for my daughter's education. She's doing her best to see that the government doesn't get a huge chunk of what she's worked so hard for during her lifetime. The money that we save in not having to pay for high education costs has been invested so we'll see how it all goes.

@fxgai

But they'll be better off with people carefully risking their wealth in investments to generate new jobs, which can then help those on low incomes earn more and live better as a result. The problem for Japan is that when people invest they do it overseas because the Japanese business environment is relatively unattractive. It's not the fault of the rich, but the government. Government taking away money from the rich does nothing to help the poor.

And other countries get by fine even with consumption tax rates higher than 10%, and even without inheritance taxes.

**You make me laugh. Are you kidding me? Yes other countries have higher than 10% consumption taxes, but they also have 0% on food, meds, school supplies, baby needs etc. You are clueless.

salaries are spent on food, housing, consumer goods, whose providers are overwhelmingly in the private sector.

Doctors and nurses may be providing useful services, but bridge to nowhere builders aren't. Rather than have those people employed doing something completely useless and detrimental to the environment, it'd be better if they were put to work doing something that would produce something of value. The central planners of government have no special clue what that something of value might be.

CH3CHO,

You assume only the rich can invest.

No, I assume only that they have a greater propensity to invest, and I'd rather they were left to invest their own money than have government dictate that more useless bridges to nowhere be built.

MsDelicious,

Yes other countries have higher than 10% consumption taxes, but they also have 0% on food, meds, school supplies, baby needs etc.

No, some countries have opted to avoid making those various exemptions. And those are the countries that have lower consumption tax rates than those with the exemptions. Broad-based, low rate is the best way to go, unless you are a politician looking to buy votes.

Whoever voted me down, please send me the monies you think should be spent on taxes on food etc. as I listed above. You are obviously really rich and really cruel.

Taxing consumption is just a practical matter of gathering revenue. It's not for the rich and cruel because - government has the option to spend those tax revenues on assistance for the poor. Looking a the tax revenue gathering system without considering how the money is spent makes no sense.

I cannot believe there are people that support taxing food, baby goods, educational goods, medicine and health care. There sure are some stupid people in this world.

I support broad-based low rate taxes. People with no money can't afford anything, taxed or not. But middle, upper-middle and rich people can, and the richer they get, the more they consume. Giving them all a tax break is stupid if the alternative is to hike other taxes across the board.

I think all old codgers should go on "SKI" trips before they shuffle off This Mortal Coil: "Spend the Kids' Inheritance". Don't have to worry about tax if there's nothing left to tax! Win, win, ne?

Dues is unionism at work. Taxation is socialism at work. Forced taxation is communism at work. However, multiple taxation is the government, the "legalized" "mafia" or "yakuza" at work. That is how it keeps "power" away from those that are not in with them.

That power is why and how the wealthy stay wealthy even at death. The tax laws are designed to keep the wealthy and the powerful keep their wealth and power in the name of the social need for betterment of what ever need that they can use to define to benefit all/everyone. But they have "loopholes" that only they the privileged wealthy and powerful are privy to know and use. Such was the case exposed by the Swiss banks.

Banks are owned and run by the wealthy and the powerful. They determine who gets to use the money that they get from the depositors. Such is Japan's Postal Bank. Banks are an arm of the system of controlling money. Sadly money also control the lives of people. So the government keep control of the people using taxation.

In effect taxation in Japan and the USA is not just multi level but also extremely lopsided and devious. But that is another story.

Just curious - assuming you have a Family, apart from your Wife and Kids, who I would assume can inherit without anything being done by yourself, who or what else can legally inherit from you ?

For example, can you leave part of your fortune to your pet Goldfish, Cat or Dog, your Siblings, or Parents even ? And if so, what needs to be done in order to make that legal ? (I'm guessing it'll involve a Lawyer - in which case what's the rough cost these days ?)

Assuming Goldfish, and each one were themselves named - what happens if one of them were to die... suddenly ;-) eaten by the jealous Pet Cat... Has such a situation arisen before ?