{"id":488175,"date":"2026-02-18T15:45:08","date_gmt":"2026-02-18T15:45:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/488175\/"},"modified":"2026-02-18T15:45:08","modified_gmt":"2026-02-18T15:45:08","slug":"death-tax-property-tax-four-ideas-that-could-offset-inheritance-inequality-in-australia-inequality","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/488175\/","title":{"rendered":"Death tax? Property tax? Four ideas that could offset inheritance inequality in Australia | Inequality"},"content":{"rendered":"

The $5.4tn intergenerational wealth transfer predicted to occur within the next two decades is a major challenge for Australian governments. Economists have warned it could entrench and exacerbate inequality, and make the economy less productive<\/a>. So what can be done about it?<\/p>\n

\u201cIn the end, that comes down to tax,\u201d says the former deputy reserve bank governor Guy Debelle. \u201cTaxation is how you redistribute. Basically, that\u2019s it. So what\u2019s the tax?\u201d<\/p>\n

The Australian taxation system has traditionally been progressive and oriented towards income tax but, as more people hold greater volumes of wealth or get income from assets rather than labour, says Debelle: \u201cWe have to think about what\u2019s the sort of spending we want the government to be doing and then how are we going to fund that?<\/p>\n

\u201cHow do you want to think about that?\u201d<\/p>\n

Economists and academics speaking to Guardian Australia offered different interventions that might do for wealth what income tax does, in some ways, for income: try to limit the worst excesses of inequality.<\/p>\n

1. Death taxes<\/p>\n

Prof Daniel Halliday, political philosopher, University of Melbourne: \u201cA simple approach is for inherited wealth to be included in the taxable income of the recipient. So, how much inheritance tax you pay depends on how much money you\u2019re earning already, subject to whatever rules we already have in the tax code for adjusting one\u2019s taxable income.<\/p>\n

\u201cInheritance means that wealth inequalities get more easily replicated from one generation to the next. Inheritance allows wealthy families to keep their wealth so that it just keeps growing. If an inheritance tax could be accompanied by a reduction in income tax, higher education debt, or other taxes paid by poorer people, then we might see the most reduction in wealth inequality.<\/p>\n

\u201cThe taxing of inheritance needn\u2019t be seen as an exclusively leftwing idea. Unlike the income tax and GST, inheritance tax would not attach to a market exchange. Whereas taxing income and consumption puts a brake on economic exchange, inheritance tax doesn\u2019t, because inheritance happens outside markets. So an inheritance tax should appeal also to people who think taxes are a problem when they restrict market freedoms, as well as people who value equality.\u201d<\/p>\n

Prof Peter Siminski, applied microeconomist, University of Technology Sydney: \u201cI think consideration of death taxes is always worthwhile.\u201d<\/p>\n

2. Reform pensions and aged care systems<\/p>\n

Associate Prof Bruce Bradbury, Social Policy Research Centre, University of New South Wales: \u201cIn many other rich countries, government-provided age pensions are more generous.<\/p>\n

\u201cIf you\u2019re a middle-class person in a northern European country, you can expect quite a generous pension in retirement based on your lifetime contributions. But that\u2019s not something you can pass on to your children, and so it doesn\u2019t count in wealth statistics.<\/p>\n

\"$5.4$5.4 trillion will soon be inherited in Australia. What does this mean for equality? \u2013 video<\/p>\n

\u201cOur superannuation system has some advantages \u2013 such as incentives for people to work and save \u2013 but it does have the big disadvantage that people just end up with this lump of wealth in retirement, much of which just ends up being passed on to middle-aged children.<\/p>\n

\u201cOne possible solution would be to try to move towards a pension-type system. For example, put more effort into developing annuity systems that people could buy some security in old age. Also perhaps reforming the provision of nursing and home care in old age, so the people can be certain that they\u2019ll get the services they need in old age without having to put money aside that they might not need.\u201d<\/p>\n

3. Superannuation reform<\/p>\n

Dr Ken Henry, former secretary of the federal Treasury: \u201cToday it\u2019s simply laughable to claim that superannuation is all about retirement incomes.<\/p>\n

\u201cWe have to address the way that the superannuation system operates. We do. There is going to have to be a legislative cap<\/a> on superannuation account balances that qualify for generous tax treatment. Whether that\u2019s the right cap or not is a question for debate<\/a>, but I don\u2019t think we can argue that we should allow any amount of money to be accumulated in a tax preferred savings vehicle just because it\u2019s a superannuation account.\u201d<\/p>\n

Siminski: \u201cWe almost pretend that we have a progressive taxation system while we exempt things such as superannuation wealth to very high levels from being taxed fairly.\u201d<\/p>\n

4. Property tax reform<\/p>\n

Henry: \u201cWe are going to have to do something about the way in which property is taxed. Whether it\u2019s dealing specifically with negative gearing, dealing with the size of the capital gains tax discount or more broadly redesigning the way that property is taxed to remove stamp duty and replace it with an annual property tax (such as the New South Wales government tried to do some time ago, which the ACT government is doing). All those elements of property taxation should be on the table. We\u2019ve got to think this through.\u201d<\/p>\n

Siminksi: \u201cDuring the productivity roundtable last year, myself and Roger Wilkins put out a piece saying that if you want bold ideas, then let\u2019s consider taxing the family home<\/a>. The amount of hate mail and pushback that we got on that was incredible.<\/p>\n

\u201cEveryone knows that this is one of the biggest sources of this whole issue of inequality and mobility. It\u2019s the [family] house that is completely untaxed in any way, well, except for stamp duty and local government taxes, but that is comparatively trivial. So it\u2019s one of the reasons I think why \u2026 that it has become urgent is that everyone\u2019s too scared to go there.<\/p>\n

\u201cWe just need to at least acknowledge that housing should be at least considered to be on the table.<\/p>\n

\u201cThis is the irony, isn\u2019t it? This protection of housing from [tax by] the government actually makes it unaffordable for some people to get in. So it becomes a welfare state for those who already have housing.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The $5.4tn intergenerational wealth transfer predicted to occur within the next two decades is a major challenge for…\n","protected":false},"author":2,"featured_media":488176,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-488175","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/488175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=488175"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/488175\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/488176"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=488175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=488175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=488175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}