Applied Accounting Group 23

Estate duty tax have sparked a debate among scholars who believe that it fails to pass the moral
fiber test by taxing the dead and make death a taxing event. However some scholars like believe that
taxing the dead is moral and ethical since the dead was helped by the community to acquire the
wealth it is moral and prudent to share with community through estate duty.
Moral grounds Immoral grounds

Since estate duty don’t contribute much to the Constance J. Crawford believes that estate
fiscal, it is believed to more of balancing duty was introduced to punish the rich since
equality between the poor and the rich which is those died without any assets will not pay
morally accepted. It also help in dealing with anything
unchecked family dynasty passed from
generation to generation
Some scholars believe that the dead have a Some scholars believe that the dead have no
moral obligation to contribute to the moral duty to share his wealth with the
community since the community helps him or community since it was his saving and sweat
her to accumulate that wealth so he or she during his or her life time.
supposed to share with community through
estate duty
Since estate duty provisions are still in line with Estate duty is also regarded as immoral and un
principles of taxes of revenue generation it is ethical in the sense that it waits until the tax
morally accepted. Taxing the dead is prudent payer died so that it come into effect. Whilst
on the sense that it is the only occasion were the families members are still aggrieved with
the net worth of the deceased will be accuartly the death of their loved ones the estate duty
accounted for and taxed under estate duty. o will be already knocking the door
Wealth is believed to be accumulated through Estate duty tax referred to pejoratively by
the help of the community and natural opponents as a “death tax” penalizes
resource so there a need to share the portion individuals for being successful and taxed
with community. It is also believed that the rich property that already been taxed when earned
accumulate there wealth by abusing the poor or inherited ( double taxation)
so it is ethical to tax the wealthy even they are
dead to reduce the gap
Estate duty can be looked from the economic point of view looking at its advantages and
disadvantages to the surviving beneficiaries and the government economically
Advantages disadvantages
Estate duty like any other tax it generate Deceased estate is a form capital to the
revenue to the state surviving beneficiaries so taxing it will reduce
the capital which was supposed to be used
meaning to say it affects potential future taxes.
Estate duty is levied after allowing some The estate duty tax is harmful especially to
deductions like hospital bills, funeral cost etc. small business and farms because it forcs4s
and exemptions like family house, family car heirs to deplete working capital and even to sell
etc. This will reduce tax liability hence increase business assets or farm land to pay it
capital to the beneficiaries
Estate duty helps in taxing the wealth which Many individuals will save less because they
was accumulated illegally or through informal don’t want their estate to be subject to the tax
business which was never exposed to taxes hence it promotes spending
It destroy the whole purpose of inheritance as
it treats immovable, movable and cash the
same way meaning to say if there no cash the
immovable assets have to be sold to raise tax
RECOMMENDATIONS
Alternative to estate duty
 The elimination of the stepped-up basis to the beneficiaries would resolve the issue of
transferring property tax free. Once the property was sold by the beneficiary, the property
would be subject to the capital gains tax at the rate in effect at the date of sale.
 Since estate duty have failed to pass the moral test since it punish the death we recommend
the introduction of wealth taxes which will be levied on tax payers whilst they are still alive
rather to wait until they die.
Alteration
We recommend the following alteration or improvements to the estate duty provision:
 All assets which are used for the purpose of business to be exempted from estate duty since
the income generated by those assets are also taxed to avoid double taxation of the same
asset from generation to generation
 Exempt the estate if there is probability that it will be used as capital to start a business or to
generate income
 Increase the exemption on the minimum amount to be taxed in order to reduce tax burden
from the poor who own less assets and increase net inheritance to the beneficiaries
Conclusions
According to Seligman’s argument, the focus on the individual, on family, on society at large
missed a fundamental point. “We pay taxes not because we get benefits from the state, but
because it is as much our duty to support the state as to support ourselves or our family;
because, in short, the state is an integral part of us.” The lens of moral hazard provides a way in
which to more critically analyse various moral arguments about the estate tax. In the end, the
estate tax provides a particularly vivid example of the ways in which taxation touches on
questions of identity, individuality and one’s relationship to family, to society and to the state.

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Estate duty tax have sparked a debate among scholars who believe that it fails to pass the moral

Moral grounds Immoral grounds

Alternative to estate duty

We recommend the following alteration or improvements to the estate duty provision:

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