RetireJapan

It's not a popular opinion, but I think inheritance taxes are more desirable than income taxes or consumption taxes. Ancestral inherited wealth is a scourge on society, and I don't see why people should have the wealth and power they have just because one of their ancestors stole it. But that's my Marxist side talking perhaps.

In practice, Japanese inheritance taxes are not all that onerous, and something like 90% of estates don't pay any inheritance tax here. For the ones that do, the tax is applied in bands and kicks in progressively as the sums get larger. Spouses also have generous exemptions.

Wrote about it more in detail here: https://www.retirejapan.com/blog/japane ... nce-taxes/

Of course, compared to countries with no inheritance tax (Australia) or ones with huge tax-free allowances (the US), Japanese taxes look high, but they are broadly comparable to tax in the UK and the tax treaties mean you won't be double taxed.

Being aware of the situation, I can imagine some people might want to avoid living in Japan if they are expecting a large inheritance, but if they choose to live here then I think expecting them to follow the rules is not too much to ask.

RetireJapan wrote: ↑Thu Dec 03, 2020 11:43 am It's not a popular opinion, but I think inheritance taxes are more desirable than income taxes or consumption taxes. Ancestral inherited wealth is a scourge on society, and I don't see why people should have the wealth and power they have just because one of their ancestors stole it. But that's my Marxist side talking perhaps.

In practice, Japanese inheritance taxes are not all that onerous, and something like 90% of estates don't pay any inheritance tax here. For the ones that do, the tax is applied in bands and kicks in progressively as the sums get larger. Spouses also have generous exemptions.

Wrote about it more in detail here: https://www.retirejapan.com/blog/japane ... nce-taxes/

Of course, compared to countries with no inheritance tax (Australia) or ones with huge tax-free allowances (the US), Japanese taxes look high, but they are broadly comparable to tax in the UK and the tax treaties mean you won't be double taxed.

Being aware of the situation, I can imagine some people might want to avoid living in Japan if they are expecting a large inheritance, but if they choose to live here then I think expecting them to follow the rules is not too much to ask.

I agree, ultimately it may be a net societal good.

That being said...

Could you not have the inheritance put into a blind trust that pays you annually within the gift tax range?

RetireJapan wrote: ↑Thu Dec 03, 2020 11:43 am It's not a popular opinion, but I think inheritance taxes are more desirable than income taxes or consumption taxes.

I'm from one of those younger countries where they don't have inheritance tax, and perhaps that's why but I don't have an aversion to "ancestral inherited wealth", and rather an aversion to the alien tax.

My views on it are largely summed up by http://friedmanletter.org/, and I'd cut income taxes and increase consumption taxes if I were the boss! As you can probably tell, my favourite political party has never (as far as I remember) gained more than 10% of the vote so don't mind me

... if they choose to live here then I think expecting them to follow the rules is not too much to ask.

I do agree that abiding by the rules is a good idea - the worst way to deal with these things is an illegal one.

But that doesn't stop people planning around inheritance tax. As far as foreigners inheriting assets is concerned, I think there is a trade off between being able to get some inheritance tax revenue, versus getting some more consumption revenue tax if they were to inherit and spend it here (or even invest it perhaps), as well as the income tax from foreigners who might opt to not work here because of it (I don't fall into the latter category but since the politicians are talking about it I suppose there are some.)

Could you not have the inheritance put into a blind trust that pays you annually within the gift tax range?

You surely could, but it does prevent you from taking complete control of the assets immediately I guess. It could be part of a plan...
(This is one of the arguments against it... here I am thinking of ways around it, rather than ways of being more economically productive instead)