The Samsung family has paid £6 billion in inheritance tax, calling it a “natural duty of citizens”. The sum came from the firm’s late Chairman Lee Kun-hee’s £13.2 billion estate.
South Korea’s inheritance policy
South Korea has a higher top rate of inheritance tax than the UK and its system is implemented progressively, although it does demand more from less well off people.
The top rate is 50% for estates above £1.5 million. So at £3 million, you’d pay £750,000 for that rate. Given there are 49 billionaires in South Korea, who have around 1,000 times £1.5 million, there could well be higher rates of inheritance tax. It would take someone on £100,000 annually 10,000 years to become a billionaire.
That said, it’s a better attitude from the Samsung family than in the UK, where the Duke of Westminster inherited £9 billion at 25 years old and paid zero tax on it. In Britain, it’s supposed to be a flat rate of 40% for estates worth £325,000 or more. It should have higher thresholds for the super rich.
In South Korea, one still pays a 20% rate for estates worth £50,000-£250,000 and a 10% rate on less than that. One issue with that is the country doesn’t have free healthcare.
The whole idea of inheritance could be viewed as anti-democratic and anti-meritocratic. But that only holds up in a society with first class public services and education.
UK billionaires
The UK super rich routinely avoid inheritance tax. In 2022, 275 wealthy families transferred £2 billion in assets while paying little or no tax. Each family paid none or highly reduced tax on at least £2.5 million in assets.
Labour did close a major way super rich families are doing this, through introducing inheritance tax to farm land. Billionaires and multi-millionaires were buying up farmland because it was inheritance tax free.
Labour should go further and introduce higher rates of inheritance tax at 50% then 60%, then 70%. For huge corporations, the government could take a stake rather than taxing it to the point of collapse.
Featured image via the Canary
By James Wright
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