Start Taxing Inheritances, Says OECD

April 13, 2018 International Tax Cooperation

inheritance taxesPARIS – Inheritance taxes are the key to reducing the developed world’s growing problem of wealth inequality.

The Organization for Economic Cooperation and Development has issued a new report stating that governments need to use taxes to combat wealth inequality, and has suggested that inheritance taxes are an ideal way of achieving this goal.

The OECD noted that the levels of wealth inequality in the developed world have risen in recent decades, and the extent of wealth inequality is greater than income inequality.

It was explained that “A key aspect of wealth accumulation is that it operates in a self-reinforcing way; wealth begets wealth,” the report said. “It may be argued that wealth begets more power, which may ultimately beget more wealth. Overall, this means that, in the absence of taxation, wealth inequality will tend to increase.”

The number of developed countries which do levy a tax on an individual’s accumulated wealth is falling, with only four left which do levy such a tax, compared to 12 in 1994.

However, taxing wealth alone would not be enough, and the OECD believes that taxing inherited wealth is more effective and equitable solution.