A Research On The Abolishment Of Taiwan Inheritance Tax Under A Fair Angle Of View

Contemporary American Philosopher John Rawls believes that social and economic inequality (such as inequality of wealth and powers), as long as it ends bringing everyone especially those with the least gains, with profit compensation, that is justice and fairness. For principal of equality, most of the scholars in finance agree with the view of fair tax and levy and accept ability-pay principle as the concept of taxation, achieving the objective of principle of equality by adopting progressive tax rate.Since promulgation in 1946, the Taiwan inheritance tax has been implemented for many years. After the tax reform bill was brought up in America in 2001, there have been scholars who propose tax reform plan or system to reduce or even abolish inheritance tax that has caused heated debate on the abolishment of inheritance tax system. Since inheritance tax affects financial income of our nation and taxpayers'right and obligation, this research, in addition to discussing the reasons why scholars assert that inheritance tax should be abolished, has analyzed the current status of taxation of Taiwan inheritance from 2002-2006 and has carried out case analysis and questionnaire survey to understand and discuss the abolishment of Taiwan inheritance tax through a fair angle of view.The research has looked into the percentage of revenue from inheritance tax in GDP of Taiwan, which is quite similar to that of America. In a similar situation, we could, actually, take the U. S. version of tax reduction bill as a base and reduce tax rate year by year instead of abolishing inheritance tax. As we analyze current status of inheritance taxation, we can find that wealth is still concentrated at hands of minority, while inheritance taxation will not worsen the situation of capital outflow and industry migration but could, indeed, narrow down wealth gap and re-distribute social wealth fairly. Therefore, it is not yet time to abolish inheritance tax right now. Presently, the percentage using physical objects for payment of inheritance tax is very low; thus, using physical objects for payment of tax should be carried out by tax authority as it holds public auction and afterwards, money obtained from auction can be used to deduct tax payment. If frequent cash withdrawal made by the deceased before the death has come into the category subject to inheritance taxation and correct amount has been determined, using physical objects for payment of tax should be approved and such decision should be made by the difficulty of judge whether or not cash payment is possible "at time of inheritance tax is due." Besides, because of different tax categories and sources of tax, though Rules of the Statute for Upgrading Industries will expire at the end of 2009, timing is not yet good to abolish inheritance tax.Under Taiwan's income tax system to keep up with the economic development, it is stipulated that the capital gain from stock exchange is not subject to income tax Similarly, capital gains from land is also exempted from income tax that has usually led to the appropriation of non-arm's length transaction and tax avoidance, posing itself as a significant challenge to the principle of equality. From the perspective of equity and tax-paying capacity, capital gains from securities and land are like inheritance tax, and therefore, tax should be levied. In addition to avoidance of double taxation, transaction tax and land value increment tax should not be levied to achieve social justice. If inheritor has inherited land, capital gains for land value increment due to land transition should be exempted from taxation; however, if abolishment of inheritance tax is carried out it will jeopardize the principle of equality and social justice. Therefore, from the perspective of equality, time is not yet ripe to abolish Taiwan inheritance taxation, while capital gains should be taxed so that social wealth can be re-distributed fairly and social justice achieved.