Chapter 2 Death taxes and taxes on gifts

The purpose of this chapter is to provide an overview of death taxes and taxes on gifts. This overview is important for the understanding of the problems of cross-border death and gift taxation that I will present in chapter 3. Furthermore, the justifications of death taxation (section 2.4) contribute to the understanding of the benchmark of this study (that I will present in chapter 4 of this study) and of the impact of the problems in a cross-border setting (that I will present in chapter 5 of this study).

As mentioned above, death is an event, which can result in the imposition of different types of taxes from state to state. A brief look at the legislation of the states reveals that not only can inheritance and estate taxes be levied upon death but also mortis causa income and capital gains taxes, registration levies and stamp duties. It seems, therefore, that states have been very creative when deciding what type of death tax they will levy when a person dies in their territory or leaves property in their territory. Moreover, I note that even the legislation of states, which levy the same type of death tax, may vary considerably, thereby making the need for a comprehensive overview of death taxes essential in the context of this study. The same applies to taxes on gifts.

In the following sections, I will provide an overview of the key features (section 2.1) and the jurisdictional rules of death taxes and taxes on gifts (section 2.2). Furthermore, I will discuss the revenue trends of death taxes (section 2.3) as well as the justifications of death taxation (section 2.4).