- You get your salary, paying income tax.
- You buy a product with it, paying sales tax.
- The company pays the profit as a salary to its employees, subject to income tax.
- They buy a product with it, paying sales tax.
- ... ad infinitum
Taxes are applied every time money changes hands. By that logic, inheritance can be taxed as well. It's like bonus salary, but from your relatives instead of an employer.
If inheritance tax prevents working classes from accumulating wealth, then I'd say the problem is the formula. It should be a progressive tax, remaining 0% until a certain floor is reached, just like income tax (in most places anyway, I think).
E.g. in Germany you pay zero income tax until your salary reaches, I don't know, let's say 500 bucks or whatever per month. Then for every buck on top of that you start paying increasingly large percentages as tax. There's also an upper limit on the percentage. Found a graphic. The solid line is the percentage applied to each additional Euro you make; the dotted line is what that ends up being as a percentage of your total salary.
You just tweak this to make things fairer for lower incomes. Same principle should be used for inheritance tax instead of abolishing it, if the current numbers prevent wealth accumulation for working people.
