The Sun 42 WYNDHAM STREET, AUCKLAND SATURDAY, JUNE 8, 1929 “THIS TERRIBLE TAXATION”

Sun (Auckland), Volume III, Issue 684, 8 June 1929, Page 8

The Sun 42 WYNDHAM STREET, AUCKLAND SATURDAY, JUNE 8, 1929 “ THIS TERRIBLE TAXATION”

SMOKERS of a popular brand of cigarette will be interested to know that they helped to contribute £6,635,872 harvested in death duties by the British Treasury from members of the Wills family in 1928. This colossal levy from three deceased estates exceeds most of the loans which New Zealand raises at intervals abroad. It is almost as large as New Zealand’s annual return from Customs taxation. Year by year the sum gathered in death duties by the British taxation system assumes more formidable totals. Perhaps this is an inevitable reflex of immense fortunes made or swelled during the period of unexampled commercial prosperity before, during and immediately after the war. One by one a group of contemporaries who showed great enterprise and boldness in the pursuit of wealth are being gathered to their fathers, and upon the estates of tobacco kings, brewers, merchant princes and other magnates is descending the heavy hand of the tax-gatherer.

Not without protest have the rich men submitted to this process. Not theirs the joy, having been reviled by the proletariat in life, of feeling a glow of satisfaction at the thought that over a third of their riches shall, after their deaths, pay for the social services rendered to that self-same proletariat. Indeed, there is almost a note of bitterness in the posthumous plaint of the late Sir Hildebrand Harmsworth, whose estate, as announced yesterday, has been sworn at £1,443,000. The many ingenious forms by which, under the general name of death duties, an attack can be made on such an aggregation of wealth will result in the reduction of the total available for beneficiaries hv £480,000. Very few estates in New Zealand could be valued at such a sum in cold cash. The ingenuity of the tax-gatherer is seen in the methods of his approach. On an estate of this size the amount taken simply as death duty is 32 per cent. To frustrate any scheme to evade the duties, there is a severe duty on gifts made within a period of three years prior to death. There is a legacy duty payable upon all cash bequests, and a heavy succession duty payable on real estate and leasehold property passing under a will or other disposition. Hence, not only does Sir Hildebrand’s estate yield something like half a million pounds in death duties, but also his bequest to his old college, Merton, Oxford, is shorn of a further £IO,OOO before a net figure is reached.

The various forms of severe taxation on wealth have resulted, of course, in the conversion by the landed gentry, where such a course is possible, of themselves and their estates into companies. Company tax is heavy enough, but its strokes are not so heavy that deaths of beneficiaries in quick succession could almost extinguish a big estate, as could conceivably happen otherwise. This '‘terrible taxation” effectively disposed of any inclination Sir Hildebrand may have had to contribute to charities. Surrendering £480,000 at a gasp—and that his last—he must have felt that charity on such a scale and under such inexorable compulsion left no moral or ethical demand for further demonstration. If the average New Zealander with a modest income that rarely gives the Commissioner much trouble tries to imagine himself a rich man, untroubled by rent or overdrafts, yet carrying the great responsibilities that the possession of millions entails, he may gain an insight into the magnate’s mood. By the time a man has accumulated a seven-figure nestegg by dint of his own genius, initiative or foresightedness, he has some excuse for active resentment of a system that deprives him of one third of it at a stroke. Sometimes it is more than a third. The first Earl of Iveagh, a brewer who had a remote association with New Zealand because his son married a daughter of a former Governor, Lord Onslow, left an estate valued at £11,000,000. It paid 40 per cent, in death duties, or £4,400,000. Sir George Wills, tobacco king, left £10,000,000, reduced by death duties to £6,000,000. The tax against such rich estates is graduated with the utmost steepness and severity on the higher levels, but he would he a bold man who said that on the face of it an estate of £10,000,000 could not stand reduction by 40 per cent. To the individual the difference would never be appreciable. Even in a luxury-loving day there are no personal wants on which six millions may be squandered. Even Sir Hildebrand Harmsworth’s modest million and a-half represented a great deal more than that gentleman, even in his wildest moments, can ever nave regarded as his needs. It is true that in special circumstances the death duties may operate most unfairly and unjustly, but against that is the responsibility that these very rich people have toward the masses from which their money, in the final reckoning, was made. It is a question that hot for a long time will need to trouble New Zealand, where there are no excessively wealthy men, and the maximum death duty is only 20 per cent. But in England, with its Inveresks, Rothermeres and Dewars; in France, with its Cot.ys and Meuniers; and in America, with its Rockefellers, Fords, and scores of others, it is a social question of vast importance, in which public need and private right are very delicately balanced.