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An open letter to Professor Pierre de Vos

An alternative idea around the transfer of intergenerational wealth that has ‘two happy effects’.
The author agrees that ‘practical and concrete steps that could be taken to begin to dismantle the system that produces and reinforces privilege’ should be considered. Image: Shutterstock

The University of Cape Town constitutional law expert said in a blog post on Wednesday that South Africa should essentially get rid of inheritance by taxing it at up to 100% to prevent white privilege from being carried over from one generation to the next, thereby tackling inequality.

Dear Pierre,

I came across your piece about the transfer of intergenerational wealth when Max du Preez tweeted a link to it on Wednesday. Any friend of Max’s is a friend of mine, so I read it with great interest. It certainly contains a lot of food for thought and makes an important contribution to a crucial debate.

As a wealth manager responsible for looking after the life savings of a number of South African families, it would however be remiss of me not to offer a counter-perspective.

Let me begin by saying that, like you, I cringed at the glibness of white people “giving up” their white privilege when I saw it a week ago.

I do not come from a wealthy family (my late father was a teacher, my mother sold kitchenware in her spare time at ‘house parties’ to make ends meet), but we always had a roof over our heads in a middle class Johannesburg neighbourhood, there was food on the table three times a day, and we even enjoyed the odd holiday in Amanzimtoti. I also went to decent quality government schools and experienced relatively cheap university education of very decent quality at the old RAU [Rand Afrikaans University, now the University of Johannesburg] in the 1980s.

Compared to my black South African brethren of a similar age, I therefore know and accept that I’ve benefitted from white privilege my whole life.

No amount of hand-wringing or #SJW [social justice warrior] gesturing will ever change that.

Against this background, I sympathise wholeheartedly with your statement that we should consider “practical and concrete steps that could be taken to begin to dismantle the system that produces and reinforces privilege”.

It’s in the detail that I differ from you, however. Before offering an alternative, allow me to respond to your proposal.

In a nutshell, I believe your suggestion of a 100% inheritance tax is ultimately doomed based on at least two points, namely its impact on tax morale, as well as the fact that it just won’t work.

Tax morale – as you no doubt know – can be defined as the intrinsic willingness to pay tax. Contributing to the cost of shared infrastructure and services, for example (some of which one might in fact never use), is supported by a social contract: most people are happy to pay towards having an effective police force and pothole-free roads and clean neighborhoods and a fire department on standby, simply because we all form part of a shared society.

In plain English: people are generally happy to pay their taxes if two conditions are met: as long as rates are not extortionate, and if there is evidence that tax revenues are well spent.

I believe your suggestion of a 100% inheritance tax (after a threshold) fails the former; the latter is a topic for another day.

This brings me to my second point, namely that your suggestion simply won’t work. If there’s no tax morale, in other words, if the ‘haves’ that you’re after believe tax measures to be draconian, they will find ways to avoid it. Books have been written about the difference between tax avoidance and tax evasion, and I don’t want to get into it here – life is too short. Suffice it to say that there is a whole industry of tax and fiduciary advisors that specialise in helping wealthy individuals and families with exactly this.

As part of my accounting training back in the day, I had to serve a two-year sentence of taxation classes at university. My final year lecturer (who consulted to corporate and other clients part-time) used to say she was thankful to have “a partner in government”.

She was referring to the fact that the Tax Act used to change quite a lot on an annual basis, with more watertight rules being written every year in an attempt to close previous loopholes. And of course every time there’s a new rule, creative consultants will find crafty ways of getting around it … hence her reference to a benevolent partner guaranteeing profitable work on a continuous basis.

I believe your proposal – if ever implemented – is bound to suffer the same fate.

The inheritance tax take will probably go down, not up, if you increase the marginal rate to 100%. The richest will leave the country.

They will set up structures. They will find ways of getting assets into the hands of beneficiaries well before death. People like my old university lecturer will be just too glad to help them.

Something else: I think we’re actually having the wrong debate here. South Africa has a huge unemployment problem – which is of course linked to the inequality problem … but they’re not one and the same thing.

As I see it, there is really only one way to address unemployment, and it’s not for President Ramaphosa to arrange another national indaba that comes up with a six-prong plan. It’s much simpler than that: create a business-friendly environment where entrepreneurs can flourish.

I’m a firm believer in free markets, and entrepreneurs create more and more jobs as their businesses grow (helping to lift an increasing number of people out of poverty).

Entrepreneurs by their very nature are extremely enterprising people. They take risks, they invent things, they solve problems, they work hard, they motivate other people, they are singularly focused. Ultimately, they change the world – mostly for the better in my view.

But no entrepreneur will ever be happy with a legal system where everything simply ‘stops’ with them – that is, one where they’re not able to create a legacy or pass on the wealth they’ve created to beneficiaries of their choice (which might include charities, by the way, even for 99% of their net worth – just look at the examples of Bill Gates and Warren Buffett).

Don’t we all wish that Elon Musk never left South Africa, and that rather than Silicon Valley, he’d chosen the Stellenbosch Technopark to launch Tesla (not to mention SpaceX)?

Do you really think that someone like Musk would ever pursue these ventures in an environment where anything (inheritance or otherwise) is taxed at 100%?

One more point, before I offer an alternative: I actually used to think similarly to you, Pierre, not really caring about what happens to my modest amount of assets upon my death. As part of the social media storm around your article over the last couple of days, I saw a tweet by Max where he said that he hopes to enjoy his last ever Johnnie Walker Blue just before he dies penniless one day … I get that.

But then, just under 13 years ago, I became a father for the first time. And having a child changed me from a selfish, middle-aged curmudgeon to a slightly less selfish, slightly older curmudgeon. Now it really matters to me – a lot, in fact – that my daughter will hopefully be okay (financially speaking) when I kick the bucket one day. And I will never be happy for a government to take everything that I would otherwise leave to her.

So, here’s my suggestion – with full credit to Merryn Somerset Webb, the editor of UK personal finance magazine MoneyWeek and also a contributor to the Financial Times.

A few years ago, she suggested that inheritance tax should be abolished completely, and that it should be replaced with a gift tax instead.

This would mean taxing not the estate of the dead person, but the recipients of the cash, for whom it should be considered unearned income. This would then be taxed in the hands of the recipients at their marginal rates.

In the words of Somerset Webb herself: “This would, I think, have two happy effects. As the tax would be nothing to do with the estate, the elderly would know that avoiding it was not in their power, something I suspect would relieve them of a great deal of stress … It would also have an element of progressiveness the current system does not have (the lower your income-tax band on receiving your gift the less you pay). Good isn’t it?”

In South Africa, this would mean a tax take of perhaps double the current 20% inheritance tax rate – going quite a long way towards addressing the inequality issue (but without destroying tax morale).

Perhaps you and I (and Max) can discuss this over a whisky one day?

All the best,

Deon Gouws

Deon Gouws is chief investment officer at Credo Wealth.

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Taxes where first a means to fund wars; no it is a means to rob the hard working blind. It is the middle class that suffers the most in taxes… not the poor or the wealthy.

I can’t imagine that de Vos was serious. He just wanted publicity, and has been fairly successful in that respect. Maybe I should make some ridiculous suggestion that I know will get peoples’ back up and then stand back and enjoy the ruckus it causes.

momo, not all of us can handle isolation — some go bonkers!!!! 🙂

Looking at this in another way. I work my whole life to earn, create and amass wealth for myself and my family. When I die my estate goes to the state.
So in other words I work my entire life for the state who will simply squander this wealth. No way Jose. Then I will rather become a burden and leech to the state and claim UIF, countless grants and use state hospitals and housing.

If the Government implements Prof de Vos’ idiotic suggestion, I am going to live like a king in my old age and run up huge debts so that the government can inherit all my debts after I pass away. Then there will be nothing for them to tax. Surely they can’t just inherit the assets, they must get the liabilities too?

Great thinking – but somehow, I doubt this would be allowed – – probably pass debt on to remaining family.

Sorry, does not work that way. If you are insolvent at death your estate will be insolvent and everything you had will be distributed between your creditors, after the executor (or trustee if your estate is dealt with under the Insolvency Act and not the Administration of Estates Act) paid all costs and took his fee.

After experiencing the last 26 years do you think that the ANC is beyond changing the legislation to enforce their Will? The law can be amended to achieve many things.

So in other words only the non white beneficiaries will stand to inherit anything at all and this will “tackle inequality”.
You have got to be smoking something!! (or just another way of identifying another source to loot now that most others have dried up)

Jy kan nie appels met Pierre vergelyk nie.

Typical academic proff.who can not change a light bulb when are people going to realise most academics are the dumbest guys around especially in economic and business matters my experience.

The prof must be a shining example and be the first to return and forfeit his inheritance.

Exactly. Does not know what real hard work is – starting in the negative and fortunately making it. Forgot the communist rubbish

While this article does provide a much needed alternative perspective (and is certainly more “moderate”), I believe that the entire discussion is fundamentally misguided.

Aside from the practical, moral and legal concerns of imposing an inheritance tax (and the continuing inevitable flight of high net worth individuals and creative solutions to get around the tax), we have to consider what the likely outcome will be for the nation as whole and its people if the state were successful in imposing this.In considering the outcome, it would make sense to consider the current leadership’s track record of financial management.

26 years’ of data would suggest that independent of the amount of revenue collected, the ANC is ideologically incapable of running an economically vibrant/successful modern globalised economy. The focus has always been, and will always be, on wealth redistribution rather than wealth creation.

Whatever the tax generated, be it $10bn or $500bn, history would suggest that somehow, the ANC would find ways to deplete it, squander it and ultimately enrich themselves.

The tragedy is that the ANC voters remain ignorant of how badly they have been betrayed and how different their lives could be if their party had the ethics, political will and management skills to operate an economy in the 21st century.

Hostile unions, labour relations, BEE, cadre deployment, chronic mismanagement and a lack of political will has everything to do with the current status quo.

Full disclosure: I don’t have any “skin in the game” as it were, since I relocated to greener pastures offshore. I fully appreciate the inclination and the need to find ways to live/work together in a beautiful but fractured society (hence engaging in the debate). Sitting from afar, the entire “debate” is without merit and self evidently so. However, I suppose if you are in the trenches and you want to survive, you find ways to reconcile any cognitive dissonance that would exist if you held an alternative viewpoint. Take care friends and say hi to the bush from me.

Owl, you’re not wrong, but (and bear with me), I think the Prof was perhaps trying to look for a more equitable capitalistic system, than our current version. It is, after all, clear that the current version is exceptionally good at unequal distribution of wealth, not so? How then do you address the inherent unfairness? Looking at the comments (and Deon’s response) it seems having kids are the main reason why people want to accumulate as much wealth as possible… even to the detriment of others. If that is the case, then how do you remove the excuse from the equation? You simply make inheritance illegal. Princes can’t become kings and spoiled little brats can’t inherit from rich parents. They will have to make their wealth on their own. Suddenly the playing field is more even and the very reason for the failure of capitalism is removed. Unless, of course, the kids are just a handy excuse for people’s own greed. Then, of course, tinkering with inheritance will not make a difference; meaning capitalism’s failure will not be fixed.

And if the “spoiled little brat”is physically or mentally disabled to the degree where he or she cannot be self-sustaining as an adult, then what ?

@TheOwl: Your comment eloquently represents exactly my views and opinion. Given that this article is “openly” addressed to Prof de Vos, there might be an outside chance that he actually reads it, together with the comments related to it. I would dearly love to read his take on ” … the ethics, political will and management skills … ” of our leadership. Does he agree with your assessment of reality or would he rebut? If he did respond and chose the latter, I look forward to read how he would try and sell that idea. I suspect however he would avoid that mountain, and settle for his feeble attempt at virtue signalling.

Prof, I will not leave anything for anybody but my children when I die, believe you me. These arguments and statements of you are futile especially depending on which side of the colour and wealth fence you sit. In South Africa we have many ethnic groups and many cultures and religions. We do not have a SA nation culture and until we have that we have nothing, will differ and will have conflict. We have however much in common and can actually together figure out what the real collective culture of our society really is, that is if we really want to. All SA Political parties, especially the ruling ANC party (from history one can understand their resistance) and the likes of the FFP will off course resist such moves. Understandably politicians enjoy their status and benefits and do not want to loose it so it is their mission to maintain the current political status. The solution must keep these guys happy as well.

Dear Communists,

The wealth of a nation is created not through the lifetime of an individual but due to the compounding effect across generations.

Your proposals will sap incentive from the industrious and productive who will simply leave for kinder climates.
The nature of redistribution of other peoples earnings is inherently destructive and consumptive, and temporary.

Your proposal, as all all socialist economic policies do, will ultimately be of no consequencr to white privilege (as you refer to it) but will cause further harm to black south africans. Who, unlike their white compatriots, will under this proposal be denied the right and opportunity to pass on their life’s achievements to their children in order to provide them with a better starting opportunity in life than they hadm
Potentially.
Some waste inheritance. Others build upon it.

If you want to tax inheritance then imo put it at 10 percent and ring-fence it into a sovereign wealth fund which has an explocit purpose of being for national crises and disasters only.
That, is an idea the rich can also get behind while not depriving the poorer members of society with the chance to provide their heirs with a leg-up in their life.

Regards,
A free market liberal capitalist.

Germany’s economy, for example, is comprised largely of small-to-medium sized family owned businesses that have been passed on from generation to generation. The benefits of this capital inheritance or transfer are self-evident.

Readers shouldn’t overreact to Prof de Vos attention seeking deliberately provocative article. He is becoming as redundant as Constitutional law is in this country -as clearly evidenced by the government treating the Constitution for what it is i.e a worthless piece of paper in a continent with a solid reputation for ignoring such irritations. (The captured judiciary have a full time role now acting as though they are interpreting the Constitution with the endless stream of cases against government policy)

As Mr Gouws points out people with money and skills can(do and have) fled South Africa to avoid being subject to punitive taxes and getting nothing in return for these extortionate rates. Mr Gouws points to Mr Musk-an excellent example of the people we need here. Also as he points out one thinks and acts differently when one has children.

What this country desperately needs is money-direct investment-not bond trading. The ideas of the Prof. will not bring a Tesla plant to this country-even with an undervalued(?)currency-remember BMW/Mercedes plants are here for the government incentives and currency!

There can never be a TESLA here- Elon Musk’s only limits in America are his imagination and business skills. In RSA he would have been smothered and entangled in a raft of nonsensical laws and regulations designed to protect the non-entepreneur. A rent seeking economy will never thrive.

We had the Optima Joule. For less than R300.00, funded by government, Optima developed quite a natty looking and rather efficient, for the time, EV.

SO.We did have the equivalent of Tesla, but not the incentives that Tesla had and still has in both the USA and China.

Therefore, no Joule.

Sad

SAM, what captured judiciary are you talking about? You sound like an EFFen spokesperson after losing a court case.
If there’s any arm of the state that has protected SA from absolute chaos, it has to be our judiciary.
They’ve protected (and continue to do so) us from numbskulls such as JZ, Dudu, Busisiwe, etc.
Do or will they get some judgements wrong? You bet they will! But to make such a sweeping statement and accusation about our judiciary is disingenuous to say the least!

With respect the conduct of the judiciary(Hlope, Sereti,Veldhuizen, Motatta etc), the quality of judgements, the overwhelmingly political manner with which judges are appointed, the number of cases being over-turned on appeal, the deep seated corruption( Shabir, Commissioner Selebi, Arms deal etc) is clear evidence that the judiciary is no longer independent, controlled by politicians , incapable and captured!

Hello
I tried to respond to you-twice-but the moneyweb AI did not like the ample, credible and overwhelming evidence I wrote to support my view.

De Vos has lost the plot. I always had great regard for his opinion on CC matters but it is clear he has now adopted the ANC entitlement anti white racist mentality .What stupidity. Will not read him again.

Hey Prof, why don’t you stand in the middle of a township, and announce that the 20MIL grant recipients will no longer receive their monthly grants as they did not earn them and never paid taxes towards the coffers. Let’s see how that works out for you. Your article could have been the final push for us to emigrate and we people of colour. What utter rubbish

If you can emigrate, pack your bags. Now. Read about Zimbabwe under Mgaganagwe and see our future. And tremble in fear.

Agree, there is no future after Cyril. Its a dead beat.

Its NOT hard to see that CYRIL does not have control of the economy.

his minions are doing a great job destroying the country.

give it until the next election and things will really go south of Africa

Best comment on this site! Flee the failed state!

So does that apply to whites only? Or will Frog Boiler’s children also see their wealth evaporate?

I suspect his spawn (and his cash) is long externalised. I recall reading he had one child in Dubai and one in the home of the Great Satan; the USA. Prime hypocrite.

de Vos is trying to compensate for his hue by sucking up to the most corrupt government in the world.

Lets thank those that have managed to accumulate a little something, at least they are not a burden on the state like the majority in this country. Those that have a little extra were able to feed and pay a lot of the ANC voters through this unnecessary lockdown which their government was not able to do.

A question from farmers?? You have been trying to get rid of us by all sorts of means, EWC, lack of security, psychologically by trashing us and also by taxing us.

Example

A livestock farmer who owns his sheep, cattle, goats, chickens etc will have estate duty levied on the value of his estate including the sale value of his livestock, plus he/she will be taxed on the income of the stock sold as it will have been deemed to have been all sold in the year of his death. That is then a tax of 45% in sales not executed.

How fair is that? Maybe all well and good in the eyes of those who want them off the land.

It is callous for a man like de Vos who do not have children to make this kind of suggestion. It proves once again that until the day you have children you like in a different world.

Without kids, known money burners, he must have accumulated quite a bit for 100% estate duty.

No. He doesn’t need any wealth- he is a government employee with a guaranteed pension

Yes, what a stellar way to grind the new black middle-class back into poverty. Or will this only apply to those of us guilty of original sin (TM)?

It goes back to the old saying. There are two tax rates that produce no income: 0% tax rate and 100% tax rate!

Yep, and that’s where Deon Gouws’s alternative viewpoint falls flat. While referring to the effects of the Laffer curve, he then ignores it and implies that the children will be happy to lose a much larger part of the inheritance through paying income tax on it. They won’t, and the family will again sit together to find ways to avoid this. In the end, only the ignorant will pay. Oh, and by the way, you don’t really pay inheritance tax (called estate duty in SA), your heirs already pay in effect. The estate duty reduces their inheritance.

Prof de Vos has totally lost the plot.

I don’t know of any parent who is not trying to create a life for his or her child that is better than their own.

And sure, the idea would be to create wealth for your child to benefit from while you are alive, but if or when you die, surely you’d still want your child to benefit?

Marxist propaganda has certainly infiltrated the universities and the Prof has not escaped it. Very sad.

De Vos is implying that government will look after us.

What a thoughtful and polite reply.

I am going to summarise it in one word.

Idiot.

It’s a form of appeasement. What is appeasement? it is feeding the crocodile hoping that he eats you last.

A very good way for the learned professor to set us all an example, would be to resign from his cushy job as an academic, in favour of a black candidate. Why wait until after he’s passed away to do his part in empowering black people? Failing that; him setting a concrete example by means of his own actions, I’m not all that inclined to take his posturing seriously.

Has he donated his savings, investments and house to the ANC or to a family member. Sure he is earning a very comfortable package.

And most probably happily earning more than his non-white peers.

If u want to fix inequality start with enforcing equal pay for equal work which will address the issue of whites earning more than their non-white peers for the same work.

A concrete example would be concrete shoes?

Agree. Let the learned prof expunge his guilt by resigning and letting a more deserving BBBEEE candidate fill that post. Does he not see that it’s the right thing to do, by his metric of measuring the world?

Ah, the academics, who have never spent a day in the real world. No difference between the idiotic De Vos and a starry eyed, -will solve the worlds problems 1st year student

Get well soon, Professor De Vos.

He should change his smoking habits to something less mind altering.

what most of the commenters missed in the interview: ” we live in a very unstable country ” there is not a white army/police force anymore to protect them against a potential revolution…this is probably the thinking of the De Vos and he also state this….suggesting “something” must be done?

Thanks Deon for being the voice of reason.

I definitely want my children to inherit everything that remains. They need this because the ANC has destroyed their future. Well qualified children are battling to find jobs and face discrimination.

Receiving family wealth is absolutely necessary for business continuity and growth. I am the sole judge of who will benefit the most from my assets. The government will squander this wealth on their ineffective programmes.

…this is probably the best argument for not paying any tax at all

If the government nationalises land then there probably won’t be any inheritance anywhere.

The law of large numbers works against Pierre’s idea.

Let’s target the ten wealthiest people on the planet. Call it $500 billion. Obscene amount. Let’s confiscate all their money and give it away. To 7.8 billion people. $64 per man woman child.

ok that didn’t touch sides. Let’s take the next 90 wealthiest in the world and redistribute that, call it $2500 billion. $320 per man woman child.

that helped, paid for five months of global health care.

and then? The next 900 on the list?

By all means we must fix the tax system so that people at the top pay a lot more, but 100 wealth tax is simply not going to work

A child will see that his proposal is simply absurd and cannot work.

One would have expected a “Professor” to have the ability to set out clear and logical rationale, which would have addressed the considered comments that have been made above.

No, is abundantly clear that this de Vos is only a “Professor” in personal attention seeking and political point scoring.

Sad really that he would stoop so low, he certainly has earned his disrespect.

When people with noble intentions suggest that inequality should be rectified, and that cultural privilege should be punished, by redistributing the property of the privileged group, they do not understand the implication of their plan.

Firstly, people from rural areas chose their own particular system which does not include property rights. They chose to have a communal system where they share ownership of the land. They do not own property because they put themselves at a disadvantage by electing to live in a communal structure. They repeat that choice daily. They can decide today to abolish the communal system and to get the title deeds to the land they live on. This will immediately put them in a very privileged position. Many white people do not own property. By choosing to privatize cultural land, black people will be more privileged than many white people. Therefore, the cultural disadvantage of black people is the result of a choice they make every day of their lives. Their relative state of deprivation is certainly not forced upon them by another group.

Secondly, any property serves the community as a whole. Nobody can afford to buy a property, or to keep that property, even if he inherited that property, if that property is not used in some way to add value to society. An industrial building like a factory, a farm, investments in bonds or shares, or the ownership of intellectual property or residential property forms the basis of a process that contributes to society as a whole. The owner has to sell his knowledge, skills, or products and services to someone willing to buy it from him, to enable the owner to afford that property. The fact that someone owns property implies that he did some important service to society. He serves his fellow-man. He is a slave to the consumer in other words. Where is the privilege of that? The man has to apply that property to a process that earns revenue so he can pay the taxes, insurance, and other costs on that property, otherwise, he will lose it in an instant. Property ownership, therefore, is proof that someone is valuable to society. Society rewards him for his contributions. The opposite is true for people who do not own property.

The privileged people are those who do not own any property but live off the property of others. Like the queen bee, they do not contribute, but they are rewarded. They receive employment opportunities that are provided by the property owner or they share in the social grant that is paid by the property owner. A tax on capital formation destroys the basis of economic growth and job growth. A society that sees property owners as the enemy will be plagued by rising levels of unemployment and such a nation will not escape the “terrible lessons of catastrophe” or famine.

Sensei, you are not making sense in your 1st point. People living in rural areas ‘chose’ to live like that? Should a child born in a rural area pack their bags and go live in the city?
Do you have any idea how this communal system came about?
Try changing this system and see what the Zulu king will instigate his subjects to do. Has he already not made such threats if ‘his’ land run by the Ingonyama Trust is ‘interfered’ with, in partnership with Afriforum?
Are these communal land policies not kept in place by the government (to appease traditional leaders) instead of the communities that live there? And if the communities rebel against this system then they get kangaroo court justice as seen recently by our weed smoking Abathembu king, Dalindyebo.
You normally make sense but I think you’ve missed the mark this time around.

Thank you, sir. My point is that the people are not powerless. They have the right to vote. They are not serfs or slaves. They got the advice of the Motlanthe Commission. Yet they prefer to keep on supporting the ANC, the very government that keeps them in poverty. The Zulu King does not have power over the state or power over the Constitution. Therefore, he does not have power over the people. The people choose their circumstances every day. They make this subconscious decision every day. They determine and enforce their own relative state of deprivation daily, and that is their right to do so. This is not white privilege, my brother, this is the communalist mindset, and there is a cost to it, a price to pay.

Oh my, this is a professor at UCT and constitutional law expert saying this. No mention about employment creation, no word about protecting the weak, no word about police brutality, just take funds away so we can pull all down as appose to uplift all to a better standard.
There is none so blind as those who don’t want to see.

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

W.B.Yates “Second Coming”

Why have Estate Duty at all? The money used to purchase and accumulate those assets was already subject to income tax. I would argue this wealth is far better utilized in the hands of the beneficiary the death of their loved one than in the hands of our corrupt and inept government.

When we start seeing absurd articles like the de Vos one start to appear, then it’s clear that the government has realised that it has a giant hole in its budget and its trying to figure out where to get the money from, with which to plug that hole. My guess is that there’s a concerted action afoot to try to justify new cash grabs, and its no secret that the government is eyeing the pension funds.

Quite simply, de Vos’ entire premise is completely undermined by the fact that he thinks the most trustworthy recipient of deceased estates is the most corrupt institution in the country, the same entity that has run our nation off the road of prosperity and over a cliff.

Obvious this professor is either gunning for brownie points or that lockdown hasn’t been kind on his mental health.

The points raised and debated here are thought-provoking indeed but only if you ignore the fact that the argument that the so-called wealthy, presumably “privileged” white people, must hand over their money because they stole it, is an exercise in sophistry. The premise that one ethnic group has become indebted to another by default through regime change is false. You do not right a wrong with another wrong.
As you pointed out this country needs entrepreneurs more than restrictive and discouraging labour laws. The wise old saying, “Give a man a fish and you feed him for a day…”, holds true in this instance.
In this regard the government as sought instant solutions rather than the better permanent ones. Proof of this can be seen in the large number of black children that are flocking to old model C schools because the schools in townships are mostly still dysfunctional. Why has the government not instead fixed the problem of poverty and unemployment at its roots by addressing the poor quality education?

Very good comment.

The problem with Prof de Vos’s idea and similarly with so much of the redistribution brigade is that they all want an instant solution the problem of inequality.
As clearly set out in one other person’s comments, what happens when you’ve run out of other peoples money ?
The wealth found in prosperous countries was not achieved from handouts, it was achieved by hard work over generations, with governments that realized that they had to create enabling conditions in their countries for business to prosper, not to try smother the endeavours of inventive people with drive and initiative. (The Elon Musks of this world)
The tax Prof de Vos is proposing is a total dis-incentive to anyone who has children and who is working their butts off to provide the best education for them to get a good start in life, and to leave them with a legacy that will give them a hand up in their lives. That’s what (I hope) most decent parents would want to do for their children.
With such a tax, and any similar tax, there would be no incentive to work hard, be creative, create jobs. Might as well go sit on the beach all day and hope for a government handout of money taken from some other poor industrious fool. And tomorrow he’ll / she’ll also be poor. Perhaps that’s what the actual objective is, create a sea of poor uneducated people who can be governed by a small select group of elite stinking rich politicians who control everyone’s lives to the n’th degree.

Excellent reply Deon Gouws!

You lost me at “..Any friend of Max’s is a friend of mine”

Pierretjie de Vos is a Social Media Professor.

This is not even his idea, it is plagiarized straight out of Karl Marx’s Communist Manifesto. It’s a sad day when a Professor at UCT, on a salary of R1.3 million nogal, espouses such contemptible nonsense. What a hypocrite he is too – his Professorial chair at UCT was established by an inheritance from a deceased estate! I presume too that in the spirit of non-racialism, this inheritance ban would apply to a black person who works himself out of poverty but can’t leave an inheritance for his children to help break the cycle of poverty. What utter nonsense!

Clearly this would only apply to whites …. I wonder how the intergenerational wealth transfer is going in other black african countries like malawi, kenya, tanzania, ivory coast, nigeria etc etc … oh .. there is no intergenerational wealth except for the politicians who have looted their country’s fiscus and have safely stashed their plunder off-shore. But why has there been no inter-generational wealth transfer – oh – you have to create an industrious economy built on valued societal norms – like intellect, hard work, education, building competitive businesses, creating a society of no drug dealing/crime, transparent and ethical etc etc … I guess this depends on a population that aspires to these values … don;’t hold your breath for this to happen in africa or any african dominated society … it has never existed, it does not exist and who knows if it will ever exist ?

The Professor seems under the impression that the majority of white South Africans die with significant wealth to the name. They don’t. Most struggle to even afford a decent retirement.

Mostly, they get their retirement income from a life annuity or government pension (ie there is no underlying asset) or a living annuity (which does not form part of the estate).

Then try to write race into the Tax Act. Even if it gets past the Constitution, there will always be the question of whether the deceased was white or not (how many drops of non-white blood will it take to make it otherwise?). The pencil test may prove difficult at this late stage. What happens in a mixed race marriage? Or if the beneficiaries are non-white? Will those of Chinese origin regain their status as “honory whites”?

In any event, white privilege does not manifest on inheritance. It manifests much earlier, with better healthcare, education, aspirational modelling, sense of entitlement, opportunities, networks etc etc. Inheritance is just the cherry on top for a few.

Also, his argument contradicts the entire concept of white privilege. This does not depend on money. It depends on being born white, and the advantages this confers in socities all over the world. The only way to end white privilege is to outlaw white people having children together.

After some thought and considering that the eminent professor will most probably never father children, the only logical conclusion is that he was stirring the pot to elicit debate and outrage, as his piece lacks his usual meticulously reasoned approach and singularly, clarity of mind.
Gouw’s piece is equally meritless.

Gouws has done a disservice to common sense by responding to De Vos’s “proposal” in the first place: it was not worthy of a response. Sadly but clearly Pierre de Vos has not enjoyed the advantage of an education that facilitates rational and logical thought. He would greatly benefit from the guiding hand of someone who has.

Although the Professor is entitled to his own opinion, it is irresponsible utterances like this that encourages people to rather join the FIRE generation (Financially Independence Retire Early) than continuing to contribute to wealth building and job creation.

Excellent thinking which I would expand on Deon, which would have saved you two years of onerous tax legislation study and also block any loopholes in non-collection of tax; it’s quite simple, a transaction tax on every financial transaction done within the banking system. it would eliminate VAT, put more money in the pockets of the poor and tax those who have money and move it around.

The accounting industry would have to be overhauled and according to studies, this would bring far more money into the treasury than currently.

Too simple for the entrenched industry which as you correctly point out has been manipulating company income for decades.

I think Prof de Vos has nothing to do and therefor dream up these idiotic ideas.
The reality is that wealth (money) will always be with those who know how to earn and manage it. Take all the money away from the wealthy and give it to the poor – and, it will be back with the wealthy ones in less than a generation.
The wealthy are wealthy because they know how to make and manage wealth!

To make it worse – The System Is Rigged against the Common Man:
https://www.rumrebellion.club/2020/06/12/the-system-is-rigged-against-the-common-man/

I do respect Mr de Vos’s opinions as a constitutional legal expert. Maybe he should stick to that.
I cannot see why any person would carry on working past the age of having provided financially for his family and himself.
So without going into the enormous economic consequences of this maybe Mr de Vos the amount of revenue lost to the state via uncollected taxes just being one major flaw.

The trick is already to instead of leaving a huge pile of cash, to rather ensure that your kids are well-educated, healthy, balanced and in professions that they really like. I trained my clients over the years that the best way to die is to be in such a position that only requires a family member to hand the required documents in at the local Magistrate’s office. Indeed it is important to have a good death benefit for your wife, as one doesn’t want to throw the love of one’s life to the wolves. However, live a full life, see your kids enjoy the fruits of your labours and keep everything simple. Even Thomas Piketty can’t beat this form of wealth transfer… and then the responsibility to create a future for our children is where it should be; in the hands of those individuals that created them. Not the state.

There, is a difference between a (A) successful business operator and a (B)politician (A) will sit down and see where he can cut on his expenses and beat the market on the revenue side (B) have no idea of control over expenses but focus where to increase the income eg. 100% on inheritance Should A operate like B , he wont last long and same way. B is now-bankrupt with inheritance included-Prof What will be left after another 25 years? A country should be run as if a business with a financial entity in control of the spending of politicians. It is impossible for politicians to have the knowledge to decide how to run a SAA, Eskom etc?
Thus all those operations should be privatized with no subsidies and number of politicians should be cut.

Deon Gouws was at school with me. He is absolutely brilliant and very hard working. I believe he never got any mark for any subject at school which was less then 90%. Ever..!His academic career was equally stellar.

It appears as though Pierre de Vos is advocating for a more equal society. Given the fact that he is a lecturer at the Kremlin on the hill aka UCT, one could make the assumption that he is advocating a socialist utopia.But lets not assume anything..

What we do know is that he wants to take from the ‘rich’ (who have built up wealth and want to give it to their children) so that the state can give to the poor. Somehow we will then become an equal society.

The problem with that is that we are not equal. Will never be. Even in a communist state. Those who steal, lie and cheat better in a Communist State become the political elite. Witness the Zumas..!

Deon and the prof are both wrong.

The inheritance was created with after-tax money.

If banks do this it is called double-dipping.

Why must the government ALWAYS get a slice when assets are transferred, using their fiat as a measure?

There should be a law against taxing the same money twice.

With investing, only money liberated from an account should be taxed and not every transaction.

Our government has proven to be a very bad capital allocator. Giving them more tax payer money is like giving a junkie money for food. Serious reforms are needed.

Prof, we are already double taxed. we pay high rates of taxes and then has to pay again for education, medical aid and security.

Further, government is not prudent with other peoples money.

Do not give them ideas.

Marxist claptrap justified by sophistry and good old fashioned BS!

Deon. I disagree with both De Vos’ proposal (vehemently) and with yours. Wealth that has been built by an individual (and their forebears) has generally been taxed and is the portion that is left which belongs to him / her to do with as they wish. Blow it, save it, leave it to their children or leave it to the SPCA. The only point I can take from your proposal is the “gift tax”. The proviso on that however, is that it is a voluntary tax (the essence of the word gift). That can become a single line item on any tax return, being of a living person, or a deceased estate (as directed in the will), setting the amount gifted to the state coffers. This then allows virtue signallers such as De Vos, Piketty and the like, to brag about how much they have”gifted” to society – or they can shut up about it – and free themselves of the guilt they may harbour about any excess they feel they own or have inherited.

You raise a great point. This proposal, if implemented, will mean the end of charities like the SPCA and Salvation Army who are largely funded by bequests. I wonder if the Professor even considered this ?

plus no more funds for Hospice, YfC etc, this when will be a double blow for NGO’s since government funding already started drying up before Covid-19

De Vos is suggesting this tax based on inequality:

There is no inequality if you compare apples with apples – SA black people are not worse off than their peer group in surrounding countries, in Botswana, Zimbabwe and Mozambique, when compared on income, housing, literacy, medical assistance, amount of businesses started and amount of businesses listed.

In fact, SA blacks are better off, that is why hundreds of thousands streamed into this country during apartheid and millions thereafter.

De Vos based his tax on “inequality”.

How can you want equality of income when there is such a wide inequality of mindset?

Take two key issues:

Rich people, basically middle class tax payers, vote for good government – poor people vote for large scale corruption and mismanagement.

Rich people do not have more children than they can afford – millions of poor people have children they cannot afford.

This inequality is such a load of trash, we are all different, all have different aspirations, goals, ideas and are all at a different place on the timeline. Some accumulate, some spend some tread water and some just go backwards, that is how people are.

So once we are all equal??? those that fall behind will get a pickmeup from those that progressed a bit.

Who is going to oversea all of this if we are all equal?? The guy with more? or the guy with less?

Idiots.

Well here’s another dear professor who thinks he’s working by dreaming up theoretical “solutions” completely separated from the real world and/or he got nudged by their employers to write something that promotes their little propaganda and self-serving agenda’s.

The amazing thing about these so-called intellectual’s is that they never address the real issues, because, they become lazy living in their intellectual ivory tower a bit of waffle in class, promote self-ready chapters of their own overpriced textbooks, see a few student, tick a few papers (no reading them) hobnobbing with other intellectuals and talking the same old fake waffle to be politically correct with their dreamy armchair solutions.

Not once were there any proposals made that result the creation of employment. However it’s popular to support the ever increasing hand-out queues just sitting around waiting for another month-end hand-out program. Just read the dribble from Oxfam or the who.

Instead of developing solution towards entrepreneurship and/or a town/city/suburb support teams that service/repair/maintain its infrastructure & clean-up, trained the municipality subject experts with on the job training/work whilst earning a respectable income based on actual outcomes for the town/city/suburb, with viable solutions focusing on:

> REAL meaningful recycling;
> road repair/building/maintaining with durable alternative materials from waste
> cleaning processes for rivers, parks, public places, buses, trains,
> with support employment toward providing food, water, toilets, first-aid, transport
> community service for the elderly/disabled, with support services jobs to provide food, cleaning etc.
> local policing & support to SAPS
> after school care/supervision/tutoring

Surely there are countless many more areas of real work that is needed by the town/city/suburb, that requires man-power.

The interesting thing about SA is that its constantly appears that our priorities are wrong, just observe in any township if one could spot one informal dwelling that does not have a dstv antenna and or the amount that spent on alcohol and smokes in comparison to those items that are really essentials, then the social cost for the abuse of alcohol etc.

Then observing the queues at hand-out points there’s something wrong:

1. THE ENTITLEMENT MENTALITY
2. THE MAHALA MENTALITY

So dearest professor, please apply your mind to real world solutions because if your idea is to be considered in any minor or mayor way then you take responsibility for the effect/impact.

As for my & family; we never received anything for free from any organization private or statutory; we WORKED & PAID for education (+ children’s education), transport, security, medical services plus pay our taxes for which most working south African’s receive absolutely NOTHING! Accept those that collect their monthly grants.

So thank you for the early heads up, it will now be our new mission ensure there’s NOTHING left after we’ve gone HOME. (also NO DEBT)

If your dreamy intention are intended towards your promotion/appointment to Chancellor of one of our universities by appeasing your employer/controller with your dreamy controversial ideas then good luck!

Just remember with every “great idea and or sa drama” sa losses a couple of potential creators e.g. Elon Musk, Doctors, Specialist, detectives etc. leave sa permanently! They will never be back & there’s even a good chance they’ll never holiday again in sa because the world offers better alternative!

If you can imagine it, the cANCer will take it or break it.

The only way to prevent the cANCer is to be 100% offshore in trusts;

– In this state of affairs, zero political or currency risk; zero income tax; zero death tax;

– In this state of affairs, the more the cANCer stuffs up SA, the wealthier you become.

When i was a kid my parents taught me that life was not necessarily fair and some people are more equal than others regardless. Whyhas the world cottoned onto the notion that we must all be rich or poor for that matter.

The only person who proposes a 100% wealth tax has no money to leave behind. I imagine the good professor is in that situation

His present job is funded by an inheritance of the type he rants about (The Claude Leon Foundation) and he will collect a juicy state pension for the rest of his life. I doubt (hope he won’t) spawn any offspring. So he doesn’t care one jot about “other people” he labels as “privileged”, “entitled” or whatever, losing their means of supporting remaining spouses or children who cannot support themselves, let alone inheritance.

An article for the article hall of fame.

ANY inheritance tax is immoral and unjust. My assets have been acquired with hard-earned, already taxed money. In my estate it is being taxed again?

I inherited only a broken pair of binoculars when my father passed away, so this myth of all white people having become rich due to inherited wealth and being the reason for inequality is the biggest BS I have heard recently.

The editors have decided to censor my piece on “black privilege” – why?

Please motivate

The editors censor many articles because they, unlike other journalists, believe in censorship.

Only those who benefited will dispute the need for an equalizer. The racist who can’t look themselves in the mirror and say we mainly where we are because of privilege.

They like claiming hardwork when it is just the dividends of apartheid.

Prof, jy het tog sekerlik nie hierdie uiterste str… behoorlik deurdink nie!! As jy wel het, ys ek om te dink watter gehalte studente uit Ikeys se regsfakulteit kom….

The way that wealth is created is through inter generational transfer of wealth. By taxing that wealth out of existence you will destroy the route out of poverty and create the dependence of citizens upon the state. This is the very antithesis of free choice and individual liberty.

I always thought the esteemed Prof De Vos was a smart man to look up to. It seems Covid 19 may have affected his ability to think rationally. Are you overdosing on your medication Prof? Or are you stoned or just stupid? People always held you in high esteem. Until you thought you were an expert on tax too.

I’m really, really getting fed up with this white privilege thing. Do you think for one moment I volunteered for TWO years of “voluntary” military service? Getting treated like rubbish with p-poor pay notwithstanding my degree? What money is going to be enough to compensate me for the lost two years of my life? And if you’re even slightly financially literate, you will realise the loss that the first two years do to a final pension payout.
Lastly, covidiot of the year title goes to…..someone working in the shadow of Table Mountain, no doubt.

Isn’t it ironic that prof de Vos is funded from the bequest of a white colonialist from London –Claude Leon–who made his money being an early investor in Anglovaal. Surely this money should be paid back, hey prof?

no wonder 109 comments

Please give this brilliant and respected academic his due. His idea(s) make 100% sense.
The likes of JZuma, Ramaphosa, Ace, DZuma, etc, etc will also pass away some day. At a 100% tax rate, billions of Rands will then flow back into our vibrant economy.

End of comments.

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