LIFE ASSURANCE RESTORES VALUE OF ESTATES.
Theoretical consideration supports the figures. - With differential taxation the size of individual estates has a twofold significance, nainely, Volume and the Tate of tax leviable, the latter being governed by the former. Con7, sequently, a decrease in size means more than a propor- tionate reduction in the yield to the revenue from death duties, income tax and surtax, because it means a lower . rate of taxation on the remainder of the estate. Unless the value of the estates comprising the higher rated groups be kept up, revenue must progressively decline. The creation of new wealth may conceal what is going on, but the falling off in revenue by the destruction of old estates is there. Instead of the new wealth producing addi- tional revenue its contributions are wholly or partly absorbed in making good wastage, and there is not the expansion there otherwise would be. Life assurance supplies the only practicable method of maintaining the capital value of estates.. Death duties imply the use of capital for revenue. Life assurance pro- vides a sinking fund for the restoration of capital used up in this way—a sinking fund paid for by the subject and not by the State. That restoration is greatly in the interests of the State, which ought therefore to encourage, and not discourage, owners of estates to establish their own sinking funds. The payment of the premiums would really be a self-imposed tax on their own incomes for the benefit of the State.- To tax the fruits of a man's self- denial, fruits which he can never enjoy himself but which will be reaped solely by the State, is not only unfair but short-sighted.
Life assurances of the kind would bring other great advantages to the State—advantages not .so easily measurable as those already discussed, but which anyone with a knowledge of the stock, share or property markets will appreciate. The amount of the death duties paid in Great Britain for the financial year .1930-31 was 183,092,037. Apart from any cash available, the whole of this enormous sum had to be obtained by the realiza- tion of Securities.
Previous page
