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Addressing Intergenerational Inequality: The Role of Death Taxes

The appointment of Danielle Wood as the new chair of the Productivity Commission indicates a shift towards left-leaning policies. However, it is uncertain whether this change will have a significant impact, as the Australian federal government has failed to implement most of the commission’s previous recommendations. The previous report’s 26 recommendations were largely ignored, except for a partial implementation of one recommendation in New South Wales. Treasurer Jim Chalmers initially appointed Chris Barrett to reform the commission, but Barrett decided to return to Victoria instead. Wood’s decision to take on the role suggests that presiding over the gradual bankruptcy of Victoria seemed more appealing than the Productivity Commission job. The Grattan Institute, where Wood is currently the CEO, is known for promoting left-wing policies. Wood’s past positions and the institute’s stance on issues like energy transition and COVID advice have received criticism. Wood has made several proposals that have sparked controversy, including reintroducing death duties, taxing retirees at higher rates, abolishing dividend franking, reducing the capital gains discount, and tightening the assets test on pensions. While some of these proposals address underlying problems such as intergenerational equity and housing affordability, they have been met with skepticism. Implementing an inheritance tax, for instance, could damage family farms and businesses and create economic and social problems. Currently, inheritance is already indirectly taxed through the capital gains tax. However, Wood’s emphasis on the importance of home ownership is seen as valid, as it is crucial for financial security. Overall, Wood’s tenure as chair of the Productivity Commission will shed light on whether her proposals will come to fruition.

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