Australia’s state and federal death taxes (aka estate duties or inheritance taxes) were consigned to the graveyard of abolished taxes in the 1970s, and no major political party has ever proposed a resurrection. As long as there is hunger for revenue, however, no tax idea ever really dies — as the Australia Institute’s proposal this week for a new death tax demonstrates.

There is a respectable theoretical case for a death tax: it has lower disincentive effects than most other taxes; and it limits the unearned advantage passed between generations.

The real world context, however, is important. If the idea were to reintroduce death taxes and use all the revenue to lower other taxes — particularly income and capital gains taxes — for the living, it would be worth considering. In reality, death taxes double up on the already high taxes people have paid while earning and accumulating their fortunes.

In recognition of the double-tax effect and the strong voter opposition to death taxes, the countries that do have them typically set thresholds and exemptions at very high levels and little revenue is raised.

Typically, those calling for death taxes do so not to finance cuts in other taxes but to raise more revenue for social programs and redistribute wealth for the express purpose of forcing a higher degree of economic equality. Death taxes are piled on top of high lifetime taxes on income and capital gains. They are part of the collectivist nirvana.

Advocates of death taxes should also recognise that Australia already has a death tax of sorts: to the extent people have accrued capital gains without realising them and paying capital gains tax before death, their accrued tax liability is passed on to their heirs along with the assets. In certain circumstances death can also trigger a tax on inherited superannuation benefits.

Robert Carling is a Senior Fellow at the Centre for Independent Studies.