Will Inheritance Tax Payments Fund the Government's Free Gifts?

An opinion piece in Berlingske questions the financial projections for a proposed increase in Denmark's inheritance tax, suggesting that actual revenue may fall short of estimates due to anticipated behavioral adjustments by wealthy individuals. The article highlights that while a higher tax threshold might offer some relief to many estates, the crucial factor for revenue generation lies in how people change their behavior.

For families with substantial assets, the incentive to adapt becomes significant. Strategies such as making gifts, initiating early generational transfers of wealth, or other dispositions could reduce the value of assets subject to inheritance tax. This effect is amplified for the wealthiest, as substantial taxes on estates worth tens of millions of kroner might encourage emigration to countries without inheritance taxes, such as Sweden. Even a limited outflow of the most affluent individuals could dramatically impact overall revenue.

The author also notes that tax policy should be viewed holistically. Changes in housing taxation, reduced interest deductions, and their subsequent impact on sales prices for expensive homes can affect wealth over time, potentially lowering the net worth that eventually becomes subject to inheritance tax. When combined with a higher inheritance tax, these factors collectively increase the motivation for proactive wealth planning.

Separately, the piece includes commentary on societal attitudes toward defense. One letter writer expresses concern over what they perceive as a low level of defense preparedness in Denmark, contrasting it with the perceived seriousness with which neighboring countries like Finland, Estonia, and Latvia view the Russian military threat. The writer criticizes the reluctance of young Danes to consider longer or mandatory military service, questioning how society can expect young people to take such threats seriously when the broader community appears dismissive.