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In 1789, one of the founding fathers of the United States, Benjamin Franklin, famously wrote in a letter that “In this world nothing can be said to be certain, except death and taxes.” So true. But what happens when a death occurs? Does the taxman take an interest?

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Around the world, the answer is an emphatic “yes.”

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However, the form of such taxes can vary widely. For example, some countries have an estate tax based upon the fair market value of the decedent’s property at death. There is often a basic exemption for such amounts so that it is only the amount of the estate in excess of that exemption that is subject to tax. The U.S. and a handful of other countries, such as the United Kingdom, South Korea and Denmark, have a traditional estate tax.

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In the U.S., it’s fair to say the estate tax is more of a symbolic tax. It was originally established in 1916 with the stated policy objective of preventing dynastic wealth accumulation. The exemption amount is now US$15 million (but it will be indexed to inflation starting in 2026) as implemented by the One Big Beautiful Bill. Such a large exemption exempts the vast majority of deaths from the tax.

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For example, in 2022, the U.S. estate tax applied to only about 3,900 taxable estates — roughly 0.11 per cent of deaths — and raised approximately US$22.5 billion out of total federal revenues of approximately US$4.9 trillion.

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In other words, it’s a pittance. Most tax practitioners know it’s pretty easy to walk around the U.S. estate tax. It’s fair to say the estate tax has failed to achieve its original policy objective.

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In other countries, an inheritance tax is common, and the recipients of a deceased’s estate pay it. Countries such as Germany, France, Belgium and others deploy this type of regime.

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There are a variety of other death tax regimes, like a capital acquisitions tax in Ireland that is triggered when an individual acquires wealth, either through inheritance or gifts. Chile has a similar regime. Other countries, such as Greece, Italy and parts of Latin America, have stamp or notarial duties that apply when people register their inheritances.

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What about Canada? It introduced an estate tax in 1947 and it operated similarly to the U.S. model. In 1966, the Royal Commission on Taxation recommended the country abolish it and instead introduce an inheritance tax.

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“The estate tax fails to account for the economic position of those who receive the assets and cannot be properly integrated with a personal tax system based on income and individual ability to pay,” its report said about the estate tax.

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“We believe that an integrated income tax system should treat all accretions to wealth, whether earned or unearned, as part of the taxpayer’s income, and that gifts and inheritances should be included in income for this reason.”

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In the end, after much debate and consideration, the government chose to abolish the estate tax and not introduce an inheritance tax as recommended by the commission.

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It appears that, like today, any form of death tax in the late 1960s and early 1970s was very unpopular with voters. Accordingly, Canada decided to introduce a deemed disposition upon death rule as part of the introduction of capital gains tax effective Jan. 1, 1972 (previously, capital gains were not taxable).