| |
How to minimize your taxes on wealth
By Jakob Jelling
Taxes on wealth or simply wealth tax is the tax levied on the value of wealth owned by a person. As the term 'wealth' carries with it a broader meaning, generally capital transfer taxes (which include inheritance tax and gift tax), property tax, and capital gains taxes are some times invariably referred to as wealth taxes.
Taxes on wealth were first introduced in Europe, aimed at reducing the growing wealth gap between the rich and the poor. It was meant to raise revenue for addressing pressing social requirements and also to discourage the attitude towards amassing wealth.
Still, in countries across the world, majority of wealth is concentrated at the hands of fairly small number of people. Ideally taxes on wealth cuts down the disparities in wealth rather than the income, which actually is the determinant factor on how the scales are weighed for the next generations.
Also, taxes on wealth can bring about vertical as well as horizontal equity, which income tax fails to achieve. For example, neither a wealthy person nor a poor one with no income will pay income tax. But the wealthy ones need to cough up wealth tax while the poor need not.
But, as critics puts down, taxes on wealth can actually cause inefficiency by discouraging wealth producing economic initiatives. Also, the revenue generated by imposing taxes on wealth may not be that productive as the theory suggests. The wealthiest form only a small percentage of the population and by nature they are adept at avoiding taxes while remaining themselves within the contours of law.
Taxes on wealth comes in two forms – the capital transfer taxes that are levied when wealth change hands and the annual wealth taxes. Capital transfer taxes can occur either at death – also called inheritance tax – or via donation (gift tax). Some people tend to believe that Capital Gains tax to be a form of taxes on wealth. But in realty, capital gains tax is the taxation on the income obtained on capital and not a wealth tax on the capital.
Ideally, taxes on wealth should not be severe on the tax payers even if they have lots of wealth. Instead, after the minimum slab of no taxation, the taxes on wealth percentage should increase at increments, depending on the value of wealth in dollars. Such a fairer taxation not only increases the revenue but also goes a long way in bringing down the inequality aspect as well.
But with intelligent investing, one can save a lot that other wise goes as wealth tax. But that requires careful thought and advanced planning. May be a tax professional could help one in this regard.
About the Author
Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.
Article Source: http://www.simplysearch4it.com/article/15807.html
| If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/15807.html" as shown above and make it hyperlinked. |
| Some other articles by Jakob Jelling | Mixing and pouring concrete
Mixing and pouring concrete often sounds easier than it is. This task implies handling the right amount of ingredients and handling them at the right moment and the right way, and all these aspects might ...
How to repair cracked vinyl siding
Although vinyl siding has many advantages over wood and does not wear as easily, sometimes it can be cracked and ...
How to install replacement windows
Replacement windows can be a great choice when needing new windows and wishing to be able to replace them easily. Replacement windows are created and designed in such a way they can fit ...
How to install an under-the-sink water filter
Installing a water filter can be very important, especially in those cases where water has more chlorine or minerals than we might wish, or ...
How to install a ceiling fan
A ceiling fan can be a great choice for acclimatizing an environment, especially when the space is reduced, but installing it can be difficult ...
How to replace a windowsill
Replacing a windowsill can be easier than it seems, you might only need to count with the necessary tools and follow several steps. We will provide you with some useful tips through ...
|
|
| |
|
|
|
