How To Minimize Your Taxes On Wealth

How To Minimize Your Taxes On Wealth

How to​ minimize your taxes on​ wealth
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.

You Might Also Like:

No comments:

Powered by Blogger.