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How_to_minimize_your_taxes_on_wealth

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									Title:
How to minimize your taxes on wealth


Word Count:
443


Summary:
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.



Keywords:
tax, personal finance



Article Body:
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.




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