How_to_minimize_your_taxes_on_wealth by georgetitan

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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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