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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. This article was posted on November 15, 2005   View More Videos from the "Business and Finance" category: Finding Private Scholarships Learn about Safe Withdrawal Rates for Retirement Guy Fieri Takes a Big Bite out of Small Business Focusing On High Or Low Priced Items   Read More Articles from the "Business and Finance" Category: Challenges of Managing a Bilingual Call Center by Randy Harmat 10 Strategies on How Successfully Trade Metatrader 4 Expert Advisors by Gaye White How to Become a Successful Real Estate Developer by Rhiannon Williamson Seven Deadly Trading Mistakes - Part One by Harvey Walsh What Makes You Eligible For Venture Capital? by James Marriott Work At Home Moms Time Management Tips by Carrie Lauth Money Management 101 by Jeff Lakie Is Your Business Profitable? by Pam Newman Credit Problems, What You Can Do by Jennifer Hershey The Seller's Guide to the Buyer's Eye by Elaine VonCannon << Back to "Business And Finance" Index

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