A wealth tax basically centers around the ultra-wealthy who while tax filing online, will be paying their annual tax on assets they have with them. So what are the assets to be considered?
Well, it is in the form of the following:-
- Fine art
- Business interests
- Yachts etc
We know that most all of us pay taxes on the income, we generate in an annual basis. However, wealth tax basically relates to the assets of a person irrespective of it being sold, traded or earned a dividend.
Harlan Levinson, a popular accountant in Beverly Hills, defines wealth like all the possession of an individual that can be sold, as he/she is the rightful owner of the same.
You may be a high-income holder, but still don’t own lots of wealth. Here’s how?
Clearly, there are various people who have high incomes but no considerable amount of wealth. The best example can be that of a footballer who gets paid a handsome amount, but they equally spend very much.
You may still be wealthy without much income. Here’s how?
There are people with a big chunk of wealth but not that much of income. The related example can be that of Jeff Bezos who has assets worth $100 billion, but whose total salary when counted in a year is little less to $100,000
How to understand, if I am liable to pay wealth tax?
- In order to get a sense of understanding about wealth tax, you can derive a comparison with the property tax you are liable to pay at year’s end.
- For deeper meaning, knowledge, and understanding about a comprehensive type of wealth tax, you can look for the federal estate tax and visit the website, where you can also know about the tax refund
The individual is liable to pay just once as it is levied after the death of the individual and Americans with estates reaching $11.4 million in 2019 does come under its purview.
- This type of tax to the most reaches 40% and has certain norms to judge the assets.
Like, it assesses the market value of the items a taxpayer owns including the following:-
- Real Estate
- Business Interests etc
This whole procedural norm gives an understanding regarding the assets which are considered as per the wealth tax law.
Many countries tried a series of different versions of wealth tax and experimented to make it work, and they end up scraping theirs.
However, there is an exception to the same in terms of countries such as Sweden, Spain, and Norway which practice wealth tax.
Am I liable to pay wealth tax?
In short, wealth tax can potentially impact you, if you are extremely affluent; otherwise, you are free from its purview during tax filing forms. So, the answer is a Big No, because you don’t possess assets which are valued at tens of millions of dollars. This is the policy of wealth tax which won’t impact you unless you are highly rich, you can be calm and composed and don’t need to panic for sure.