Wealth tax is a direct tax levied on individual person or household. Wealth tax is calculated on the property that an individual has, like bank balance, land, house, car, etc. Wealth tax is not fixed to a person, it increases or decreases with the changing of wealth. Every year Government of every country decides the rate percentage of wealth tax. The government also gives some relaxation on certain cases up to a certain limit.
How to Calculate Wealth Tax
First, know the relaxation limit that is set by your Government for that financial year.
Let’s suppose the Government gives exemptions up to $100 Million, that’s means the Government is taking 0% tax up to $100 Million.
A 2% tax is imposed from $100 Million to $500 Million, 4% tax is imposed from $500 Million to $999 Million.
Your net Wealth worth is $800 Million.
| Wealth Value(Million) | Tax Percentage | Owed Tax( Million) |
| For first $100 | 0% | $100*0%= $0 |
| For next $400 | 2% | $400*2%= $8 |
| For next $300 | 4% | $300*4%=$12 |
Total Tax =$ (0+8+12) Million =$20 Million
So, you have to pay $20 Million to your Government as a wealth tax for your $800 Million wealth value.
Let’s Describe Some of the Arguments That Supporters and Opponents of Wealth Tax Make
Wealth tax is an argumentative topic. Some people in each country take a supportive side, whereas some people take the opponent’s side.
Arguments of Supporters:
According to wealth tax supporter, every country should impose wealth tax on their citizen as it is one of the main ribs of the country’s economy.
i) Wealth tax is a way to balance a country’s poverty line. In the wealth tax system, a Person with more wealth has to Pay more tax and poor people get exemption from it. The government collects wealth tax from rich people and distributes it to the people below the poverty line.
ii) Wealth tax contributes a huge amount of money to every country’s economy. The government allocates this revenue to grow in the downgraded condition of that country.
iii) If the Government doesn’t take wealth tax, the rich people will become more rich, and poor people will become more poor.
Arguments of Opponents:
On the other hand, opponents say,
i) Why do only they pay the wealth tax? Why some people will get the exemption from wealth tax? They made their Wealth by doing hard work.
ii) Every person in the country gets the same facility, so why the amount of wealth tax is different for different people? It should be the same and fixed to each person.
FAQs:
Do Indians pay wealth tax?
Yes, Indians also pay wealth tax.
Is a wealth tax a property tax?
Wealth tax and property tax are not the same. The government imposes property tax on every citizen, whereas wealth tax is imposed on the citizen, whose total Property value crosses a certain limit.
Is a wealth tax direct?
Yes, a wealth tax is a direct tax. Direct tax means the tax that is imposed by the Government of a country on an individual person. There will be no intermediate person.
Who imposes wealth tax?
The government of each country imposes wealth tax and collects it through the tax department.
