Why Wealth Tax has been Abolished All Over the World?
Taxation is a hotly debated subject all over the world. There are supporters of capitalism who already believe that the rich are being taxed too much. On the other hand, there are supporters of socialism who cite increasing wealth disparity and argue that the rich should be taxed even more.
The idea that the rich should be taxed as much as possible is not really new. In fact, the concept of Wealth Tax existed in many countries across the world. However, with the passage of time, economies experienced negative effects of this wealth tax. This is the reason why it was abolished in the first place. It seems like many politicians and people have forgotten the pitfalls of wealth tax. This is the reason why many Democrats are lobbying for the introduction of this tax in the United States.
Before any wealth tax is levied on the American people, it is important to have a look at the true meaning of wealth tax as well as its pitfalls.The same is being explained in this article.
What is Wealth Tax?
Wealth Tax is a tax on the wealth i.e. the net worth of an individual. This is opposed to the normal income tax which is levied on the income in a particular year. In order to compute the wealth tax payable, the government needs to have a record of all the assets that a person has viz. cash, vehicles, properties, stocks, bonds etc. If the sum total of all these assets goes over a certain threshold level, then the person is liable to pay wealth tax.
Pitfalls of Wealth Tax
The bottom line is that the wealth tax is a draconian and unfair tax which has been abolished by most countries across the world. There is no reason why the United States should adopt this tax system which has been an undoubted failure in both developed as well as developing countries.
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