Wealth distribution. Wealth tax and estate planning - Essay Example

Yvonne Marie Leyson Academia.com Wealth Tax and E Planning 16 April 2006 Riches are accumulated at a rate faster than the affluent can normally spend yet it is being held and proportioned among themselves while the gap between wealthy and the needy visibly widens. In a study of disposable weekly income by the ONS, the richest 10% of have at least 658 per week (after deductions), compared with the poorest 10%. Twenty-three percent of the nation's total riches is owned the by richest 1% group. Intangible wealth is left to the hands of its owner to amass and enjoy during his lifetime free from any liens and encumbrance. With the current budget crisis, tax imposition and structure on intangible wealth would surely correct the scenario and for the country to appropriately create solutions that is beneficial to each citizen. Instead of finding ways and means to increase the tax percentage remittances of the working class, channeling the deficit to the excess of the affluent could entirely minimize the growing responsibility of its weary ordinary taxpayers. Wealth according to Frank "is an abundance of items of economic value or the possession of such items" which could either be money, personal property or real property. Other countries would identify wealth as the possession of crops and livestock. Historical data would portray wealth as an accumulation of non-necessities. In the Middle East, wealth denotes ownership of arable lands. Smith saw wealth as "the combination of materials, labour, land and technology in such ways as to capture profit. Across the ages from tribal society to modern age several means to moderate wealth distribution and its acquisition and use was relatively studied. Some tribes along the Pacific Rim kept wealth evenly distributed by means f giveaways to the poorer members of the society. The tradition of philanthropy exists in modern civilized society. Such traditions according to Cook "are recognized as responsible wealth". Government policies can gear towards the redistribution of wealth to the rich and poor respectively. In disaster relief operations, wealth is transferred to those who are victims of natural disasters and calamities. Social security benefits transfers wealth earned to the older individuals. Wars transfers wealth to other sectors of the society and in reparations wealth is transferred to other countries. Public education allows the wealthy to send children of needy families to school. Certain government campaigns support the hungry in third world countries. Yet, people from the upper social strata despise having to contribute to these programs and continue to evade them. The act of wealth distribution itself cannot achieve 100% efficiency due to the maintenance of structures to collect and redistribute it. Arguments as to its accumulation and redistribution often create conflicts within the system. However if a certain society implements wealth distribution by means of persuasion valued on the different capital and the production of wealth, the rich once in a while can be mandated to give away at least a small part of their extra assets to the poor. In turn, according to the Keynesian theory, this redistribution and expenditures have a multiplier effect that stimulates the economy and creates wealth again back to the wealthy capitalists. In France, residents declare their annual worldwide assets and their value for which assets exceeding 732,000 a graduated tax is payable annually. Married couples and minor children file one common return. Non-residents who own assets or bank deposits including shares of stock in France or French companies are also liable under the wealth tax law. As a significant source of revenue this law was implemented in 1989 and declared taxable assets which include: real estate; furniture; jewelry; cars and other vehicles; horses; shares and bonds; endowments and redeemable value of life insurance. Assets that are held in trust for beneficiaries under the French law are not recognized. French authorities regard a trust as being owned outright by the trustees and any beneficial owners are ignored. This is however in stark contrast to the English law which recognizes the split ownership between the trustee and the beneficiary. Within the European Union, France, Greece, Spain, Luxembourg and Sweden has imposed wealth tax often with a lower rate although with a higher threshold for its imposition. Since 2003, Austria, Denmark, the Netherlands, Germany and Finland have abolished this law. In 2003, out of 786 billion "general government receipts" in France, 174 billion was collected on income and wealth alone". In Sweden, out of 1,314 billion kronor of general revenue, 3.8billion was collected on wealth tax. In Switzerland, a progressive wealth tax of around 1% is expected tp be levied on net assets. If such amount will be annually appropriated among the poor and the lower-income earners of one nation, gradual ease would be felt throughout the year. Attitudes towards taxation of wealth have gained support claiming that anti-wealth tax is funded by a coterie of wealthy taxpayers whose instinctive rejection of the system comes from the broad aspiration to become wealthier and amass more fortune by any means and that rampant starvation and poverty is a result of "deserving what you get" sentiment. With this popular anti-poor statement, Brown's poverty child target made an unexpected commitment to support wealth tax for child poverty campaign as the heart of political debate. With the issue on trusts being affected, it has been reiterated that existing trusts are in no danger as the law is not retroactive however, upon a beneficiary's 18th birthday he is expected to claim his trust fund otherwise new charges shall be applied. Others have rallied with glee on taxing the British monarchy whose vast amount of landholding and wealth needs to be distributed upon to the entire lower sector. Inheritance tax as part of wealth has also gained a varied public sentiment. Financial advisers created solution for estate planning for parents and grandparents wishing to effectively allocate wealth for the future and welfare of their families. According to Goodin, "inheritance taxes have long been the third rail of tax policy and once one touches them, you are dead, politically". Peace Tax Seven has published that "the UK is on permanent war and tax returns are weapons of mass destruction. Proof of taxpayers' money being spent on useless wars and other unnecessary spending along with political suicide for its implementers are the usual arguments often heard and disclosed popularly. Albeit shallow and defensible other arguments are relegated on the misappropriation of funds and on the theory that the market works so well and that people by definition get what they deserve. Middle-income earners are also weary on the possibility of incremental programs to shift tax burden off the capital and unto consumption by ultimately harming them as the rich echelons turn popular resistance. According to Moon "accumulation and maintenance trusts and interests in possession trusts, both sophisticated legal vehicles used to shelter assets from tax" and are currently threatened. Further Moon added that "the trust industry is warning that millions and not just a few thousands will be affected". John Locke claimed that because we admix our labour with land, we deserve the right to use and benefit from the products of such land subject of course to the proviso of "at least where there is enough, and as good left in common for others". More commonly we till the soil but generally it does not belong to us, we are merely caretakers for the next settlers and that we have no right of property over it. Thus wealth that comes from it thereby ought to be shared by the rest rather than allocated for the good of a few. If taxes collected from amassed fortune of the rich are properly allocated to the deserving citizens of a nation, its worthwhile implementation deserved to be lauded upon. However if government is decisive on its implementation for the common good, public debates about inequality matters should harness public support to build a fair society where rewards are evenly distributed among all. Equal collection of taxes among the wealthy should be imposed rather than allowing protection and exceptions for government entities and their families which would create a larger outcry. Works Cited Politics.co.uk. "UK Wealth Gap Grows".08 Dec., 2004. http://www.politics.co.uk/the-economy/uk-wealth-gap-grows-$7265530.htm 17 April 2006. Frank Sr., Larry R. "Wealth Odyssey. The Essential Road Map for Your Financial Journey: Where is it you are really trying to go with Money" Warner Business Books. Collins, Chuck. "Tax Wealth to Broaden Wealth." The American Prospect vol. 14 no. 5, May 1, 2003. Cook, Heleny. "Business Owners for a Responsible Estate Tax." Oct.,2004. http://www.responsiblewealth.org/ 17 April 2006. Moon, Simon. "Wealth tax rages on". 11 April 2006. http://www.thisismoney.co.uk/tax-advice/inheritance-tax/article.htmlin_article_id=408226&in_page_id=78 17 April, 2006. Read More