Income Tax: The Biggest Expense

Income Tax: The Biggest Expense

Which is the biggest expense any anyone’s life? Well, it’s not the food, clothes, education or anything else. But it’s the Tax. Income Tax – The tax on income.

Income tax is the single largest annual expense for many households. There is no tax on appreciation of wealth. Of course there is a wealth tax. But there are ways to avoid it. Say for Example wealth tax on gold. Now if you buy a paper gold (Gold ETF) than it’s the financial (Paper) Asset so you don’t have to pay any tax on keeping a paper gold.

And on the top of that, there is no tax on the unrealized capital gains of your assets. And for the rich, most of the time of their life, this profit remains “On Paper” only and thus they pay very less in taxes and sometimes NIL in taxes.

High Income group of people suffer the most because of the Income tax. Because all of their income is realized income. And they struggle hard to increase their income rather than growing their assets.

Most of the high income group of people mainly focus on their Income. While Rich people focus on their Assets. And that’s why Rich pay very less in taxes while high income group of people pay highest in taxes.

Most of the wealth of rich people never realize any kind of Income and even if it realize the Income {Business Income), it keeps re-investing inside the Asset (Business) and increase the valuation of their assets several folds.