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How Money Works : Taxation

April 27, 2012

How Money works – Taxation

April 19, 2011

Image licensed under CC AttributionNoncommercialNo Derivative Works Some rights reserved by Anders AdermarkIn building wealth, the focus is always on the growth of invested money. A factor that is always present in hindering growth, aside from inflation, is taxation, especially for the working class. The income they receive is already less withholding tax. More often than not, the net income is insufficient to provide for their needs. In effect, they do not have funds for investment.

Taxation is a form of permanent expense imposed on citizens in order to support government operation. Without taxation, no country can become progressive. Look at Singapore as an example. Their collection system is efficient, and the government is not corrupt. Taxes worked for the citizens as government built road networks and an efficient MRT system, and served the citizens properly. As a saying goes, there are only two certainties in life, death and taxes. Whether we like it or not, we have to live and die with taxes. We cannot escape tax but we can try to minimize it. Even after we have earned our paycheck and invested a part of it, the capital gain by that investment is still subject to tax. Another example is the tax on wealth/asset transfer and inheritance, which is 35 percent of the estate.

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