Here we discuss some of the many Problems with taxing private wealth, that come into effect well below 100.000 EUR.

Now most countries do not do this, to a certain degree. The author lives in a country where you are taxed from around 50.000, which is a lot less than it sounds: It is around 1,5 years wages and less than half a kilogram of gold (on 06 October 2025). In this article it is assumed that all savings and investments are taxed, with no differentiation between the two.

• The first and foremost issue is double taxation: Tax is first paid over salary, later over your savings and investments. Particularly if you are saving to purchase your first home, which can cost over 300.000, so takes many years of taxes to accumulate. Should be noted that homeownership is usually less taxed than savings or stock.
• Taxing savings means that people are discouraged from keeping enough money around for a real rainy day. This actually increases dependence on foreign sources of money, as your own citizens will have spent theirs to avoid high taxes.
• Discouraging savings has the further effect of people not being interested in learning about financial health and investing. This deteriorates their basic understanding of the world.
• There is the knock-on effect of encouraging people to save outside of the normal system; they accumulate money in physical form or physical investments and “forget” to mention it in their tax return. Most governments have legislation to get the missed taxes, but lack the man power to go door to door checking every house for cash hoards. There also is the possibility that people go the extra step and invest in sub-par products from shady companies: In this case they are likely to lose their money and fall into a debt trap, which actually costs society far more than the missed taxed.

These are just pointers: Tax is unavoidable, officials just need to do a better job at avoiding double taxes or to such an extent that it discourages people from investing in anything. The issue where it keeps people from forming a proper rainy day fund, is a genuine problem that needs to be addressed with either a full exemption or a threshold of a least several tons: Below that you might have a real need for the money, above it and we are talking large in heritance.

Some cases in which taxing wealth is not a big problem:

• Multi million dollar accounts, these can take the loss.
• Inheritances, above a threshold: Small amounts should be exempt, they might not be cost effective anyway. Think about it, how often do people die and how much paperwork is involved in their death. Going after the small fry is enough to pay for a department but not enough to make a big profit.
• People who donate above a set percentage to charity; this is mostly done to get a tax benefit, so further study is required if they are not hiding something.