The fiscal regime of the patrimony

Regarding the taxation of wealth and / or income obtained by individuals, the social option in
tax matters has outlined over time two alternatives: the use of real taxes or personal taxes.
In the case of real taxes, their settlement takes into account only the nature and size of the taxable
matter assessed on the basis of criteria external to it, without the tax burden being differentiated in
relation to the personal situation of the taxpayer.
Over time, many types of real taxes have been used:
- the land tax, placed on the main form of wealth in feudalism and even at the beginning of
capitalism. When determining its size, a series of criteria for evaluating the taxable matter were
used, such as: the surface of the lands and their quality, the number of animals kept or of the
agricultural equipment, the size of the lease or the price of the land, etc;
- building tax, characterized by the use of such taxation criteria; the number of rooms and their
destination, the usable area, the external appearance of the building, the size of the rent, etc .;
- the tax on commercial, industrial and liberal professions, which knew in particular the forms of
patent or license (including in Romania) and taking into account a number of aspects related to:
the size of the capital, the volume of business, the revenues expected to be achieved by exercising
a certain profession, etc.
- the tax on movable capital established on the amount of interest or other income of a financial
nature paid or collected.
As the real taxes proved to be unfair, becoming often regressive, we proceeded to differentiate
the tax burdens according to the contributory capacity of each payer, using personal taxes.
They have known several variants over time:
- the “capitation” type tax, which has now disappeared, having as its essential feature the fact that
it was established on the person himself, who was substituted for the taxable matter, reaching the
situation in which the subject and object of taxation coincided;
-modern personal income or wealth taxes, for which the tax burden is established on wealth and
not on the individual, taking into account the personal situation of each taxpayer (marital status,
children, health status, etc.).
Thus, currently personal taxes can be divided into two broad categories: wealth taxes and
income taxes, respectively.
Wealth taxation

These taxes are related to the exercise of the property right of the persons over some movable
and immovable goods.
Depending on their object we can distinguish the following categories:
a) actual taxes on wealth which may in turn be:
- taxes on the wealth incurred from the income produced by the respective wealth
- taxes on the substance of the wealth, which are borne from it and lead to its diminution
Within this first group of wealth taxes, the most common are those imposed on some form of
real estate, such as taxes on land and / or buildings. The tax base is represented by the acquisition,
replacement or the value declared by the owner, and the rates are generally reduced, so that the tax
can be borne from the income brought by the fortune. In Romania, at present they are collected by
the local budgets, which have autonomy regarding the annual establishment of the tax amount,
differentiated according to the location of the property and the category of its use.
In some countries there is also a so-called wealth tax, which is a capital tax borne by the income
from its use. It can be established on the entire immovable and movable property of a person,
natural or legal. Although the object of this tax should be represented by all the assets that can be
valued, as a rule only the agricultural and forestry patrimony, as well as the real estate or movable
goods used for carrying out an activity are required.
The establishment of a global wealth tax, in addition to the global income tax, would allow the
establishment of fiscal equity and the personalization of taxes. This is because this tax would
mainly affect the elderly (over 60 years old) who have left working life and who have an
established patrimony. In this way, there would be a balancing of the fiscal pressure borne by the
different generations, because the global income tax mainly affects the active persons, who are in
the phase of establishing a patrimony.
b) Taxes on the circulation of wealth
This second group has as object the transfer of the property right over some goods from one
person to another either free of charge through inheritance or donations, or for a fee following a
deed of sale and purchase.
In the case of inheritance tax, its object is the property acquired by inheritance from a deceased
person. It is applied to the entire estate, regardless of how it is divided between the heirs, or
separately on the part of the property that belongs to each.
Taxable matter is relieved in advance of debts and burdens. In many countries, the share of the
surviving spouse or first-degree descendants, the amounts of life insurance taken out by the
deceased, property left for charity, funeral expenses is not required. The calculation of the tax is
made on the basis of progressive quotas whose level is differentiated vertically in relation to the
size of the inheritance and horizontally in relation to the degree of kinship of the beneficiaries.
Although the rates can be very high, reaching up to 80% in the case of large successions, the tax
has a low tax return, due to the usual evasion of the taxation of movable capital or the valuation of
real estate.
Inheritance tax is a controversial one, with arguments for and against it. Thus, his followers
appreciate that his existence is necessary for reasons of social equity. This is because the institution
of succession annuls the equal opportunities of the people, the beneficiaries of some inheritances
increasing their wealth without any effort or personal merit.
Also, if the inheritance left by someone is large, it means that the deceased was not properly
taxed during his life or evaded taxes. Thus, inheritance tax would appear as a complementary tool
for controlling and correcting income and wealth taxes paid during life. The arguments against this
tax are based in particular on the fact that its existence discourages saving and incites waste.
In order to prevent the evasion of the inheritance tax through donation deeds during the life, the
donation tax was instituted. They are borne by the recipient of the donation and are calculated in
progressive quotas that differ according to the size of the donation, the degree of kinship, the time
and motive of the donation (between the living and in view of death). Usually, small donations,
those for charity or for public utility actions, etc. are exempt.
The advantage presented by the donations is that the succession can be organized immediately,
paying the taxes at the current (not future) value of the patrimony. The reverse is represented by
the fact that although the trim is reduced, the tax is paid in advance, which can have financial
implications on the patrimony (of its size).
Payment of rights and expenses by donors is not considered an additional donation (not
charged). On the other hand, in the case of inheritances, the expenses with the succession are not
deductible from the taxable estate.
There are also differences between inheritance and donation tax rates. For example, in the UK
large estates are taxed at 40%, while in the case of donations it is 20%.
In order to avoid the effects of excessive taxation of the free transfer of wealth, those who own
a patrimony can prepare for its transmission by purchasing a series of tax-free products (example:
forests, government securities, life insurance). They can also resort to the solution of civil or family
societies that allow the avoidance of indivisibility and facilitate the transmission of patrimony.
Inheritance and donation taxes apply, as I mentioned, to the free movement of property. If the
transfer is made for consideration, through the sale - purchase of real estate or movable property,
the wealth tax takes the form of stamp or registration fees. They are collected in cash or by applying
tax stamps, are mandatory, non-refundable and give the tax authorities the right to prosecute and
enforce in case of non-payment.
c) Taxes on wealth increase
Their object is the increase in value that certain goods have registered in a certain period of time.
 Such a tax is the one on the surplus of real estate value, calculated on the difference between
the sale price and the purchase price of a real estate. Its size increases all the more as the time
elapsed from the purchase of the good to its resale is shorter. It is usually paid for by land or
building speculators.
An exceptional tax of this type is the one applied on the assets of the so-called "war-enriched"
by a series of European states such as France or England after the two world conflagrations.
A suggestion that we would make to the authorities in the field would be the introduction for a
limited period of time of a similar tax in today's Romania, which could be called "tax on
transitional enrichment" or "cardboard billionaires".

Income taxes

Usually, both the citizens of the respective state and the foreign ones are subject to the payment
of the tax, insofar as they obtain income in the respective country, when determining the size of
the tax, a series of social factors can be taken into account (marital status, number of persons in
maintenance, age) or not.
Tax practice has established two different systems for taxing personal income: separate taxation
and global taxation.
The first variant presupposes the existence of several distinct taxes, each aiming at the incomes
obtained from a certain source.
Separate taxation thus presents the advantage of differentiated treatment of income in relation
to their origin: wage labor, liberal professions, placements, activities based on small initiative, etc.
Separate taxation also has the advantage for those who generate income from several sources,
that the effect of progressive taxation, inherent in the case of cumulation of all income, is avoided.
The second solution is the global taxation of all incomes made by an individual, regardless of
their source. In this case, the income is cumulated, being subject to a single tax. It is practiced in
most developed countries, having the disadvantage that it does not take into account the nature of
income, all their owners are subject to the same tax treatment.
Taxation is practiced with proportional or progressive rates. Sometimes proportional taxation
can be carried out in the first stage, followed by the application of progressive quotas. These are
differentiated into tranches, with levels differing from country to country. Thus, in Germany the
quotas vary between 22 and 56%, in France between 0 and 60%, in Great Britain between 25 and
44%, in Italy between 10 and 72%, while in Romania they fall between 18 and 40%. .
The advantages of the global tax consist in the fact that it is applied on the entire taxable matter,
allowing on the other hand the personalization of the fiscal burden and the use of progressivity.
 Opponents of this type of tax claim that its practice incites fraud, with a tendency on the part of
taxpayers not to declare part of their income. It is also considered to discourage overwork, outside
the main workplace, being an obstacle to saving because it mainly affects high incomes or those
of the middle class, social categories that have the most active saving behavior.