“All that money I worked hard to grow with investments, is it really going to be cut down even more by taxes?!”
If you’re an investor feeling that anxiety, unfortunately, I don’t have good news. The government is actually considering taxing your investment profits with social security contributions! If this happens, what kind of impact will it have on our wealth building? And what can we do about it?
Let’s break down this issue in an easy-to-understand way with these three key points.
1. What’s “Triple Taxation”? Your Investment Profits Might Shrink Significantly!
Currently, after our salaries are hit with taxes (income tax, resident tax) and social security contributions, any profits we make from investing what’s left over are further taxed with approximately 20% “financial income tax.” This already feels like “double taxation,” but the government is now considering adding social security contributions on top of these investment profits!
If an additional 15% in social security contributions were imposed, the total taxes and contributions could amount to a whopping 35%! More than a third of the investment profits you worked hard to earn could disappear due to taxes and social security. This is truly a “triple taxation” scenario, and it would be a huge burden for investors, wouldn’t it?
2. Why Is This Happening Now? The “Youth vs. Elderly” Dynamic
“Why are they targeting investors so specifically?” You might be wondering. This situation is actually related to government policies that favor the elderly.
The government is considering a new tax-exempt investment program called “Platinum NISA” for seniors aged 65 and over. While this aims to support the elderly in their retirement, it also seems like they’re trying to extract more taxes and contributions from active generations who are making investment profits.
Why are seniors favored? Because voter turnout among the elderly is extremely high. Politicians tend to propose policies that benefit seniors to secure more votes. On the other hand, voter turnout among younger generations is low, which often means their voices are not heard in policy-making.
3. What Can We Do? Gain Knowledge and Take Action!
If we just sit by and do nothing in this situation, our assets will continue to dwindle. So, what can we do?
- Get interested in politics: Our lives are shaped by politics. It’s important to be more aware of who decides the taxes deducted from our salaries.
- Study economics: By gaining knowledge in economics and investing, you can avoid unfair losses.
- Start investing early: Especially now, with potential changes to the tax system, it’s crucial to start investing immediately, even with small amounts, by utilizing tax-exempt programs like NISA. The earlier you start investing, the more your money can grow through the power of compounding. Just delaying by one year can significantly impact your future assets.
- Go vote: If voter turnout among younger generations increases, politicians won’t be able to ignore their opinions. Voting is the most powerful tool we have to change policies.
In Summary
This issue is not someone else’s problem. To protect our future wealth, it’s absolutely essential that we understand the current situation and take action.
I hope this information helps you in your wealth building journey.
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