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Tax Efficiency

Definition

A financial process is said to be tax efficient if it is taxed at a lower rate than an alternative financial process that achieves the same end.

What is 'Tax Efficiency'

Tax efficiency is an attempt to minimize tax liability when given many different financial decisions. There are a variety of ways to obtain tax efficiency, including selecting tax efficient vehicles such as many exchange traded funds (ETFs) and municipal bonds, locating assets in the accounts such as Traditional or Roth IRAs and offsetting taxable capital gains with capital losses.

Explaining 'Tax Efficiency'

Choosing the best tax-efficient investment can be a daunting task for those with little knowledge of the different types of products available. The best decision may be to contact a financial professional to determine if there is a way for you to make your investments more tax efficient.


Further Reading


State Ownership, Preferential Tax, and Corporate Tax Burdens [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ200910010.htm'>PDF]
… 2, XIAO Jia-yuan (School of Public Finance and Taxation,Zhongnan University of Economics and Law,Wuhan,Hubei 430073,China);On Tax Efficiency Theory:Development … China; 2. Department of Economics, Henan University of Finance and Economics, Zhengzhou 450002 …

Tax efficiency in selected Indian statesTax efficiency in selected Indian states
link.springer.com [PDF]
… 2, XIAO Jia-yuan (School of Public Finance and Taxation,Zhongnan University of Economics and Law,Wuhan,Hubei 430073,China);On Tax Efficiency Theory:Development … China; 2. Department of Economics, Henan University of Finance and Economics, Zhengzhou 450002 …

The collection efficiency of the Value Added Tax: Theory and international evidenceThe collection efficiency of the Value Added Tax: Theory and international evidence
www.tandfonline.com [PDF]
… 2, XIAO Jia-yuan (School of Public Finance and Taxation,Zhongnan University of Economics and Law,Wuhan,Hubei 430073,China);On Tax Efficiency Theory:Development … China; 2. Department of Economics, Henan University of Finance and Economics, Zhengzhou 450002 …

TAX EFFICIENCY AND QUALITY/QUANTITY TRADE‐OFFS IN DEFENSE PROCUREMENTTAX EFFICIENCY AND QUALITY/QUANTITY TRADE‐OFFS IN DEFENSE PROCUREMENT
www.tandfonline.com [PDF]
… 2, XIAO Jia-yuan (School of Public Finance and Taxation,Zhongnan University of Economics and Law,Wuhan,Hubei 430073,China);On Tax Efficiency Theory:Development … China; 2. Department of Economics, Henan University of Finance and Economics, Zhengzhou 450002 …

Do active fund managers care about capital gains tax efficiency?Do active fund managers care about capital gains tax efficiency?
www.sciencedirect.com [PDF]
… 2, XIAO Jia-yuan (School of Public Finance and Taxation,Zhongnan University of Economics and Law,Wuhan,Hubei 430073,China);On Tax Efficiency Theory:Development … China; 2. Department of Economics, Henan University of Finance and Economics, Zhengzhou 450002 …

Size does matter: technical and scale efficiency in Indian state tax jurisdictionsSize does matter: technical and scale efficiency in Indian state tax jurisdictions
onlinelibrary.wiley.com [PDF]
… 2, XIAO Jia-yuan (School of Public Finance and Taxation,Zhongnan University of Economics and Law,Wuhan,Hubei 430073,China);On Tax Efficiency Theory:Development … China; 2. Department of Economics, Henan University of Finance and Economics, Zhengzhou 450002 …

Neutrality and efficiency of petroleum revenue tax: A theoretical assessmentNeutrality and efficiency of petroleum revenue tax: A theoretical assessment
academic.oup.com [PDF]
… 2, XIAO Jia-yuan (School of Public Finance and Taxation,Zhongnan University of Economics and Law,Wuhan,Hubei 430073,China);On Tax Efficiency Theory:Development … China; 2. Department of Economics, Henan University of Finance and Economics, Zhengzhou 450002 …



Q&A About Tax Efficiency


What would be taxed at a rate of 3?

Property-type income.

What is tax efficiency?

Tax efficiency is an attempt to minimize tax liability when given many different financial decisions.

What types of vehicles can be used for obtaining tax efficient investments?

Exchange traded funds (ETFs) and municipal bonds can be used for obtaining more efficient investments.

Who should determine if there is a way for you to make your investment more efficient?

A financial professional should determine if there is a way for you to make your investment more efficient.

What would be taxed at a flat rate of 1?

Earned income from work.

Where can you locate assets in order to make your investments more efficient?

You can locate assets in the accounts such as Traditional or Roth IRAs and offsetting taxable capital gains with capital losses.

What is the plan called?

The Efficient Taxation of Income Plan.

When was the plan first discussed before Congress?

The plan has been discussed before Congress but no bill has been introduced yet.

Are there a variety of ways to obtain tax efficiency?

Yes, there are a variety of ways to obtain tax efficiency.

Who created the plan?

Dale Jorgenson, Samuel W. Morris University Professor at Harvard University and Kun-Young Yun, Professor of Economics at Yonsei University in Korea.