Explain Why $1 Today Is Not Equal to $1 in the Future

question 116

Essay

Explain why $1 today is not equal to $1 in the future. Why is understanding this concept particularly important for tax planning? What tax strategy exploits this concept?

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Definitions:

National Wealth

The total value of all economic assets owned by a country's residents, institutions, and government, minus foreign liabilities.

Richest Households

Familial units that possess a significantly high level of wealth compared to the broader population.

Wealth

The abundance of valuable resources or material possessions, or the control of such assets, which gives an individual or group economic power.

Income

The money received, usually on a regular basis, for work or through investments.