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Tax Shield

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Tax Shield
The reduction in income taxes that result from taking an allowable Deduction from taxable income.
    
A reduction in taxable income for an individual or Corporation achieved through claiming allowable deductions such as mortgage Interest, medical expenses, charitable donations, Amortization and Depreciation. These deductions reduce taxpayers' taxable income for a given year or defer income taxes into Future years.
    
Tax shields differ from country to country, and their benefits Will depend on the taxpayer's overall Tax rate and Cash flows for the given Tax year.
    
For example, because Interest on Debt is a Tax-deductible Expense, taking on Debt can act as a Tax shield. Tax-efficient investing strategies are a cornerstone of investing for High-net-worth individuals and corporations, whose annual Tax bills can be very High.  The ability to use a home mortgage as a Tax shield is a major benefit for many middle-class people whose home is a major component of their Net worth.
Posted by  Privatebanking.com
 
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