What is the main purpose of gift taxes?

The main purpose of gift taxes is to tax money transfers during an individual's lifetime. Gift taxes are implemented to account for wealth that is transferred without adequate compensation, ensuring that individuals do not avoid estate taxes by giving away their assets before death. By taxing these transfers, the tax system aims to prevent loopholes that could allow for the circumvention of tax liabilities. The tax is based on the value of the gifts given and applies to individuals who exceed a certain threshold of gifting within a year.

This mechanism serves to maintain fairness in the tax system and ensure that wealth is equitably distributed in terms of tax responsibilities among individuals. It also plays a role in public finance by providing revenue that can be used for societal needs. The other options do not adequately reflect the purpose of gift taxes, as they pertain to other types of taxation or regulations not related to the direct transfer of wealth between individuals during their lifetime.