Rich people should pay taxes
This is a question that we actually discussed quite a few days back in an office party. When I said that the rich people should pay taxes, just the brute force / response of almost everybody forced me to shut my mouth. And if you add the fact that most of them are paying much more taxes than me (it also implies that they are earning much more but that can be discounted), it was better for me to shut up. I was planning to write this article since then but as always lethargy takes over. When Indian budget detailing the various tax exemptions was announced, I reminded myself of the fact that the article is due so decided to spend Saturday afternoon on it.
Most of the people who deride paying taxes of any kind stress basically on the following three reasons, they are the only ones paying it; all the money collected is going down the drain and in proportion to the amount they are paying taxes, they aren’t getting much in return
Argument that they are the only one paying it is true to a large extent especially in India. In India the word rich people has been replaced by salaried class: “salaried class pay taxes”. I agree with them and none of us feels great when you see people driving Mercs, BMWs are paying much less taxes than you. But still the argument is specious. Consider a corollary: many of us jump traffic signals and that’s true for most of us notwithstanding what we drive: scooters, bikes, cars etc even pedestrians. So is the solution removing all the traffic lights. I guess that we all will disagree: atleast the sensible ones I am quite sure. Because a city bereft of traffic lights will lead to a chaos that many of us can live without. Similarly just because some (a lot actually) people don’t pay taxes, solution is not to pay taxes but to improve compliance. And I will not delve into how to do that because apart from the tax department (knowingly) everybody knows it.
The second argument is all the money is going down the drain. Yes that’s another of the major problems. In a country where 30% of the people have no access to basic amenities most of the budgetary resources are spent on rest of the 70%: the rich farmers, corporate, middle class. The recent waive off for the farmer’s loan is the best example: my dear finance minister if u can go to ICICI / SBI and get a loan then you are not exactly poor. But that’s not the point of discussion here.
The argument looks very logical: why should I be paying taxes when all the money is going down the drain: but here’s the fallacy of the argument. Another corollary: your boss comes to your cabin and says “hey I have been following your expenditure for the whole month and I have noticed that you waste a lot of money on drinks / parties. Add to the fact that you are a bachelor, I am reducing your salary by half”. The reaction will be “what the f***”. Even thought you may not state in as many words. Thankfully I am currently neither in a developed world / Indian IT industry, so the probability of my boss saying that is negligible. But the argument is similar: a lot of wastage so reduce money. I have always been a strong believer in that sources of fund should have nothing to do with uses of funds. The governments’ mis-utilization of its funds (uses of funds) nowhere implies the solution to be no taxes (sources of funds). Indeed the country requirement of funds is much more than ever before.
The third and the final argument: proportion to the amount they are paying taxes, they aren’t getting much in return. Even though I didn’t agree with the same but wasn’t it meant to be: taxes were meant to be collected from those who can afford for those who can’t.
But life is funny. I have thought about these arguments so many times but every time my salary statement comes over and I see the amount the tax that I pay: my first reaction is what the hell Am I the only person responsible for paying all the taxes in the country….kash I start getting my salary in Cyprus / Mauritius.
~~~ As always I just hope I will become much more regular in writing… target: to write on atleast 2 topics each month….lets see
This is a question that we actually discussed quite a few days back in an office party. When I said that the rich people should pay taxes, just the brute force / response of almost everybody forced me to shut my mouth. And if you add the fact that most of them are paying much more taxes than me (it also implies that they are earning much more but that can be discounted), it was better for me to shut up. I was planning to write this article since then but as always lethargy takes over. When Indian budget detailing the various tax exemptions was announced, I reminded myself of the fact that the article is due so decided to spend Saturday afternoon on it.
Most of the people who deride paying taxes of any kind stress basically on the following three reasons, they are the only ones paying it; all the money collected is going down the drain and in proportion to the amount they are paying taxes, they aren’t getting much in return
Argument that they are the only one paying it is true to a large extent especially in India. In India the word rich people has been replaced by salaried class: “salaried class pay taxes”. I agree with them and none of us feels great when you see people driving Mercs, BMWs are paying much less taxes than you. But still the argument is specious. Consider a corollary: many of us jump traffic signals and that’s true for most of us notwithstanding what we drive: scooters, bikes, cars etc even pedestrians. So is the solution removing all the traffic lights. I guess that we all will disagree: atleast the sensible ones I am quite sure. Because a city bereft of traffic lights will lead to a chaos that many of us can live without. Similarly just because some (a lot actually) people don’t pay taxes, solution is not to pay taxes but to improve compliance. And I will not delve into how to do that because apart from the tax department (knowingly) everybody knows it.
The second argument is all the money is going down the drain. Yes that’s another of the major problems. In a country where 30% of the people have no access to basic amenities most of the budgetary resources are spent on rest of the 70%: the rich farmers, corporate, middle class. The recent waive off for the farmer’s loan is the best example: my dear finance minister if u can go to ICICI / SBI and get a loan then you are not exactly poor. But that’s not the point of discussion here.
The argument looks very logical: why should I be paying taxes when all the money is going down the drain: but here’s the fallacy of the argument. Another corollary: your boss comes to your cabin and says “hey I have been following your expenditure for the whole month and I have noticed that you waste a lot of money on drinks / parties. Add to the fact that you are a bachelor, I am reducing your salary by half”. The reaction will be “what the f***”. Even thought you may not state in as many words. Thankfully I am currently neither in a developed world / Indian IT industry, so the probability of my boss saying that is negligible. But the argument is similar: a lot of wastage so reduce money. I have always been a strong believer in that sources of fund should have nothing to do with uses of funds. The governments’ mis-utilization of its funds (uses of funds) nowhere implies the solution to be no taxes (sources of funds). Indeed the country requirement of funds is much more than ever before.
The third and the final argument: proportion to the amount they are paying taxes, they aren’t getting much in return. Even though I didn’t agree with the same but wasn’t it meant to be: taxes were meant to be collected from those who can afford for those who can’t.
But life is funny. I have thought about these arguments so many times but every time my salary statement comes over and I see the amount the tax that I pay: my first reaction is what the hell Am I the only person responsible for paying all the taxes in the country….kash I start getting my salary in Cyprus / Mauritius.
~~~ As always I just hope I will become much more regular in writing… target: to write on atleast 2 topics each month….lets see
