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dinesh
03-17-2004, 11:20 AM
Progressive Taxation - A tax system in which the rate of tax is higher on larger amounts of money

Many countries use this system these days. But is this right? Should the people who earn more be penalised for their success. With a universal tax rate, people who earn more will pay more anyway. But is getting to pay them even more de-motivates top earners, people who top of their field in every field?

Or is taxation a means for redistribution, and nothing else? Should the rich take care of all the poor (and sometimes the lazy, who are not prepared to do any work, and live off benefits)?

Your views please?

anainar
03-17-2004, 01:02 PM
Dinesh,

You have started a very interesting debate. I dont know how many of Geethamites would participate in this though.

I presume you are talking about personal Income tax. Taxation has been looked upon as a cash cow by all governments, whether capitalistic or socialistic. They are the same when it comes to leeching on individuals.

My verdict is no, it not good.

Progressive rate is more an idea of socialisitic philosophy but neverthless embraced by even capitalisitic country like the US where the tax base is much wider. If the tax base is small like India ( less than 3 million tax payers in a population of 1 billion ), the govt has to rake in as much as possible. And so they say "More you make, more you pay". If they distribute the tax burden to a wider tax base this may not be necessary. This might look theoritically right, but even a country like US that has the widest tax base, still uses progressive taxation. That puzzles me with this theory. So, govts are alike. They will find a way to suck from every individual.

I used to work in India, and there had been instances where a slight addition of Re.4000 in annual income made me pay more than Re. 9000 in taxes, as I jumped a bracket that took away a lot of things. That is when I felt the pinch of this progressive taxation. Such things should not happen.

More to add based on what others got to say.

Cheers

Bluelotus
03-17-2004, 05:18 PM
Well guess which scrouncher voted yes :Ksp:
Serioulsy though, Progressive taxation should work in theory and imporve the lot of the less fortunate. (I don't think it has succeeded yet, but then again I may be wrong)
It's abt giving back to the society which supported ur success. It's abt contributing towards imrpoving the country for future generations.
The fortunate or higher income tax payers, all have improved thier lives due to contributions from society ...so in theory there seems to be nothing wrong from that same society expecting something back from its sucessful children is there?
Doctors, lawyers, academics are all trained at the expense of the state so what is wrong in the govt expecting a larger contribution from these ppl than from the lower income tax payers who didn't benefit the same way as the previously mentioned group.
No Man is an island...(thinki t was bon jovi who said tht can't remember) even the entrepreneurs benefited from society...they too should make a greater contribution than the less fortunate. This taxation method thus should gurrantee that they do theoretically.

But I guess it isn't the very rich or the very poor who r the true victims of progressive taxation...but the middle class...middle earners who get caught in the tax-bracket-trap.

As a very occasional tax payer (read here hmmm not at all...cos so far got it all back) and student I suppose I can afford to still believe in progressive socialism......the story may take quite a sharp turn when I get my first real pay slip though.

I still believe that it is a wonderful idea just not sure whether it should be applied to real life......bit like communism really

gokulan42
03-17-2004, 05:34 PM
My vote is no too. It should not be. This is one among the fruits from democracy that is vote bank politics...

However, rich should morally try to help the poor. But, that should not be mandatory by tax...

Bluelotus
03-17-2004, 05:38 PM
I am so lost...what do u mean tax shouldn't be mandatory?...then how would a govt function with no tax money? how would it pay teachers and nurses, army and navy?

I though this was abt making the more fortunate pay a higher percentage like 40% and the less fortunate pay a lower ercentage like 15% ......or wotever the correct figure is supposed to be?

anainar
03-17-2004, 05:58 PM
Lotus,

No one says "No Tax". Actually there is one country with zero income tax.( Switzerland, I suppose ). There are taxes in everything. You buy a clothe, there is a sales tax, excise tax, import duty, octroi.- It will be funny to note that the money raised through income tax of individuals is less than 15% of the revenue of India. Rest comes through indirect taxation like the ones I mentioned. Even if we abolish personal income tax completely, we will still be able to run the governent and navy/airforce etc.

I am not saying abolish taxes completely. That can be evenly distributed to more people. True, some people make more money, but they also slog their balls out to make more money. Why should they be taxed more just because they are hardworkers?

It is a delicate balance that any fiscal policy planner has to maintain. I strongly believe uniform tax rate. If a guy making 50000$ pays 10% of his salary, so should the one making 100000$. the absolute amount does go up from 5000$ to 10000$. That is reason enough. But asking the second guy to part with $15000 just because he made 50000$ more is absurd.

Cheers

vasan
03-17-2004, 06:12 PM
I voted yes also. Will explain my raison-detre soon.. :) gotta finish some stuff.. :(

Bluelotus
03-17-2004, 06:21 PM
yup gottcha Anainar anna....was actually addressing Gokulan who said:


should not be mandatory by tax...

got bit confused by above statement.

I still think that progressive taxation is a very good (theoretical) policy.
I don't know how to make sense of it all...but here goes my view
the one earning the higher income...has obviously benefited from society quite a bit....so its just asking for retribution to help the lesser fortunates
u can't expect the same tax percentage for lower and higher income earners...............if lower income earners had to pay the same as the higher income earners then they would be on the "bread line" or at the soup kitchen
It's also abt breaking down the rich v poor barrier which every increases year after year.
Potentially the higher income earner can afford to part with tht much money cos he would still have enough left to lead a comfortable existence...

again it's neither of those groups who will feel the pinch but the middle income earner.

reks
03-17-2004, 06:28 PM
progressive taxation - the concept itself is not bad, i think...

it expects wealthy people to contribute more to the society than from the not so fortunate people... unlike communism, i dont think lazy ppl will be greatly benifited because of this..

but the difference in tax rates should definetly be reduced... like anai says, a slight increment in ur salary shdnt create a enormous diff in the tax u pay... its ultimately the middle class who suffer

anainar
03-17-2004, 07:23 PM
Bluelotus,

There is a bareminimum required for some one to make a living. Almost every govt gives tax break on that. In India I think it is 40000 Re and in the US 13,500$. Any one making less than that does not have to pay tax. And they do take care inflation and other stuff by standard deduction. So, uniform taxation does not mean lower income group paying more tax.

Progressive taxation does affect middle class too. The percentage jumps from 15% to 30% within a span of 3-4 years or career progression for a professional.

If I look back at what I have paid to Govt( which ever country I lived in ), it runs to astronomical amount, in many many multiples of what I recieved from Govt.

This philosophy of rich should share with poor is all fine. But it should not be taken for granted and made mandatory.

Cheers

dinesh
03-17-2004, 08:07 PM
The fortunate or higher income tax payers, all have improved thier lives due to contributions from society ...so in theory there seems to be nothing wrong from that same society expecting something back from its sucessful children is there?
Doctors, lawyers, academics are all trained at the expense of the state so what is wrong in the govt expecting a larger contribution from these ppl than from the lower income tax payers who didn't benefit the same way as the previously mentioned group.

Yes, people who earn more should contribute more, but with a universal rate aren't they paying more already? Whats the justification in asking them to pay even more.



That can be evenly distributed to more people. True, some people make more money, but they also slog their balls out to make more money. Why should they be taxed more just because they are hardworkers?

I don't think you can connect more success and more money to hardwork. There are loads of fatcats around who don't do a fraction of work a miner would do.



Progressive taxation does affect middle class too. The percentage jumps from 15% to 30% within a span of 3-4 years or career progression for a professional.

Yes, this is the most important point. The line which differentiate the "rich" for the higher tax rate, takes the middle class to be rich also, which is wrong. For example, here in the UK the rate where the higher rate becomes applicable is £35,000. In London the average graduate would earn that money within two years of starting his/her first job. The person wouldn't even finished paying the student debts yet, still the goverment considers them to be rich.

Bluelotus
03-17-2004, 08:14 PM
yes I do in fact agree that the most affected group is the middle income earners....that I have mentioned in each post so far.....
the rest, well gotta think a bit more abt it ...then shall reply :think: :cool:

san2003
03-18-2004, 12:40 AM
I am not saying abolish taxes completely. That can be evenly distributed to more people. True, some people make more money, but they also slog their balls out to make more money. Why should they be taxed more just because they are hardworkers?

It is a delicate balance that any fiscal policy planner has to maintain. I strongly believe uniform tax rate. If a guy making 50000$ pays 10% of his salary, so should the one making 100000$. the absolute amount does go up from 5000$ to 10000$. That is reason enough. But asking the second guy to part with $15000 just because he made 50000$ more is absurd.

Cheers

since when the $50,000 guy pay $15,000.... there r so many procedures on how one is taxed.. i'm sure u guys know how u r taxed in ur countries... i dun know coz i'm not working yet.. but i have studied accountancy and i know the procedures of it and the inside story of taxation.
it is also not fair to have a flat rate of 10% to any income earners as some may have been from hardship as u said and some from fraud and so on... but effective and progressive taxation offices do detect them.. which is by tax consultants and so on (which is my dream to be... so tax vendum'pa.... ennodu dream'pa... need to work ;) hehehe)
i'm not sure how tax rules work in other countries... but i know its different... so.. r u all here talking about US only or INDIA only?

dinesh
03-18-2004, 12:49 AM
which is my dream to be... so tax vendum'pa.... ennodu dream'pa... need to work hehehe

yeah right doll.....we have to pay tax in order to get you a job..... :sm12:



i'm not sure how tax rules work in other countries... but i know its different... so.. r u all here talking about US only or INDIA only?

everywhere where is progressive taxation.

anainar
03-18-2004, 01:04 AM
San,

I think govt all over are alike when it comes to taxes. I dont think any govt differentiates income from hardship or fraud. Fraud is an offence. They all have same rules. Except lottery wins or gifts where they take a fixed percentage.

But they provide us some leeway to avoid some tax like Mortgage interest payment, child tax credit, standard deduction etc. But evntually they take a good percentage of money.

I dont think you can make money by catering to individual taxation, unless you have high networth clients. I do all my taxes myself. It is fairly simple, my company gives me a form with what they paid me and how much tax they have witheld, I do some arithmatic, fill up a form and send it to IRs. You are better off looking at practicing professionals or companies, rather than salaried employees. :D :D

Cheers

san2003
03-18-2004, 01:20 AM
employees of taxation offices r not accounting graduates as i am.... they do not need any qualifications (just for imformation) .... yes .. nowadays everyone does their own taxes coz its made easy ... tax consultants r for big firms.. or individuals that own businesses and we r representatives in any cases concerning tax :) (jus for info as well ;) hehehhee)
by the way... gifts and lottery r tax free under certain circumstances.... (jus for info again :) hehehehehe.... as i said i did study tax and i might work in that field ;) hehe)

as u said fraud is an offence... but tell me how many percent of ppl do not do fraudness?.... very little... :) by the way... r u all talking about personal income tax or tax in general... coz its different in every aspect.. the rates, the rules, the procedures and everything :)
about tax in different countries..i think its different.. as far as i know... tax in australia(where i am now) is different to tax in malaysia(where i'm from)... minor difference but there is difference :)

dinesh,
doesn't mean u pay tax only i get job.... but taxation rules shud be there so that i can get job.. ;) hehehehe

anainar
03-18-2004, 01:39 AM
San doll,

I am knowledgable( or ignorant ) only in personal income tax as that is what I have been doing so far, in India or US. They all have some basic standard deduction, and then progressive rates. In the US they have a table, I look at the table and it tells me the tax directly. But since I dont have many deductions it is easy. But for people who have many tax breaks, the consultants help them a lot.

So, you do have a job doll. :lol: :lol: ....

Cheers

vasan
03-18-2004, 02:59 AM
I voted for yes. There are two reasons - and philanthropy is not one of them.

1) Flat tax rate for each individual is a bad idea. Why? Simple.. the resources available is not equal - nor is the government spending money equally on all people. A billionaire using resources in LA is not exactly in the same proportion as the guy working in McDonalds. I am talking about proportions here. Sure the billionaire pays a lot of money as tax (say 5 %) and the mcD guy pays little (5 %) also. But if you look at the things goverment has to spend money on, most amount is spend on sustaining the life style of the rich - roads, health, infrastructure, air travel... I am saying the government is not spending reasonable amount of money on resources required by poor people but a disproportaionate money is spend on comforts for the rich. And I think there is an imbalance here if the money is taxed at a flat rate.

2) The second point is to do with number of people. Say in CA the average per person income is 1000 bucks a month (flat average, total earnings of all the people divided by number of people). Number of people living at 1000 bucks are far too many compared to people earning say 5000 +. And the if the rates are the same, the math works out to be about the same tax is paid by all the poor people as the rich people. Where as the money spend on meeting basic needs of all the people is much less compared to money spend on things only the rich could afford and use. Its a flat out fact that public transport like buses are less funded than maintaining airports. So indeed the govt is spending more money on rich people and its only reasonable that they pay more. Roads are common and lot of money is spend - but if you look at the poor sections of the city, the roads suck, but in Beverly hills things are kept so well.. I think the disparity is unreasonable. And any formula that is used for taxation should also take into account what percentage the govt is spending on what causes.

I think progressive taxation, used intelligently, should be the key to proper resource generation and distribution. Ofcourse mindless taxing of any one - be it rich or poor is pathetic.. Tax collection is only to have a proper functioning goverment - not to lend a hand to the foolish politicians.. (We should recall those idiots who squander money !!)

Vasan

anainar
03-18-2004, 03:50 AM
Vasan,

I explained already, there is no tax for people drawing less than 13000$. Only for salary beyond that there are tax brackets. So, that rules out the first case of people making less than 1000$.

Coming to the point of imbalance in distribution of wealth, it is part of life. Some one who slogs his balls out to make more money should not be penalised by paying more tax. How is that rational? This does not mean any disrespect to any job. But every job has its own potential. Some one who knows what he wants and hit bullseye, should not be made to pay more tax, just because he is successful. He will pay more tax obivously but not at a different rate.

Roads are maintained normally by states and the revenue comes from property tax and not the income tax we are talking about. Property taxes are decided based on the value of the property. A property in Beverly hills will obviously be 10 times expensive than a similar property in Iowa. So is the property tax and so the roads also suck big time in Iowa, but are like a layer of butter in Beverly hills.

The infrastructure used by people are almost the same whether they pay 10% or 33% tax. I dont think there is any differentiation. So, why should the rates alone be different?

Cheers

gokulan42
03-18-2004, 04:05 AM
I am so lost...what do u mean tax shouldn't be mandatory?...then how would a govt function with no tax money? how would it pay teachers and nurses, army and navy?

I though this was abt making the more fortunate pay a higher percentage like 40% and the less fortunate pay a lower ercentage like 15% ......or wotever the correct figure is supposed to be?

hey blues, dont read between the lines. I said 'However, rich should morally try to help the poor. But, that should not be mandatory by tax...' which means, tax is needed and nobody said the otherway.

However, by having a higher bracket for rich makes them contribute for the poor (it goes to politicians is altogether a different topic)...

If you insist a higher rate for rich, why not have this funda for sales tax ;)

Infact, it makes more sense as nobody can cheat with the income you know. The more you spend the more you pay the tax ;)

anainar
03-18-2004, 04:29 AM
Gokul,

Actually there is one country that practices expenditure tax rather than income tax. I dont recollect what is that country. I know for sure Switzerland does not have any personal income tax. They generate all their revenue through indirect tax.

I gave a number in the beginning. Personal income tax is just 15% of the government's revenue. Rest comes from indirect taxes and corporate taxes. Making that tax rate uniform is going to reduce the revenue by proababy 3-4 % only. If the governments can cut their expenses by downsizing that reduction will be met automatically, as the govt expense go down.

But neither the politicians nor the bureaucrats want that to happen. More the govt employees, more the bureaucrats and more the ministers. If that rot is stemmed, individual taxes can come down.

Cheers

Shy
03-18-2004, 04:48 AM
:evil: A Big No No.. will tell my points tomorrow :)

Shy

Bluelotus
03-18-2004, 04:54 AM
IT is a terrible misconception that the Lower income earners are not hadworkers.
Simply beacause they r blue collar workers and do a lot more physical work does not mean one can dissmiss them as lazy. They too contribute as much as they can.

Yes I do understand tht very low income earners get certain tax breaks.
What I was arguing abt is that if a person earns 12,000pounds (Oh bummer can't find the sterling sign!) and if he is taxed 40% that's a lot of money compared proportionally to 40% from the CEO of goodness-knows-what who earns like 400,000pounds a year.
Hence why progressive taxation is far the most fairer method then universal taxation.

As always with most policies the middles classes will bear the brunt of it all......but that simply cannot be helped....well perhaps it can but I have no idea how...perhpas if they made the earning margins higher?

Yes progressive taxation is a socialist policy and yes we r asking all ur rich ppl out there (including upper-middle income earners) to contribute proportionally more than the lower income earners. But as I tried to explain do they not have a responsibility towards the betterment of the society that supported them initially and provided them with traning and other means to make them such a resounding success?

It's simply giving back what u received
(yeah I know this would be very flwaed for those who didn't get much out of a country like workers of different Nationalities)

U cannot tax more on goodsas it would affect the lower income earners even more negatively
Do u mean like on luxury items like that diamond ring or the Faberge egg?


Frankly if the stupid govts of the so called developed world cut their expenses they will take it from health/education/national security (police)/foreign aid....as opposed to the army or the navy or weaponery, etc...
So I rather not they did that....education and health have suffered enough trhough mismanagement over the years ...look at the state of the NHS in England...or at the National health service of France which was so famed for being the best in the world....now they lie in near ruin and up to their ears in debt

err...San, ur like the first person who I know wants to work with Taxes...usually ppl come out in rashes at the mere mention of Tax or the Inland revenue services. :ee: way to go . hope u get the job u wnat.

anainar
03-18-2004, 01:33 PM
Hmmm! You guys seem to be looking at that taxation through the prism of Rich V Poor. I never said any job producing less revenues is bad or lazy or not hard. And all governments give tax breaks to people making a living with a certain amount of income. In India, if you income of the person is less than 1 lakh rupee, he does not have to pay tax. And what is the average income there? around Re. 21600. So five times is the fold for some one to start actually paying tax. Anyone doing hard labour will come in that bracket and wont have to pay any tax.

When you look at the taxation through the prism of Rich Vs Poor, Rich should share with poor, the perspective is lost. Personal income tax is a form of revenue for the govt. I gave a number initially published by IT Dept. Personal income tax forms only 15% of the total revenue of the govt. Rest comes from every other possile means. Redcing the percentage to 20% and making it applicable throughout will reduce the tax revenue by 5-6 % only, which is not that tough to manage. Govt expenditure if cut down can reduce budget deficit by a great amount.

Let me give you a brief set of numbers. A guy working in India making let us say Rs.10 lacs pannum will pay around 2.3 lacs as tax. Let us say he plans to buy a car with his savings. The car costs Re.7 lacs. Of that more than 48% goes to govt in the form of excise, customs, sales, registration etc. So, in a year he shells out more than 5.7 lacs to the govt in one form or the other. How is this justified in your scheme?

I am not saying keep the percentage at 40%. I am saying make it reasonable percentage and treat every one equal. As per constitution, ever one will be treated equally without bias or prejudice, but when it comes to taxation, we will treat you differently! How does this jell with the argument?

Cheers

Shy
03-18-2004, 04:15 PM
Whatever the type of taxation, the concept of it was the weathy pays more tax.But the question is hoe much more. In this Progressive taxation, rate increases as your earnings or spending increases. Nalla manasula they have this taxation to limit the income and wealth to a resonable amount'nu vachutaalum, since its a highly complex system, lots of loop holes in exemptions, deductions, credits etc... These loop holes are helping hands for the wealthy and others u want to pay less or no tax at any cost!!! Because of people like that.. just because he falls to the starting range in the bracket, many upgrowing people are hit hard !!! these peeple let me call them poorly rich people, had to pay a larger portion of their income needed just for bare necessities. Yes, that's true, because all of their income is needed for bare necessities. I think we should have something like fair level headed taxation, a system, where the more a person earns, the higher the percentage of wealth will be taxed.

Shy

katteri
03-18-2004, 04:42 PM
Progressive taxation is a must if not rich wud become more rich and poor will bcom still poorer...

Statistically 80% of wealth is held by 20% of the people.(thats Paretos law/diagram)

There are exemptions available in India ,i.e investment if form of NSC, certificates, lic etc...

Even in the ancient days Kings used to collect Tax progressively .. and that s been carried for years too..

No one can alter or Hinder one progress ..one is responsible for his own actions and results ..I cant understand how progressive taxation will demotivate people in the field....Do u think u can get demotivated by paying less salary / high tax.....

or motivated by paying high salary /less tax....

People s motivation is a multitude factor money cant be used as a motivation factor always.. it temporary....

Hear people got motivated by hearing speech, reading books, taking person as role model...havent heard people getting motivated by paying money...companies do this but if it has to happen.. the work that ur carrying out will be progressively increase...


Motivation by paying money is like ..
.
In tamil :

pathirrathil vullaaa kalagiya thaneer pol.... paanam kidiakira santhosathil thalumbhum....aaanal satru neram kazhi thu parthal....
neer thelinthu irukkum.......

anainar
03-18-2004, 05:25 PM
Guys,

I dont understand why taxation is looked through the rich and poor prism always. It should not be. No one denies the fact that percentage of income tax is less than 15% of govt's revenue. This after a progressive taxation from 0% to 31% ( in India ). I also mentioned anyone drawing less than 1 lac dont pay any tax in India( In the US I think it is $13500 ) which is anyway beyond the poor bracket. No one drawing 1 lac can be called poor, or can they? The point is it is a source of revenue for the government. How much is that? Is any one willing to look at it in that perspective?

Let me throw some light on Govt of India. The numers are accurate within a tolerance of 5%. The annual budget of India is around 4 lac crores. Personal income tax accounts for less than 30,000 Cr. Of the budgeted 4 lac crores 1.2 lac crores go towards planned expenditure. Remaining 2.8 lac crores go to non plan exexpenditure. Planned expenditure is for upliftment of the poor, infrastructure etc. The non plan expenditure is interest payment on loans, govt expenses, expenses on ministers and their jumborees, govt employee salary etc. Basically that is like running expenses for country. These are bare facts before us published by Govt.

Now all thos saying rich-poor theory, paretos chart, tell me where will you cut off? Will you try to cut your expenses or increase the revenue? If you want to cut expenses, the best option is to look at the most expensive item and see where can it be chopped off. Our non plan expenditure has been steadily growing in the past. No one talks about it.

If some one looks at taxation as a revenue stream, and not rich-poor prism will be able to understand the logic. Rich will be come richer. Yes, but poor will not become poorer. That is absurd. Asking people to pay a constant rate of tax is going to reduce the tax revenue by 4-5 % but if we can cut off the non plan expenditure by 10% we will still have more money for the poor.

Can anyone think logically without getting into this rich-poor Socialistic philosophies please?

Katteri, where is motivation coming in taxes? Why are those emotional things getting mixed up with taxation? Whether money motivates me or not is my problem and my decision. I dont want taxation policies to be decided on what motivates people. We are not talking philosophy, but hard facts of economy. It is decided on sound economics.

For claiming those exemptions you need to invest 70,000 Re. How can some one earning 2 lac be able to pull out 70k for investments? And what are the returns from those investments? I would always pay taxes rather than reduce tax by saving in those dud schemes. The only bright spot now is housing loan interest which is present in the US too.

Cheers

gokulan42
03-18-2004, 05:31 PM
Progressive taxation is a must if not rich wud become more rich and poor will bcom still poorer....
Noble thinking, huh....

I will take your own example (how convenient :ee:), how many real high class people pay tax. There are all kinds of black money in so many fields (cine, real estate,the whole retail industry and what not).... you can only laugh at how stupid it sounds. As Guru pointed out, expenditure tax alone (as income tax) *can never* solve this problem. I was only sarcastic when I said that :lol:

And more over, the concept is so comuunist. When you oppose to communist agenda that much in developed countries, why do you have to keep this. Any reasoning from the yeah vallahs ;)

anainar
03-18-2004, 05:39 PM
Gokul,

Looks like three big swords are in the No side( Shy, you and me ). I wonder why this topic has evoked such a lukeworm response while arranged marriage/love marriage evoked such a huge response. Does it mean Geethamites are emotional characters who think talking money is dirty?

Anyway all the Yeah sayers, answer to my queries on the earlier post please. I am not knowldgable in US budget or any other countries budgets and expenditures. If some one is, throw some light on the govt expenses and taxation. That will be an eye opener to all the Yes sayers.

SansDoll and Lotus, you guys are accountants.( or aspiring to be one some day ). Why dont you throw in some piece of information about Australia or where ever you live?

Cheers

katteri
03-18-2004, 06:05 PM
Gokul the topic is abt is progressive tax right r wrong not abt people cheating /dodging to pay tax....
we lll have a sep discussn....

katteri
03-18-2004, 06:07 PM
anainar read the post by shidenish .. he said people get s demotivated on paying high tax

Shy
03-18-2004, 06:11 PM
Gokul the topic is abt is progressive tax right r wrong not abt people cheating /dodging to pay tax....
we lll have a sep discussn....

No no katteri.. The taxation system can help people to cheat. Athaan gokul trying to convey I guess... Coz progressive Tax has lots of loop holes. Read my post .. :D

shy

katteri
03-18-2004, 06:45 PM
Do u think.. if there is no progressive taxation will there be no loop holes....

Every activity is based on the system that we have designed...Design the system which does nt pave way for loop holes.....

Cud all of u who oppose progressive tax cud recollect abt it ...b4 15 years... We had certain things which were considered luxury (say washing machine( of course its not under luxury tax) ) in development of technology & econmy they have bcom necessity....

If we havent used progressive taxation......People who earn more money will earn more...Anainar i too had the same problem.. when my salary was increased i have to more tax...

In UK they have a slab called minimum salary after that they charge 22% for the rest until 800£ per week and 40 %for the rest..
In india upto 75000 per annum there is no tax then the rate increase 10, 20 and maximu of 50 % is levied.

We r living in a society.. i ll come back with few more eg

anainar
03-18-2004, 07:20 PM
Katteri,

What is the connection of Washing machine/Luxury and Progressive Taxation? I dont understand why progressive taxation is always looked through this society/rich/poor, rich sharing wealth with poor etc???

I gave specific irrefutable numbers and none of the "Yes" sayer seem to come forward and see what it is all about. We living in society, govt, roles of govt are all agreed. We are not saying dont tax people. If some one is making more money, he will automatically pay more taxes. But why to increase rates only to him?

I have given the example of Switzerland. There is no personal income tax at all. How does that country manage its fiscals? Are they bankrupt? No, they make more money. Dont they have luxury?

Tax has to be looked upon as a source of revenue for the government. If the government is careful fiscally, they can manage with uniform rate and still provide enough for the poor in terms of upliftment and development schemes.

Cheers

gokulan42
03-19-2004, 02:28 AM
Gokul the topic is abt is progressive tax right r wrong not abt people cheating /dodging to pay tax....
we lll have a sep discussn....

No no katteri.. The taxation system can help people to cheat. Athaan gokul trying to convey I guess... Coz progressive Tax has lots of loop holes. Read my post .. :D

shy

Exactly, Shy. thank you :yes:

Katteri, nobody answered my question on communist funda. why :lol:

bitter pill, isn't it????

gokulan42
03-19-2004, 02:30 AM
Gokul,

Looks like three big swords are in the No side( Shy, you and me ). I wonder why this topic has evoked such a lukeworm response while arranged marriage/love marriage evoked such a huge response. Does it mean Geethamites are emotional characters who think talking money is dirty?

Guru, atleast you scared the yeah sayers to mum ;)

To be honest, it is understandable :) love and arranged is more 'domestic' than this ;)

RaasuKutty
03-19-2004, 06:29 AM
definite yes...

Anainar.. i dont agree with ur point that there are steep tax % differences... the structure is no tax or 10% tax or 20% or 30% on incremental incomes... Also ur point.. for 4000Rs extra, u paid 9000Rs tax.. This policy was affecting only one level and it has been stopped/modified... they removed that and they introduced the even method of taxation... also I like to point out that personal income tax doesnt include corporate taxes....so 85% of revenue comes from Indirect taxes is little misleading

What is being followed in India is not progressive taxaion but progressive "income" taxation... by this I mean.. ppl dont pay extra % income tax if they earn more.. tax is divided in a way that all are taxed on the same way... Till an income level(say X) no tax.. From level X to level Y tax is 10%, from level Y to Z it is 20% and above level Z it is 30%.... so what India follows is only progressive income taxation.... This definitvely puts more tax on higherr income groups...

consider a small example... 500 ppl with 60 ppl in lower class, 120 in lower middle, 120 in middle, 100 in upper middle and 60 upper class and 40 extremely rich class.. i can imagine this to be the typical income distribution in India.....

If equal tax% is maintained &
if higher % is maintained... the first 3 class of ppl will be buried and this kills the very purpose of collecting money in the form of taxed for upliftment of ppl...
if lower % is maintained... the amount that will be collected will be too low.. and I guess this is what Katteri was trying to tell with the famous 80-20 rule...

I wud answer a No if I just do a plain logical thinking... but given the purpose and if I am the govt in such a situation.. I wud pursue progressive income taxation....

Also.. I wudn't accept fraud as a reason on why this should not be followed.. In one day or the other.. fraud and cheating wud be stopped.. so b'coz of this we shouldn't stop progressive income taxation....

luv,
....RK

sagi
03-19-2004, 06:54 AM
fraud and cheating wud be stopped..

talk about reality Rk

vasan
03-19-2004, 06:57 AM
fraud and cheating wud be stopped..

talk about reality Rk

It is reality, Sagi. Just because people cheat we don't have to change what is important. People cheat about the existing income tax structure too. And yet we have them, don't we? So why not with progressive taxation also?

anainar
03-19-2004, 08:30 AM
Katteri,

My example was just to stress a point. What I dont understand is, it is assumed that it is ok to tax higher income people more. The motive is to tax higher income group without even thinking logically or seeing what suits the best. True, if progressive rates are not there, higher income people may pay less tax. So what? Why is it assumed that they have to pay more tax?

Of course a man making 10 lac will pay more tax with progressive taxation. The main question is the motive. The motive seems to be, get as much as possible, since he has 9 lac more than 80% of the people. Now, is that the only reason to tax them? My point is it should not be the basis for taxation. Taxation is not a mechanism to level or bridge rich-poor gap. It is a means of revenue for the govt and it should be looked that way.

And your numbers about distribution of taxpayers is wrong. For a country of 1 billion people, only 3 million pay taxes. Of that people with above 10 lacs taxable income is less than 1 lac. A major chunk comes in 10-20% bracket. So, the policy of progressive taxation does not generate a lot of extra revenue, except serving the ideological purpose of "Yeah, we tax the higher income people more". Nothing else. If you look at the numbers I gave earlier, you will clearly understand how objective I am in looking at this taxation policy as opposed to ideological moorings of Yes sayers.

Cheers

Bluelotus
03-19-2004, 08:56 AM
SHY:

I think we should have something like fair level headed taxation, a system, where the more a person earns, the higher the percentage of wealth will be taxed.


just a quick question ...isn't this the same as asking for progressive taxation? :?

Shy
03-24-2004, 06:06 PM
SHY:

I think we should have something like fair level headed taxation, a system, where the more a person earns, the higher the percentage of wealth will be taxed.


just a quick question ...isn't this the same as asking for progressive taxation? :?

Lotus....

As far I know.... A proportional tax is either flat income tax or flat consumption tax right??? A progressive tax is not just increase of tax with earnings/spending, but the tax rate it self is increased right???. So my point was, rendulaiyum loops irukkum.... by the progressive one...u fall into a bracket even if u are the least there.. athu mathiri ellama unga wealthku yaetha mathiri tax poodanumnu solraen !!!

Shy

anainar
03-24-2004, 06:22 PM
Hmm! I thought this topic died as Geethamites are busy drooling at Trisha and Maddy. Money talk does not seem to appeal at all.

Lotus, yes, what you are saying progressive taxation. The percentage of tax keeps going up as your income grows and jumps tax brackets.

All the yes sayers always look at tax as the mechanism to even out rich-poor divide which is not the way. Rich and poor division will go only by wealth building and not be masquandering wealth in the name of tax. So, the tax rates should be uniform whether I make 100000 Re or 1000000000 Re.

Cheers

Shy
03-24-2004, 06:40 PM
Chumma.. neengo angae irunthu eppo thaanae vantheenga ;)

Shy

anainar
03-24-2004, 07:22 PM
அது கரெக்ட் தான் ஷை. அங்கே போயி வோட் போடணுமே? இல்லாட்டி கள்ள வோட் போட்டுருவா ங்க இல்ல, அது தான். :lol:

But very few people responded to this post. That is why I said Moneytalk does not appeal to geethamites. Or may be it is full of Leftists who believe in the State owning even my underwear.

Cheers

Bluelotus
03-24-2004, 07:36 PM
may be it is full of Leftists who believe in the State owning even my underwear.

still working on the argument why the state should own them :evil:

on a serious note though....me not a leftist...if I was freakily voted for the wrong party last time :Ksp: ...just trying to make utopia win in this argument...even if in reality it kinda sucks....

anainar
03-24-2004, 08:04 PM
Lotus,

Keep working. Some day you might make it to the Politbureau of CPI(M) or CPI(L) and get a chance to sit and time pass with useless characters like Sitaram Yechuri or HarkishanSingh Surjeet.

I always wondered and asked people only to get a snarl back when ever I asked what is the diffence between the ideologies of Marx and Lenin.

Cheers

Bluelotus
03-24-2004, 08:19 PM
Lotus,

Keep working. Some day you might make it to the Politbureau of CPI(M) or CPI(L) and get a chance to sit and time pass with useless characters like Sitaram Yechuri or HarkishanSingh Surjeet.

I always wondered and asked people only to get a snarl back when ever I asked what is the diffence between the ideologies of Marx and Lenin.

Cheers

:think: dunno who they r...guess ur talking abt communist party in India...
well the thing tht I was taught was tht marxism should be applied to a country which has developed beyond feudalism...this wasn't the case in Imperialist Russia....(still think tht democracy is wasted on the Russian federation...but who cares abt it)
Haven't read either dudes manifesto :ee: way too lazy for tht..

(come on cheer up ...u know tht progressive taxation is a method which has yet to prove to the world tht it can achieve it's aims...but u must admit that it's a bloody good idea though on paper...just like marxism...probly gonna get blasted by any/potential communist, me :ahha: )

Still thinking ...gotta go do hwk first though.....so perhaps saturday