Rahul Mehta Gandhinagar LsCandidate

Regressive Tax-law-draft vs Flat Tax-law-draft vs Progressive Tax-law-draft
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How GST is regressive while WT = wealth tax is by and large a flat tax, and what damage regressive tax does on society?
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(aside : I support flat tax, and NOT progressive tax. All bikau economists, bikau political science professors and bikau journalists claim that they support progressive tax, while in reality they ALL support regressive taxes. SoMoKe too support regressive taxes even though they will always pretend and lie that they stand for interests of commons and poor. And all congress / rss / aap workers also support regressive taxes over flat taxes !! The bikau economists (and every economist is a bikau economist) have refused to add chapter or section in economics textbook to explain what is regressive / flat / progressive tax and have refused to compare types of taxes and cite which is less regressive or less flat or less pregressive)
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The tax-law-draft are regressive / flat / progressive wrt income and regressive / flat / progressoive wrt wealth. And also, a tax law clause can be progressive on bottom 99% of population range but regressive within top 1% !!
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Now I would give some examples :
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(1) Tax on tea (or tobacco or any sugar or pan gutaka or supari)
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Now consider tax of Re 1 per say 5 gram of tea. So a cup of tea with final cost of say Rs 10 will have tax component of Re 1 in it.
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So say someone who is earning Rs 100 per day. Say he drinking one cup of tea per day. So he pays Re 1 as tax. So 1% of his income as tax on tea.
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Say a person is earning Rs 200 per day. Say he is drinking 2 cups a day. So he will pay 1% of income as tax.
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Say a person is earning Rs 1000 per day. He cannot possibly drink 10 cups a day. Say he drinks say 5 cups a day. So tax he will pay will be Rs 5 which is 0.5% of his income.
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Say a person is earning Rs 1 lakh per day. Even if he drinks 10 cups of tea per day,tax will be Rs 10 per day, which is 0.001% of his income.
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So tax on tea is regressive wrt to income.
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Same way tea tax will be regressive wrt to wealth.
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A person owning hut worth Rs 10000 will drink say 1 cup of tea per day. So tea tax on him will be 0.01% of his wealth.
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And person having land and wealth of Rs 1 crore , even if he is drinking five cups of tea per day, the tax on him will be 0.000005% of wealth value. And for a person having plots of Rs 100 crores, even if he is driknking 10 cups of tea, the tax will be much lower.
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So tea tax is regressive wrt income as well as wealth.
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The solution I propose is - ZERO tax on tea, tobacco, sugar, pan gutaka , supari, alcohol etc, and replace that tax by wealth tax and streamlines income tax. The tax on tobacco should be ONLY to pay for the medicine / hospital subsidies and NOTHING else. The tax on alcohol I propose is 0%, and some tax only cover govt expenses that alcohol causes due to increase in accidents, crimes, diseases etc. The expenses of police, courts, military , maths / science / weapon-use / law education should be covered from income tax and wealth tax ONLY. Further, we need a refrendum on whether opium should be legalized. My vote will - YES - legalize opium. Opium costs less than Re 1 per day per addict !!! Yes, Re 1 of opium is more then sufficient for even hard core addict !! And once opium is legalized, consumption of alcohol and tabocco will fall.
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(2) Tax on movie tickets
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In 1990s, Gujarat and many states in India has quite funny tax structure over movie tickets. The tax on normal theatres was almost 120% of base price i.e. ticket of price Rs 25 will have tax of Rs 27 , totalling Rs 52 !! And multiplex which had base price of Rs 99 had tax of mere Re 1 !! And back then, Modiji was an apex leader in Gujarat, and had supported this tax structure !! And so did ALL RSS / Congress leaders. And AAP leaders were not kids back then. I dont know if they opposes this tax structure.
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Now consider a person earning Rs 5000 per month. He cant afford Rs 100 movie ticket. Say he sees two movies where base price is Rs 25 and tax Rs 25. Total movie tax he paid = Rs 50 which is 1% of his income. So movie tax is 1% of his income
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Now consider a person earning Rs 50000 per month. Say he sees 5 movis in multiplex. Then tax he paid = Rs 5, which is some 0.01% of his income, far far lower than 1%
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Now lets say multiplex and small threaters are taxed at same rate say 30%. Say price at small theatre is Rs 50 and so tax is Rs 15. Say price at multiplex is Rs 200 and tax is Rs 60.
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Say a person is earning Rs 1000 per month. Say he sees no movies. So movie tax on him is 0%
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Say a person is earning Rs 2000 per month. Say he sees 1 movie a month in small theatr. Tax on him is Rs 15 per month = 0.75% of his income
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Say a person is earning Rs 5000 per month. Say he sees 3 movie a month in small theatres. Tax on him is Rs 45 per month = 0.9% of his income
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Say a person is earning Rs 10000 per month. Say he sees 2 movie a month in multiplex. Tax on him is Rs 120 per month = 1.2% of his income
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Say a person is earning Rs 50000 per month. Say he sees 5 movie a month in multiplex. Tax on him is Rs 300 per month = 0.6% of his income
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Say a person is earning Rs 10,00,000 per month. Say he sees 10 movies a month in multiplex. Tax on him is Rs 600 per month = 0.006% of his income
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IOW, movie tax in a very small range of income from Rs 0 to Rs 20000 per month may look progressive i.e. it is higher % of income. But after a point, it falls as a % of income and will become regressive,
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No wonder why leaders like SoMoKe and congress / rss / aap workers all supported Re 1 tax on multiplexes !! And all bikau economists and bikau political science prodfessors also supported Re 1 tax on multiplex.
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Solution I propose is ZERO tax on movie tickets.
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(3) Tax of 30% on vehicles of price say Rs 500,000 to Rs 2 crore
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This tax , between the range of income Rs 0 per year to say Rs 5 crore per year will be relative flat, because persons with higher income or children of persons with higher incomes will buy more expensive cars than persons with lesser income would buy. And those who have higher incomes also buy more cars and also change cars more frequently.
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But after income of say Rs 10 crore per year, the tax starts becoming regressive.
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So for bottom say 99% population, the tax is flat. And then it becomes regressive.
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I have proposed tax on car, but all money to be used to pay expenses of foothpaths, roads and pay some of fixed costs of public transports such as bus stations. Because in absence of public transport, the journey by car will take longer time !! And all this will become mute point after self driver cars come.
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But beyond collecting expenses to serve cars, higher tax on cars only benefits top 0.01% population necause a higher tax on next 0.99% will reduce ability of this 0.99% to compete against 0.01% !!
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(4) Tax of say 50% on price of Petrol
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A person who whose income is low, will use less petrol than person whose income is high. And those earning much higher income will us emore petrol via cars, flights etc. And those with very high incomes also use private flights and helicopters. So to a considerable extent, tax on petrol is flat tax. But after income of say several lakhs per year, the tax will become regressive.
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The tax on petrol is linked to forex problem. A low tax on petrol will increase petrol usage and import. As of now, some 75% of crude oil and natural gas we use is imported. So a lower price will increase import, and forex drain and so rupee wrt dollar wuill fall, and so again, price of petrol will rise and price of dollar rises.
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So petrol tax in low income range is regressive , then becomes flat, and then again becomes regressive. So petrol tax just sufficient to cover roads is needed, but a petrol tax to pay for expenses of police, courts, military and education will reduce well being of lower class individuals.
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(5) Tax of 15% on cloths
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Consider persons with annual incomes of Rs 500000 , Rs 100k , Rs 200k , Rs 500k, Rs 10L, Rs 1 crore, Rs 10 crore, Rs 100 crore
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Their annual expense on cloths can be
Consider person earning Rs 50k per year. Say he spends Rs 2000 / yr. Then tax he pays = rs 300 = 0.6% of his income as tax
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Person earning Rs 100k per year, say he spends Rs 5000 / yr on cloth. tax = Rs 750 = 0.75% of his income
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Person earning Rs 200k per year, say he is spending Rs 12000 a year, then tax he will pay = Rs 1800 = 0.9% of his income as tax
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Person earning Rs 500k per year, say he is spending Rs 15000 a year, then tax he will pay = Rs 2250 = 0.45% of his income as tax
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Person earning Rs 1000k per year, say he is spending Rs 50000 a year, then tax he will pay = Rs 7500 = 0.08% of his income as tax
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Person earning Rs 100 cr per year, say he is spending Rs 5 lakhs a year, then tax he will pay = Rs 75000 = 0.01% of his income as tax
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IOW, in beginnging the ttax may seem progressive, but after a while it become regressive.
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(6) Flat income tax of X% of income
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This tax by definition is flat wrt to income, provided exemptions dont apply. In India, income tax, after income of Rs 30,00,000 . This is because short term capitals gains tax on sale of shares is zero !! And many elitemen earn most of their incomes by sale of shares. And many companies have export income tax exempt and infrastructure income tax exempt and so on. So due to lower tax rate on capital gains and plethora of exemptions, the defacto tax rate after income of some Rs 30 lakh per year becomes regressive.
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Existing income tax in India is somewhat as (0% upto Rs 250k, 10% for next 250k, 20% for next 500k, and 30% there after). But persons earning lower income end up paying higher % of their income as entertainment tax, excise, sales tax and so on. So once indirect taxes are almost removed, the income tax rate can be made flat.
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Now flat tax on income can be varied wwrt to wealth !! Because more wealthy need not have higher income. eg. consider someone who has crores of inheruitance wealth or wealth he had earned in past. His income can be low, and so income tax on him will be low. So income tax when taken as % of wealth owned can be regressive wrt to wealth or flat, but rarely progressive.
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(7) Flat wealth Tax of x% on wealth
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By definition, this will flat tax wrt wealth. But it can be regressive wrt to income, because those who have large wealth - their income may be less if the wealth was due to past income or due to inheritance. So again, wealth tax of 1% on wealth may be regressive wrt income !!!
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So to analyse a tax law, imo, one should arrange all citizens in nation in order of decreasing income or decreasing wealth. And then one should divide the the population into 100, 1000, 10000 or more parts, and study the tax as % of income / wealth of each part.
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And one also divide the top 1% of population of by wealth and top 1% of pulation by income, and divide them into 100 subparts and guess how much will be the burden on each sub-part as % of their income / wealth.
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And of all possible tax law-drafts, least regressive imo is the least bad tax law-draft. i.e. say nation-A and nation-B have two laws, and tax law of nation-A is less regressive. Then imo chances are high that nation-A will become stronger than nation-B.