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Basically the origin reason is that the average wage level in India is rather low and people don't earn too much each month. it is impossible that the India government just depends on there taxes to support the whole nation and maybe the government has the huge other tax source.
I just read in Economist magazine that only 3% of adults in India pay income tax.
Knowing that, how do they bolster up their huge population??
Roughly 90% of India's GDP is in shadow markets and goes unreported. Additionally, their ranking worldwide in 'freedom from government corruption' is only a 31/100 in the latest economic freedom index ranking.
I just read in Economist magazine that only 3% of adults in India pay income tax.
Knowing that, how do they bolster up their huge population??
That would be fiscally speaking. The way wage labor pays taxes is when they consume less of something , eat cheaper food etc. That was why the British Empire wanted bread fruit. In other words the level of subsistence needs to be lowered. People who are at a fully completive wage do not have disposable income to tax. A thousand people bidding on a job opening will beat down the wage to the bare minimum. That how it works. You don't get to set the wage because commodity sellers are price takers. If you do tax them, it becomes a financial shell game since taxing oats on draft horses just raises the cost of using them. No real tax is collected because it will cascade into some expense.
That is of course what makes the latest Tea Party propaganda so laughable. They keep pointing out how fewer and fewer people pay taxes without realizing that it also correlates with having no disposable income. Slave masters pay taxes , but slaves don't. Can't just have a stupid tax chart to prove any kind of point
Then of course its not the only way to tax. We used to have no income tax.
only the salaried employed folks pay "income tax" and they pay because its "deducted at source". The businesses and all try to deal maximum in cash, credit cards are frowned upon and receipts are seldom issued.
The CAs and CPAs have a gazillion ways around tax and most income goes unreported.
I know that because I have 4 businesses there and have also been employed by big MNCs in India.
I just read in Economist magazine that only 3% of adults in India pay income tax.
Knowing that, how do they bolster up their huge population??
Thats the way the income tax system was in the US too. Only people making over $3000 a year ($4000 for married couples) had to pay taxes. Thats the equivalent of $52,100 and $69,500 today. And the government managed to balance the budget vary nicely. Paying income tax was considered a status symbol.
But then the filthy rich started to cry about how they were being discriminated against and how the poor should pay their fair share. . So the tax burden was redistributed from the 1% to the 99%, and thats how we have the budget deficient mess that we do now.
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