Taxing The Rich

The Minor Thoughts Blog has a brief note on taxing the rich calledTaxing Paris Hilton.

Not necessarily Hilton specific, but the concept is sound. If you do away will all forms of taxation and replace them with a consumption tax, the rich will pay more tax simply because they spend more money.

Unfortunately, the Indian government ruined this relatively simple idea recently with the introduction of the service tax. They kept all forms of tax[including the short term capital gains tax of 10% and long term[12months] tax at 0%, yes ZERO] and just added a 10% service tax on all services [legal and medical services included]. Since the wealthy are likely to have more income from capital gains while everyone pays relatively the same for basic services, this is effectively a tax on poor people. WAY TO GO!

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