
Jan
21
A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, secessionist movements or revolutionary movements). Taxes are also imposed by many sub national entities. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labor equivalent (often but not always unpaid). A tax may be defined as a “pecuniary burden laid upon individuals or property to support the government […] a payment exacted by legislative authority.” A tax “is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority” and is “any contribution imposed by government […] whether under the name of toll, tribute, tillage, gable, impost, duty, custom, excise, subsidy, aid, supply, or other name.1
Let me clear out the difference between Direct and Indirect Tax.
Indirect Taxes are attached to goods and services before a consumer uses them
The proper meaning of indirect tax is price of permission-to-live. There is not a single commodity, service or satisfaction in market, which you may acquire without paying the price of the permission to buy that product. That is, you are not “free” to buy. Either you pay government to buy a commodity like milk, vegetables, wheat, flour or salt, or you go without buying them. Since you cannot live without certain commodities and you have to buy them anyhow, you pay the government to buy those products. In other words, you pay government for living. It clearly shows that all ideas of a citizen to be free are just false, he has to pay for living his life, and if he will not pay, he will die.
“People often say death and taxes are the same, but this is wrong. Death is a taxable event, but taxes never die.” Anonymous
If you come to know that, “what price you pay, for buying commodities you live by, and what price you pay government for getting the “permission to buy your life” you will be astonished by the difference between charge of production and the charge of permission to buy.
As for example, a handmade soap which one may get of Rs 3/- or Rs 4/- in market, costs merely Rs 0.80/- per piece, the producers takes Rs 0.20/- profit on each piece, so total price is Rs 1/- per piece of a soap cake, but production levies, excise duty levies, sales tax, and then buying tax makes it Rs 4/- per piece.
(An explanation from The Hindu Business Line2
Thus, it is clear that taxation makes living three or four times costly in a state.
It is also clear that living in a state is not free; we have to pay for living.
That is, Life is Not free, there is no fundamental right to life, and who collects the price of living, Yes, the government the taxation authority.
Now these levies and indirect taxes are variable on various products, the handmade soap is mostly used by poorest section of society, and government makes their life too, 3 to 4 times costly than what it could have been if there were no compulsory taxes.
Often people believe that government helps poor by these taxes through subsidies, and thus being under the influence of altruistic paradox, they accept taxation, as if they are helping poor section of society.
Let me clear out this false propaganda. Government never helps poor. Subsidies do not mean help, subsidies means rebate in levies and taxation. On certain commodities, government reduces taxes, or announce them tax free. You still have to pay the price of production.
Recently, Madhya Pradesh and Chhattisgarh government announced free food for poor and villagers, Dr Raman Singh announced Rice for Rs 2/- per Kilogram. Is government helping poor?
No, it is not so. What government has done is it has announced it won’t take taxes on rice, that is, government won’t take price of permission from poor to buy rice.
The actual cost of that rice is almost Rs 2/- per kilogram, or a little less, the producers takes their profits too. Thus, government is not helping anybody, what it is doing is it restricts itself from looting public on certain commodities and announces it as subsidy. To cover up the loss on tax-collection by these subsidies, government increases levies on some other products that are less used by poor and more by middle class or rich. Thus, government makes sure that it takes lesser price of living from poor, more from middle class and maximum from rich.
Let us forget the rich class, neither I am rich nor I guess are the readers of this blog are coming from families like TATA or Ambani or Birla or Bachchan.
Thus, government makes the life of poor 3-4 times costlier than what it could have been without compulsory taxation. Its effect on middle class is further extreme, which makes the life of a middle class man some 15-16 times costlier than what it could have been without taxes. Hence, we always remain poor. Yet, the rich suffers the most, and many times rich pays for our permissions-to-live, i.e. we owe our lives to richer class and we pay for the poor class, yet lives of all of us remains costlier than what they might have been without taxes. One more thing, this all happens in every sector. Government makes education costlier for poor, middle class and rich, yet it announces dreams of free education. Government makes water costlier and more impure for poor, rich and middle class, yet it announces “free-water”. I clarified how government causes water pollution and wastage and makes water costlier here. Government makes roads and electricity, it increases the actual cost of making roads or electricity and most often, we get worst kind of roads and we keep paying taxes. Read privatization of Roads.
Now, let’s come to Direct Taxes.
In the first part, I explained how we are not free and we pay price for our living. We pay price for every breath we take, and government takes that price. After all those loots and robberies by government, if somehow a person by his endeavors, courage and talent manages to save some money, property, he has to pay tax on it. So, you have to pay tax on your house, it a price of owning a house. That is, your house is not free, nor your right to own a house, you have to pay for the right to own house or any other property, there is no property rights or freedom “Property tax“.
Income tax also comes in same category. What is income tax? It is the price of permission to earn a living. Ohh yes you are not free, as a dutiful slave, you have to pay to your master if you want to live. How the hell one can live without earning? If he wants to live, he needs to earn and hence he need to pay tax. Life is not FREE; there is no right to life. If you want to innovate and begin an enterprise, you need to pay for permission as there is Corporate Tax, if you don’t want to be unemployed, you need to pay for permission as there is Self-Employment Tax.
The difference between direct taxes and indirect taxes is, in Indirect taxes, government can force a particular sector to bear the charges of permission for all, those who pay direct taxes, cannot demand reimbursement from others.
Remember, all this discussion of taxes is about a statist system which is completely free, there is no corruption, no bribery no embezzlement. Still, since taxes themselves are loot, everything is costly, but in real state authoritative system, corruption, embezzlement, scams by government, bureaucrats, clerks, corporate, babus and politicians also comes in the calculation, making the life further costlier than what it could have been in free market.
Now the question how government misuses taxes, as I explained indirect taxes by example of subsidized rice in Chhattisgarh and MP and in other south Indian states, by announcing such misleading subsidies and making people think government is helping poor, government delude public and wins votes. Many times, it creates reservation groups to maintain vote banks, its all illusive help.
Taxation provides total control in government hands and government uses that control in propagating its plan. As for example, recently, MP government arranged Surya Namaskar Program3 in whole state on December 21st in all schools, government or private (there is no private school in India, either they are government schools, or autonomous government supported schools or licensed schools). It is simply misuse of authority to propagate theocracy, and our taxes are being used.
- Taxation, Wikipedia Link [↩]
- The Hindu Businesshere [↩]
- Surya Namaskar program, Indian Express [↩]
10 Responses to “What really are Taxes?”
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pankaj singla Says:
January 21st, 2009 at 10:05 pmYes u r right to some extent. I really like ur post, but this is the main and only part of government income source, all are back to us. Yes govt. should consider taxes seriously.
Sukrit Sabhlok Says:
January 25th, 2009 at 8:06 amFor a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
Sukrit Sabhlok Says:
January 25th, 2009 at 8:07 amFor a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
GP Says:
January 27th, 2009 at 6:22 pmThe govt. is entitled to collect direct/indirect taxes based on basic infrastructure,services,licensing(stamp duties,registration,etc.)being provided to particlar industry or citizens. Besides, its the only option for govt. to raise the funds which are being used to make payements of Defence personnel, R&D expanditure in defence sector,administrators and chairpersons belonging to govt.organisations and of course all employees in current beaurocratic setup.
Unpretentious Diva Says:
January 27th, 2009 at 6:38 pmLol yes, government is your God, it is entitled to loot you and kill you!
There is no need of any governmental office, and whatever is necessary for a nation, can be and SHOULD be collected on voluntary notions.
If Indian Military want financial help from citizens, let the Military demand for “Charity” let them show how necessary they are and what good they will provide, and let them convince the people to agree that if an individual invests in Military, it would be profitable, and how profitable it would be. Then, individuals may INVEST in military for the profits. There should be freedom to deny to invest. Let it be voluntary.
Not any other office of government is required for any reason.
The pimping job of Politicians is NOT AT ALL necessary.
Burden of Debt and Loss | Reason for Liberty Says:
February 17th, 2009 at 11:51 am[...] 65,300 crores waived. Question is whose money it was. Government did not produce that money, we the tax-payers produced it with our hard-work, within minutes government distributed it, and we have no way to [...]
Economic crisis and Fiscal Stimulus by Government | Reason for Liberty Says:
February 17th, 2009 at 4:50 pm[...] enough attraction for investment in service and manufacturing industries. Obviously, providing market freedom and reducing governmental interference is much better than the Bail Out packages, governmental [...]
Reality Says:
May 10th, 2009 at 6:28 pmSuch uninformed hooey! Our constitution gives the government the authority to levy taxes. All you anti-tax, fake “freedom” lovers whine about taxes and then, when you get your way and the government cannot afford to provide basic services to the peple, moan and groan about how bad government is. Do you really think that administering to the needs of the most complex society on the planet can be done on the cheap? Capitalists will lie to us and tell us that markets should take care of those things that government currently does. Well, we are now suffering the consequences of allowing the business community to do whatever they want. Not only has the average citizen not benefited from markets that were allowed to run themselves, we are now faced with a situation where the government has no choice but to bail them out, lest the entire economy collapses into chaos. And who’s going to pick up the bill for this? Why taxpayers, of course — tax payers who had no say in the misguided policies that led to this disaster. Super-wealthy businessmen are having their mistakes swept under the rug and receiving billions of dollars of America’s wealth as a reward for failure. Yet there are still people who worship capitalism as a god and insist that markets must be allowed to regulate themselves without government interference. These indoctrinated fools choose to ignore one simple fact: every time they’ve got their way, the result has been economic disaster. Free market theory is bullshit and always has been. The free marketeers know it’s a lie.
On Making A Difference « The Austrian Economist Says:
April 25th, 2010 at 11:56 pm[...] economy is ethically superior. The “basic minimum” can’t be provided without mulcting the tax payer, and hampering capital accumulation? It is capital accumulation which makes high wages and a [...]
cm Says:
April 17th, 2011 at 5:30 amblaa..blaa…bla…shut up looser. i m government. i m rich. my way or highway. don’t pay tax n c what happens to u.