how much tax do u pay?

This was the question that sparked a debate at a family gathering recently.

We all know how much income tax we pay. That's easy to keep tab off being accounted for in total once a year when we file our income tax returns. But the problem comes with sales taxes for which you have to be very meticulous to keep tab of... i actually never thought some people keep a tab of that !!

Also in many countries like India, besides sales tax, there are also indirect taxes like Excise and Service taxes which are levied on the provider of the goods/service but borne by the consumer.

So the problem is this, do you really know how much tax you end up paying to the Government? Why does the government not impose just Income tax which is easier to keep tab of and get rid of sales tax and indirect taxes? Are not sales tax and indirect taxes a double taxation on your income?

I am no tax expert and its been sometime since i passed my grad in economics.

However, i know this; income and spending are two different activities for economics and taxing each has got different objectives. Also there is the divide of what goes to the Federal (Central) government coffers and what goes to the State coffers. For me though that is just a matter of how the Government has chosen to organise itself. I'm not sure if its true in the US but in India a fair part of the taxes collected by the Central government are re-routed to the states based on various parameters. Thus, as the person getting taxed i'm equally worse off, no matter which pocket or part of the Government taxes me.

Fact is many people who do not pay income taxes, still have to pay sales tax and indirect taxes when they buy goods/services and so it certainly widens the tax net. But for those who pay Income tax, it certainly does appear to be 'double' taxation.

Also in certain economic periods (like right now) when the government would want to stimulate spending, shouldn't they do away with sales tax?

Anybody out there has an opinion? feel free to share.

Can poverty be eliminated?

This post is inspired by a video of McKinsey Quarterly featuring Jacqueline Novogratz-CEO, Acumen fund. She mentions that her fund is dedicated to the cause of bridging the gap between the rich and the poor. It revived in me a debate i've often had on why there is poverty, can it be eliminated and if so how?

The existence of the poor is even mentioned in the golden period of Indian mythology-under Ram Rajya (period under the reign of King Rama a Hindu god) and also in the time of Christ. If it was something that could be wished away why did these god-men not eliminate poverty?

Continuing efforts to get rid of poverty through long standing supply of aid and effort of charitable organisations has not helped in fighting this stigma by a lot (though i would not say that there efforts are in vain; they play a vital role by creating awareness of this problem amongst the developed countries). This is because poverty is not just a problem of lack of monetary wealth but it also gets a grip on the psychology and spiritual character of the person it inflicts.

Actually, early Christian missionaries, consciously or unconsciously were able to address the problem at almost all levels. They were able to offer monetary help and also vitally provide support for physical and mental health and healing. They also successfully broke the negative spiral which can surround an individual in poverty and helped them become a part of a new 'higher' grouping. Perhaps the only things that did not work for them was their over zealousness to convert people to the christian religion and that they did not teach the 'converts' self-sustaining enterprise.

I was once told by my spiritual guru that you cannot get rid of darkness by fighting it head-on, you get rid of it by bringing in a lamp, a ray of light. Poverty, quite like darkness cannot be fought from just within but requires a positive external intervention at the physical, mental, spiritual and economic level.

Mahatma Gandhi, rightly understanding this, addressed each aspect of the problem- including the one left out by the missionaries- the economic problem. His dictum to the teeming poor and untouchables of India in asking them to spin the charkha (weaver's wheel to spin cotton) was aimed exactly at creating sustainable socio-economic development.

Modern charity and aid NGOs (Non Governmental Organisations)have also begun to realise that they cannot fight poverty by simply collecting and transferring donations from the rich to the poor. They need to make themselves and those they wish to help self-sustaining by operating akin to a for-profit enterprise.

CK Prahlad has brought a lot of corporate attention to the real profit making opportunity in addressing the social needs of the most downtrodden by talking of 'value at the bottom of the pyramid'.

Still can poverty be eliminated? I dont know. When i asked a seer this question, she simply told me that all fingers are not equal. However, i strongly believe that even if poverty cannot be eliminated, its causes can be addressed and the window of opportunity and hope widened to give many at least a chance.