Income Taxation Quotes

Once you realize that trickle-down economics does not work, you will see the excessive tax cuts for the rich as what they are -- a simple upward redistribution of income, rather than a way to make all of us richer, as we were told.

It’s been easier to convince people to hand over half their income, their children to war, and their freedoms in perpetuity, than to engage them in seriously considering how roads might function in the absence of taxation.

There's a grosser irony about Politically Correct English. This is that PCE purports to be the dialect of progressive reform but is in fact--in its Orwellian substitution of the euphemisms of social equality for social equality itself--of vastly more help to conservatives and the US status quo than traditional SNOOT prescriptions ever were. Were I, for instance, a political conservative who opposed using taxation as a means of redistributing national wealth, I would be delighted to watch PC progressives spend their time and energy arguing over whether a poor person should be described as "low-income" or "economically disadvantaged" or "pre-prosperous" rather than constructing effective public arguments for redistributive legislation or higher marginal tax rates. [...] In other words, PCE acts as a form of censorship, and censorship always serves the status quo.

Death and taxes in life are certain, knowing how to pay only your fair share is third.

Income inequality has no necessary connection with poverty, the lack of material resources for a decent life, such as adequate food, shelter, and clothing. A society with great income inequality may have no poor people, and a society with no income inequality may have nothing but poor people.

Liberty is not about class war, income war, race war, national war, a war between the sexes, or any other conflict apart from the core conflict between individuals and those who would seek power and control over the human spirit. Liberty is the dream that we can all work together, in ways of our choosing and of our own human volition, to realize a better life.

The only beneficiaries of income taxation are the politicians, for it not only gives them the means by which they can increase their emoluments but it also enables them to improve their importance. The have-nots who support the politicians in the demand for income taxation do so only because they hate the haves; although they delude themselves with the thought that they might get some of the pelt the fact is that the taxing of incomes cannot in any way improve their economic condition.

Property taxes' rank right up there with 'income taxes' in terms of immorality and destructiveness. Where 'income taxes' are simply slavery using different words, 'property taxes' are just a Mafia turf racket using different words. For the former, if you earn a living on the gang's turf, they extort you. For the latter, if you own property in their territory, they extort you. The fact that most people still imagine both to be legitimate and acceptable shows just how powerful authoritarian indoctrination is. Meanwhile, even a brief objective examination of the concepts should make anyone see the lunacy of it. 'Wait, so every time I produce anything or trade with anyone, I have to give a cut to the local crime lord??' 'Wait, so I have to keep paying every year, for the privilege of keeping the property I already finished paying for??' And not only do most people not make such obvious observations, but if they hear someone else pointing out such things, the well-trained Stockholm Syndrome slaves usually make arguments condoning their own victimization. Thus is the power of the mind control that comes from repeated exposure to BS political mythology and propaganda.

In retrospect, I now believe this expected donation of ten percent of income to the Fellowship was based on bad exegesis of an old Jewish taxation law that Jesus Himself seemed to completely ignore.

The State obtains its revenue by coercion, by threatening dire penalties should the income not be forthcoming. That coercion is known as “taxation,” although in less regularized epochs it was often known as “tribute.” Taxation is theft, purely and simply even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State’s inhabitants, or subjects.

The main substantive achievement of neoliberalization, however, has been to redistribute, rather than to generate, wealth and income. …[T]his was achieved under the rubric of ‘accumulation by dispossession’. By this I mean the continuation and proliferation of accumulation practices which Marx had treated of as ‘primitive’ or ‘original’ during the rise of capitalism. These include the commodification and privatization of land and the forceful expulsion of peasant populations (compare the cases, described above, of Mexico and of China, where 70 million peasants are thought to have been displaced in recent times); conversion of various forms of property rights (common, collective, state, etc.) into exclusive private property rights (most spectacularly represented by China); suppression of rights to the commons; commodification of labour power and the suppression of alternative (indigenous) forms of production and consumption; colonial, neocolonial, and imperial processes of appropriation of assets (including natural resources); monetization of exchange and taxation, particularly of land; the slave trade (which continues particularly in the sex industry); and usury, the national debt and, most devastating of all, the use of the credit system as a radical means of accumulation by dispossession.

Pleasure and business, unlike oil and water, can sometimes be mixed.

Socialism is not a meritocracy. By definition it places increasingly confining restraints on those that succeed the most.

All told, over the period 1932-1980, nearly half a century, the top federal income tax rate in the United States averaged 81 percent.

Once, modestly enough, Doremus had assumed that he had a decent knowledge of finance, taxation, the gold standard, agricultural exports, and he had smilingly pontificated everywhere that Liberal Capitalism would pastorally lead into State Socialism, with governmental ownership of mines and railroads and water-power so settling all inequalities of income that every lion of a structural steel worker would be willing to lie down with any lamb of a contractor, and all the jails and tuberculosis sanatoria would be clean empty.

Government as we now know it in the USA and other economically advanced countries is so manifestly horrifying, so corrupt, counterproductive, and outright vicious, that one might well wonder how it continues to enjoy so much popular legitimacy and to be perceived so widely as not only tolerable but indispensable. The answer, in overwhelming part, may be reduced to a two-part formula: bribes and bamboozlement (classically "bread and circuses"). Under the former rubric falls the vast array of government "benefits" and goodies of all sorts, from corporate subsidies and privileges to professional grants and contracts to welfare payments and health care for low-income people and other members of the lumpenproletariat. Under the latter rubric fall such measures as the government schools, the government's lapdog news media, and the government's collaboration with the producers of professional sporting events and Hollywood films. Seen as a semi-integrated whole, these measures give current governments a strong hold on the public's allegiance and instill in the masses and the elites alike a deep fear of anything that seriously threatens the status quo.

THE AMERICAN brand of socialism known as the New Deal was made possible by the income tax. But with the advent of income taxation, socialism was unavoidable. There have always been, and perhaps always will be, people who are averse to letting other people alone. Recognizing the human inclination to err, they are impelled by their kindness of heart to overcome this imperfection; invariably they come up with a sure-proof plan that needs only political power to become effective. Political power is the essential ingredient of every one of these plans to improve the human. Since all the ills of mankind, they argue, follow from the exercise of free will, it follows that the only cure for these ills is to suppress free will and to compel the individual to behave in all things as per the perfect pattern devised by these improvers. Compulsion means force; there must be a policeman to see that the individual does not follow his own inclinations. But policemen must live. Since they do not produce a thing by which they can live, others must support them. Hence, the planners must have the means of getting at the production of the very people who are to be improved by the policeman. That means taxes, and the more taxes the greater the number of enforcement agents, and therefore the more comprehensive the plan. No plan can be bigger than its bureaucracy. The income tax is the ideal instrument for the planner.

In his history, Rich People’s Movements: Grassroots Campaigns to Untax the One Percent, Martin notes that the passage of the income tax in 1913 was regarded as calamitous by many wealthy citizens, setting off a century-long tug-of-war in which they fought repeatedly to repeal or roll back progressive forms of taxation. Over the next century, wealthy conservatives developed many sophisticated and appealing ways to wrap their antitax views in public-spirited rationales. As they waged this battle, they rarely mentioned self-interest, but they consistently opposed high taxes that fell most heavily on themselves.

It should be pointed out, however, that throughout the debate emphasis was placed on raising money only for the proper expense of government.3 None of the advocates of income taxation spoke of expanding the functions of government, and while the opposition mentioned “socialism” it seems doubtful that they had any idea of a New Deal. The American mind of the nineteenth century was incapable of comprehending paternalism, regulation, and control; it was too strongly rooted in the past for that. Even those who advocated the tax method of undermining private property were not aware of what they were doing, and would probably have stopped in their tracks if they could have foreseen the consequences of their proposal. It was not any urgency for Big Government—which they could not even have understood—that prompted them to advocate income taxation. It was simply an urgency to “soak the rich”—the very common sin of envy.

Lots of learned treatises have been written on income taxation, and a wealth of erudition has been expended in its support. But when one looks to bottom causes one finds them quite simple: Income taxation appeals to the governing class because in its everlasting urgency for power it needs money. Income taxation appeals to the mass of people because it gives expression to their envy; it salves their sense of hurt. The only beneficiaries of income taxation are the politicians, for it not only gives them the means by which they can increase their emoluments but it also enables them to improve their importance. The have-nots who support the politicians in the demand for income taxation do so only because they hate the haves; although they delude themselves with the thought that they might get some of the pelt the fact is that the taxing of incomes cannot in any way improve their economic condition. So that, the sum of all the arguments for income taxation comes to political ambition and the sin of covetousness.

It is interesting to note that in nearly all the economics courses it is taught that the income tax is the proper instrument for the regulation of the country’s economy; that private property is not an inalienable right (in fact, there are no inalienable rights); that the economic ills of the country are traceable to the remnants of free enterprise; that the economy of the nation can be sound only when the government manages prices, controls wages, and regulates operations. This was not taught in the colleges before 1913. Is there a relationship between the results of the income tax and the thinking of the professors? There is now a strong movement in this country to bring the publicschool system under federal domination. The movement could not have been thought of before the government had the means for carrying out the idea; that is, before income taxation. The question is, have those who plug for nationalization of the schools come to the idea by independent thought, or have they been influenced by the bureaucrats who see in nationalization a wider opportunity for themselves? We must lean to the latter conclusion, because among the leaders of the movement are many bureaucrats. However, if the movement is successful, if the schools are brought under the watching eye of the federal government, it is a certainty that the curriculum will conform to the ideals of Big Government. The child’s mind will never be exposed to the idea that the individual is the one big thing in the world, that he has rights which come from a higher source than the bureaucracy. Thus, the immunities of property, body and mind have been undermined by the Sixteenth Amendment. The freedoms won by Americans in 1776 were lost in the revolution of 1913.

Nine tenths of everything is tax. Everything you buy has a complicated history of robbery: land, raw materials, energy, tools, buildings, transport, storage, sales, profits. Don’t forget the share you contribute toward the personal income tax of every worker who has anything to do with the process. Inflation by taxation: there are a hundred taxes on a loaf of bread. What kind of living standard would we enjoy if everything cost a tenth of what it does? What kind of world? Think of your home, your car, your TV, your shoes, your supper—all at a 90% discount! Government can’t fight poverty—poverty is its proudest achievement!

In these pages, we have made propositions to meet those challenges: a sharply progressive wealth tax to curb the forms of rent extraction associated with extreme and entrenched wealth, an effective taxation of globe-straddling companies to reconcile globalization with tax justice, a national income tax to fund the modern social state and alleviate the crushing cost of health care.

The kind of taxes.. that we have today are nearly the opposite of what we want to create in our world. We can take from the commons, that which no one should own, without paying for it. Yet the one thing we can be said to own, our own productive labor, is subject to taxation in the form of income tax. Meanwhile, we are forced to pay a tax on the circulation of goods, a sales tax, while there is no tax on the accumulation of wealth not used for exchange.

Er … what is the current rate of taxation, do you think?” I asked, tactfully drawing attention away from Stanhope’s spluttering. Wylie pursed his lips, considering. A dandy, he wore the latest in modish wigs, and a small patch in the shape of a star beside his mouth. Under the powder, though, I thought I detected both a good-looking face and a very shrewd brain. “Oh, considering all incidentals, I should say it can amount to as much as two per centum of all income, if one was to include the taxes on slaves. Add taxes on lands and crops, and it amounts to a bit more, perhaps.” “Two percent!” Stanhope choked, pounding himself on the chest. “Iniquitous! Simply iniquitous!” With vivid memories of the last IRS form I had signed, I agreed sympathetically that a two percent tax rate was a positive outrage, wondering to myself just what had become of the fiery spirit of American taxpayers over the intervening two hundred years.

400 million Africans are born-again Christians and the various sects of Christianity are well represented in this small town, from the Church of Wonderful Miracles to the Church of the Best Future, and there is also a large Muslim community. People give around 10% of their meagre incomes to these groups – that’s far more than the government takes in taxation. And it’s made some of Africa’s church leaders multimillionaires with private jets, megachurches, video productions and publishing houses all preying on the desperate.

The Libertarian Party platform on which Koch ran in 1980 was unambiguous. It included the following: • We favor the abolition of Medicare and Medicaid programs. • We oppose any compulsory insurance or tax-supported plan to provide health services. . . . • We favor the repeal of the . . . Social Security system. . . . • We oppose all personal and corporate income taxation, including capital gains taxes. • We support the eventual repeal of all taxation. • As an interim measure, all criminal and civil sanctions against tax evasion should be terminated immediately. • We support repeal of all . . . minimum wage laws. . . . • Government ownership, operation, regulation, and subsidy of schools and colleges should be ended. . . . • We support the abolition of the Environmental Protection Agency. . . . • We call for the privatization of the public roads and national highway system. . . . • We advocate the abolition of the Food and Drug Administration. . . . • We oppose all government welfare, relief projects, and “aid to the poor” programs.44 The list went on from there, including ending government oversight of abusive banking practices by ending all usury laws; privatizing our airports, the FAA, Amtrak, and all of our rivers; and shutting down the Post Office.

Redistribution through immigration postpones the problem but does not dispense with the need for a new type of regulation: a social state with progressive taxes on income and capital. One might hope, moreover, that immigration will be more readily accepted by the less advantaged members of the wealthier societies such institutions are in place to ensure that the economic benefits of globalization by everyone. If you have free trade and free circulation of capital and people but destroy the social state and all forms of progressive taxation, the temptations of defensive nationalism and identity politics will very likely grow stronger than ever in both Europe and the United States.

The rate of taxation to supposedly “fund” Social Security has been increasing over time. Currently workers pay 6.2 percent of their first $117,000 of earnings in Social Security taxes and their employers pay an additional 6.2 percent. The self-employed pay the full 12.4 percent themselves.6 When the program started in the 1930s, however, the tax rate was only 1 percent of income on a much lower income threshold and did not reach 3 percent until 1960.7 In fact, the amount of money subject to the Social Security payroll tax has grown significantly over time. From the 1930s until 1950, workers paid tax on the first $3,000 of their income. That cap did not reach $10,000 until the 1970s. Presently, workers pay FICA taxes on the first $117,000 of their income, and that amount will continue to rise with increases in the average wage.

The economic decline of a society without property rights is followed by the loss of other values. It is only when we have a sufficiency of necessaries that we give thought to nonmaterial things, to what is called culture. On the other hand, we find we can do without books, or even moving pictures, when existence is at stake. Even more than that, we who have no right to own certainly have no right to give and charity becomes an empty word; in a socialistic order no one need give thought to an unfortunate neighbor because it is the duty of the government, the only property owner, to take care of him; it might even become a crime to give a "bum" a dime. When the denial of the right of the individual is negated through the denial of ownership, the sense of personal pride, which distinguishes man from beast, must decay from disuse. The income tax is not only a tax; it is an instrument that has the potentiality of destroying a society of humans.

with the exception of England, every other industrialized democracy has higher levels of income equality than the United States. Data from the OECD shows one consistent, general principle: The higher the taxes in a given country, the less inequality. This makes obvious and intuitive sense. Taxation is the primary method for redistribution, and as a general rule, the more taxation, the more redistribution; the more redistribution, the more equality. The United States collects a far smaller share of the national income in taxes than nearly every other industrialized democracy, and in recent years that rate has been dropping. Total tax revenue as percentage of GDP in the United States is at 24.8 percent, down from 29.5 percent in 2000. You can compare that to Denmark, which has the highest level of tax revenue as a percentage of GDP (48.2 percent) and the most equality out of any OECD country.15 Over the last thirty years or so we’ve seen rising inequality in pre-tax income, which means that before the government even starts its taxing, spending, and redistribution, there has been a profound and accelerating gap between high income earners and everyone else. The rich are earning more, while the non-rich’s earnings stagnate or decline. But these pre-tax earnings are run through the redistributive mechanisms of the state. And during the same time that pre-tax inequality has been growing, our tax system has grown less redistributive, further amplifying inequality rather than mitigating it. This

Because [Jeff Bezos] and [Mark Zuckerberg] own $100 billion in the current state of the legal system, the current state of the fiscal system, the current way the international economy is organised, people say, ‘OK, $100 billion, exactly the right level.’ But with a different legal system, different international taxation, it could be 200, it could be 50. So what would be the story? Any level that they will attain, it will be the best? This kind of sacralisation of special individuals is a form of religious thought. People who use this kind of argument: ‘He's great, therefore –‘ therefore what? Therefore we should subsidize him so that he's even richer?

There will be those who say that solutions such as wealth taxes have been tried before and failed, but that is not necessarily that the solutions are wrong, but because another innovation or strategy provides another way to reduce taxes. The solution to taxation is to allow incentives to encourage ingenuity and innovation and to match those positive characteristics with the desire to eliminate gross disparities in income and wealth.

If the company meets all of the qualifications for a REIT, it enjoys special tax status: it doesn’t have to pay any taxes at the company level, which means more cash and higher returns for shareholders. (This is in contrast to the double-taxation issues of corporate stocks, where the corporation has to pay taxes on its income before distributing dividends to shareholders, and then the shareholders have to pay taxes on the dividends they receive, resulting in the same money being taxed twice.)

With the restriction of government to its proper sphere and its concentration into our organization, resulting in the liberation of man-power into wealth-producing enterprise, and especially with the enormous growth of inter-world commerce, world-income increased to such a point that taxation could be reduced to a minimum; and the lower the taxes the more flourishing business became and the greater the income.

Ultimately, the most powerful way to rebalance the interests of private owners and the common good is by shifting the focus towards taxes on wealth - that is, asking those who have accummulated substantial assets down the years (or with inherited wealth, down the centuries) to make a fairer contribution. The case is indisputable: since 2008, average earnings have hardly risen, while the amount of wealth held by the better-off has sky-rocketed. Clearly paying for shocks such as the 2008 crash or the Covid-19 pandemic should not fall solely on those dependent on their immediate income. A Land Value Tax could also play an important role: a policy that would be difficult to evade, and would tackle the vast windfall profits that come from the development of land. It's an idea that has long enjoyed support from all sides of the political spectrum, including Winston Churchill, as well as from economists as divergent as Milton Friedman, Adam Smith and J.K. Galbraith. Given its elegant simplicity and essential fairness, the fact that it has not been introduced in England is a case-book example of the landowners' ability to block reform.

A Party Central Committee and Government decree stipulates that, as from November 1969, the population will be exempted from all taxation. Thus, the income of the budget will be secured entirely from the socialist sector of our economy.

While the rich became richer, the taxation policy of the government, instead of correcting this trend, actively strengthened it. One of the first decisions of the first Modi government was to abolish the wealth tax that had been introduced in 1957. While the fiscal resources generated by this tax were never significant, the decision was more than a symbolic one.126 The wealth tax was replaced with an income tax increase of 2 percent for households that earned more than Rs 10 million (133,333 USD) annually.127 Few people pay income tax in India anyway: only 14.6 million people (2 percent of the population) did in 2019. As a result, the income-tax-to-GDP ratio remained below 11 percent. Not only has the Modi government not tried to introduce any reforms to change this, but it has instead increased indirect taxes (such as excise taxes), which are the most unfair as they affect everyone, irrespective of income. Taxes on alcohol and petroleum products are a case in point. As some state governments have also imposed their own taxes, this strategy means that India has one of the highest taxation rates on fuel in the world. The share of indirect taxes in the state’s fiscal resources has increased under the Modi government to reach 50 percent of the total taxes—compared to 39 percent under UPA I and 44 percent under UPA II.128 Modi’s taxation policy, a supply-side economics approach, is in keeping with the managerial rhetoric of promoting the spirit of enterprise that the prime minister, who readily presents himself as an efficiency-conscious “apolitical CEO,” relishes. One of the neoliberal measures the Modi government enacted in the name of economic rationality, right from his very first budget in 2015, was to lower the corporate tax.129 For existing companies it was reduced from 30 to 22 percent, and for manufacturing firms incorporated after October 1, 2019 that started operations before March 31, 2023, it was reduced from 25 to 15 percent—the biggest reduction in twenty-eight years. In addition to these tax reductions, the government withdrew the enhanced surcharge on long- and short-term capital gains for foreign portfolio investors as well as domestic portfolio investors.130

To appreciate how income taxation reduces prosperity form what it could be, imagine a 100 percent tax on incomes. We wouldn't expect much prosperity in such a society. People would have no incentive to earn money. They would devote resources to hiding the little they did earn. No investments would be made. No savings would exist to increase living standards. People's activities would be grossly influenced by the tax. If we lower the rate from 100 percent, the principle does not change. . . If you want less of something, tax it.

The combination of higher income taxation and wealth taxation would thereby raise at least 2 percentage points of GDP from the very top earners. But even if they had to pay another 2 percent of GDP, there would certainly be no need to shed tears for the rich. Their net-of-tax income would remain around 10 percent of GDP, a share of national income two-thirds higher than the 6 percent of GDP in 1980. There

The upshot is the following: Perhaps 4 percent of extra GDP could be collected as of 2015 mainly by taxing the rich (2 percent), tightening corporate taxation (1 percent), strengthening tax enforcement (0.5 to 1 percent), taxing financial transactions, and taxing carbon emissions (0.5 percent). Introducing a VAT would raise even more revenues and could be phased in over several years. The point is that there are lots of options, and most of them could be concentrated near the top of the income distribution, where they belong. How

We are from a purely financial point of view greatly more generous than our ancestors ever were, surrendering up to half of our income for the communal good. But we do this almost without realizing it, through the anonymous agency of the taxation system; and if we think about it at all, it is likely to be with resentment that our money is being used to support unnecessary bureaucracies or to buy missiles. We seldom feel a connection to those less fortunate members of the polity for whom our taxes also buy clean sheets, soup, shelter or a daily dose of insulin. Neither recipient nor donor feels the need to say ‘Please’ or ‘Thank you’. Our donations are never framed – as they were in the Christian era – as the lifeblood of an intricate tangle of mutually interdependent relationships, with practical benefits for the recipient and spiritual ones for the donor.

Junk Economics is the cover story for all this. Claiming to be scientific, it is sponsored by financial interests to redistribute income and wealth upward, reversing the policies urged by the 19th-century classical economists and Progressive Era reformers. Instead of progressive taxation, this ideology advocates shifting taxes off the One Percent onto the 99 Percent.

Q. If you were president what wold you do? A. declare world peace, remove taxation on all people with income under 100K place qa 20% flat tax on all others with zero loopholes, forgive all student loans and make state colleges tuition free, repair the infrastructure and phase out all industries that contribute to pollution or climate change. Care for all animals and their habitats. Abolish money in politics remove gerrymandering and the electoral college. Remove all non-violent offenders from prisons to create an infra-structure job corps release program and things like that....

Even the “state” and the “market,” in these warm and discursive societies, are intricately interconnected. Late eighteenth-century economic thought is now so unfamiliar, in part, because of the subsequent transformation in political positions: in the politics of economic reform and also in the depiction of the state. It was the “left,” in the period with which this book is concerned—the friends of enlightenment, the sympathizers of revolution—who were the most severe critics of the economic, political, and religious state. Thomas Paine, praising Smith and criticizing Burke, described “the greedy hand of Government thrusting itself into every corner and crevice of industry,” and called for “lessening the burden of taxes,” in particular through a plan for reducing taxation which would limit civilian government spending to less than 1 percent of national income.

high taxation was not regarded in these years as an affront. On the contrary, steep rates of progressive income tax were seen as a consensual device to take excess resources away from the privileged

Interest on NRE and FCNR deposits are exempt from income tax in India. However, while explanation 2 of section 10 (15)(iv) mentions that “interest” includes hedging transaction charges on account of currency fluctuation, taxation of gain due to entering into forward contract may not be straight forward.

chargeable to income tax.

Loans NRIs can give loans to resident Indians on a repatriable or non-repatriable basis. NRIs can also receive loans from residents. Loan from NRIs in foreign currency or on a repatriable basis A resident Indian can borrow up to US dollars 250,000 from NRI close relatives on a repatriation basis i.e. on repayment, the NRI can credit the funds in an NRE account and take this money back without any restrictions. The NRI should be a close relative of the borrower. Please check ‘Who is your relative’ for details. The amount of loan should be received by an inward remittance or by debit to the NRE/FCNR account. The loan should be a minimum of 1 year and without any interest. The funds cannot be used for agricultural/plantation/real estate business or for relending. Income: As the loan should be interest-free, no income can be generated. Taxability: As there is no income, there is no tax. Loan from NRIs in Indian rupees or on a non-repatriable basis A resident, not being a company incorporated in India, may borrow in rupees from an NRI on a non- repatriation basis. The period of loan should be 3 years or less and the rate of interest should not exceed 2% over the prevailing bank rate at the time of the loan. The loan has to be utilized for meeting the borrower’s personal requirement or for his business purposes. The funds cannot be used for agricultural/plantation/real estate business or for relending or for investment in shares, securities or immovable property. For example, Ms. Isumati has given an unsecured loan to her father’s firm earning 15% interest. If she goes to the UK for further studies and becomes an NRI, while she may continue with the loan, RBI rules would apply. The funds cannot be used for real estate business and if the bank rate is 10%, she cannot be paid more than 12% interest on her loan. Her father would also need to deduct TDS @ 30.9% on the interest. Income: Income from loans given to residents is interest. Taxability: The interest income on loans given is taxable for NRIs. Loans to NRIs NRIs are allowed to borrow from a bank/authorized

Income from gold is in the nature of a capital gain and arises when it is sold. If

Income depends on the terms of the respective policy and may be in the nature of interest or capital gains.

Any amount received on death is exempt from income tax in India. Normally,

As premium is invested in various funds, the income has the character of a capital gain.

Income Tax Act, the premium can be claimed as a deduction from the taxable income u/s. 80C.

Mr. Bharat Shah sold shares of MBK Private Limited for Rs. 1,500,000 on July 1, 2014. The shares were acquired for Rs. 1,000,000 on January 1, 2013. STT is not required to be paid on the sale of shares of a private limited company. As shares are unlisted, sale is made before July 10 and period of holding is more than 12 months, the capital gain would be considered as a LTCG. The indexed cost of acquiring shares would be Rs.1,201,878 (1,000,000*1027/852) and LTCG would be Rs. 298,122. Mr. Bharat would pay income tax @ 20% of Rs. 59,624.

Mr. Gopal sold shares of NJPA Private Limited for Rs. 1,500,000 on August 1, 2014 without paying STT. The shares were acquired for Rs. 1,000,000 on January 1, 2013. As shares are unlisted, sale is made after July 10, 2014 and period of holding is less than 36 months, the capital gain would be considered as STCG. The capital gain of Rs. 500,000 would be added to Mr. Gopal’s income and he would have to pay income tax as per his tax slab rates.

Mr. Keyur from Australia sold an equity mutual fund subject to STT after 18 months of purchase for a gain of Rs. 1,000,000. As STT is paid and the holding period is more than 12 months, the gain would be a LTCG and would be exempt from income tax in India.

Mr. Ankur from USA invested in an equity mutual fund that is an overseas fund of funds. He sold the fund after 10 months of investment for a profit of Rs. 1,000,000 without paying STT. As equity mutual fund was sold before 12 months, the capital gain would be a STCG. However as STT was not paid, STCG would be included in the income and taxed as per the income tax slab rates.

Tax on income from investment in debt mutual fund, real estate and other assets

Mr. Kalpit from Oman invested Rs. 3,000,000 in a residential property in India in June 2012 and sold the property for Rs. 4,000,000 in July 2014. As the period of holding is less than 36 months, the gain of Rs. 1,000,000 would be a STCG and added to his other income and taxed as per the slab rates as regular income.

Mr. Kunal from Uganda invested Rs. 3,000,000 in gold in February 2010. If he sold the gold for 4,000,000 in January 2013, the capital gain would be a STCG as he sold it within 36 months. The STCG of Rs. 1,000,000 will be added to the other income and taxed as a regular income based on the income tax slab.

Can you buy more than one residential house and claim an exemption? When the exemption was introduced, it mentioned “a residential house”. It was held by various courts that “a residential house” also means more than one. Thus, if a joint family of a father and two sons living together sells the residential property owned by the father, they were allowed to buy 3 residential properties in the same building to claim the exemption as “a residential house”. However, it was not easy to prove as the taxpayer should have the patience to present his case at every level – Income Tax Officer, Commissioner of Income Tax, Tribunal and sometimes the High court. This has created a lot of controversies as well. The Finance Act (No 2) 2014 amended the provisions to allow exemption for investment in one residential house. Now, the taxpayer cannot invest in multiple residential properties for claiming exemption.

It is an indirect way of tax collection from the tax payers. As the name suggests, tax is deducted at the very source of income generation by the payer itself and then deposited to the Income Tax department on behalf of the taxpayer.

Mr. Rajesh. While the payment is a part of Mr. Rajesh’s income, under the TDS provision, Mr. Hemant would deduct TDS of Rs. 10,000, pay only Rs. 90,000 to Mr. Rajesh and pay Rs. 10,000 to the income tax department on Mr. Rajesh’s behalf.

TDS helps the government collect the tax on income in advance. The

Actually, if TDS is applicable, payment cannot be made to the income earner without deducting the TDS amount at the applicable rates. Further, TDS needs to be deposited within 7 days after the month in which it is deducted.

Tax Deduction, Reconciliation, Analysis and Correction Enabling System (TRACES)’ - its core engine. TRACES is a web-based application of the Income Tax Department that provides an interface to all stakeholders associated with the TDS administration. It

The dividend received is exempt from income tax in India provided the Dividend Distribution Tax (DDT) has been paid by the company distributing dividend. If the DDT has not been paid, the dividend income would be taxable.

is illegal to have more than one PAN. A penalty of Rs. 10,000/- is liable to be imposed u/s 272B of the Income Tax Act, 1961 for having more than one PAN. Any additional PAN card(s) should be surrendered to the Assessing Officer.

US person is to disclose all the foreign financial accounts and related incomes, revise all previous years’ tax returns, pay tax, interest, penalty as well as pay the FBAR penalty based on the highest balance in the foreign financial accounts. While

For any investor, income tax matters. The effect of tax on the return is very important and material, especially for the investors in the highest tax bracket due to tax drag

Income from a mutual fund is either dividend or capital gains. The capital gain can be short term or long term based on the period of holding and whether STT is applicable or not.

Currently, there is no tax for the gift giver (donor) but any gift of over Rs. 50,000 is treated as income under the head ‘Income from Other sources’ and charged to income tax as regular income for the gift receiver (donee).

For FPI, any profit/gain in the financial securities is considered as a capital gain and not business income. For

Income out of a bank FD is interest, whereas, the income out of FMP, liquid or debt fund is capital gains.

In India, dividend income is exempt from income tax for investors, provided the dividend distribution tax (DDT) is paid by the company or the mutual fund schemes declaring the dividend. While

Equity mutual funds, require regular income Dividend option

Equity mutual funds, no income required Growth option

A PPF account generates interest as income. The

Interest on the PPF account is exempt from income tax in India. Not only does an investment in a PPF account give the highest tax free income to residents, it is also allowed as a deduction u/s. 80C of the income tax act, thereby reducing the taxable income. Thus,

(except NBFC) or repatriated outside India. The maturity period of a deposit should not be more than 3 years. Also, there are certain restrictions on the interest rates as well. The borrowing organization is also required to comply with any other laws related to the acceptance of deposits. Income: The income from deposits made in a firm or a company is interest. Taxability: Interest on deposits with an organization is chargeable

As of August 31, 2014, only 28% of AUM (asset under management) of all mutual funds in India is in equity, balanced and ELSS schemes, i.e. in high risky securities. Income funds (medium risk) have 46% of all AUM and liquid or money market funds (low risk) have about 24% of AUM. The remaining 2% of AUM is for investment in gold, government securities, overseas funds, etc. AUM is the total market value of all financial assets under a MF or a MF scheme managed on behalf of its clients or investors.

Only long term capital gains on a MF which is subject to Security Transaction Tax (STT) are exempt from income tax. Any other

Fixed Maturity Plan or FMP is a close ended mutual fund plan that invests in debt or fixed-income securities and has a fixed maturity. The

The Finance Budget 2014 expects to earn Rs. 284,266 crores as tax on income for the financial year 2014-15.

After paying the amount owed, the income tax return can be filed.

The five major sources of income which are exempt for NRIs are: Proceeds from Life Insurance Policy - provided the policy complies with the exemption criteria/conditions Dividend from a domestic company or mutual fund scheme - provided the company or mutual fund scheme has paid the Dividend Distribution Tax (DDT), if applicable Interest on an NRE account – provided the NRE account is maintained as per the FEMA rules Interest on FCNR or RFC accounts – provided the account owner is a non-resident or RBNOR under the Income Tax Act Long Term Capital Gain on equity and equity based mutual fund – provided the Security Transaction Tax (STT) has been paid

Sec. Particulars Amount 80C Tax saving investments1 Maximum up to Rs. 1,50,000 (from FY 2014-15) 80D Medical insurance premium-self, family Individual: Rs. 15,000 Senior Citizen: Rs. 20,000 Preventive Health Check-up Rs. 5,000 80E Interest on Loan for Higher Education Interest amount (8 years) 80EE Deduction of Interest of Housing Loan2 Up to Rs.1,00,000 total 80G Charitable Donation 100%/ 50% of donation or 10% of adjusted total income, whichever is less 80GGC Donation to political parties Any sum contributed (Other than Cash) 80TTA Interest on savings account Rs. 10,000 1              Tax saving investments includes life insurance premium including ULIPs, PPF, 5 year tax saving FD, tuition fees, repayment of housing loan, mutual fund (ELSS) (Sec. 80CCB), NSC, employee provident fund, pension fund (Sec. 80CCC) or pension scheme (Sec. 80CCD), etc. NRIs are not allowed to invest in certain investments, such as PPF, NSC, 5 year bank FD, etc. 2              Only to the first time buyer of a self-occupied residential flat costing less than Rs. 40 lakhs and loan amount of less than 25 lakhs sanctioned in financial year 2013-14 Clubbing of other’s income Generally, the taxpayer is taxed on his own income. However, in certain cases, he may have to pay tax on another person’s income.  Taxpayers in the higher tax bracket (e.g. 30%) may divert some portion

Income on assets transferred without consideration (gift) to or for benefit of spouse or son’s wife or minor son is included in the income of the transferor

Mr. Lovesh Vashist gave a gift of Rs. 5,000,000 to his minor son that generated Rs. 500,000 as income. The taxable income of Mr. Lovesh is Rs. 1,500,000 and his wife Ms. Deepti is Rs. 1,600,000. The income of Rs. 500,000 will be clubbed in the income of Ms. Deepti as her income is higher than Lovesh. If in the next year, Mr. Lovesh’s income is Rs. 1,750,000 and Ms. Deepti’s income is 1,250,000, the son’s income would still continue to be clubbed with Ms. Deepti.

Mr. Rajendra Mehta has a proprietorship business in India and employs his wife Ms. Raksha and pays her a salary. The salary income of Ms. Raksha may be clubbed in the income of Mr. Rajendra if she does not have any technical or professional knowledge or experience.

Income Tax Table for NRIs The net total income for the Financial Year (FY) 2014-15 will be taxed as per the following rates for NRIs:                                                                        Up to Rs. 250,000               :  0%                                                                        250,001 – 500,000              : 10%                                                                        500,001 – 1,000,000              : 20%                                                                        More than 1,000,000              : 30%

For example, if the income of Mr. Navnit Gohel, an NRI from Australia of 82 years is Rs. 1,250,000, his tax would be Rs. 206,000 (income tax of Rs. 200,000 + education cess of Rs. 6,000). If Mr. Ashok Bhatt from Switzerland has a net total income of Rs.11,250,000, he would pay tax of Rs. 3,625,600 (income tax of Rs. 3,200,000 + surcharge of Rs. 320,000 + education cess of Rs. 105,600).

Double Taxation Avoidance Agreements (DTAA): Mr. Kaushik, a US citizen, living in UK having an income from investments in India should be taxed only once on his Indian income. If his income is taxed in all three jurisdictions, he may not be able to get anything after tax and would cause him undue hardship. Double taxation means taxing the same income more than once.

due date for filing an income tax return is July 31 for non-corporate not-audit taxpayers. Only

for an individual/HUF having income as a proprietor or a working partner from a business or profession whose accounts are required to be audited, the due date of filing the return is September 30.

Special reliefs, exemptions and incentives have been provided in the Income Tax Act to NRIs/PIOs.

You know, Bob, the real patriots out there are people who earn big incomes—$100,000, $200,000, and $1 million or more a year—and spend it all. Congress should mint a new medal for this type of patriotism, Bob. It would be called the Congressional Medal of Taxation and Consumption. And as long as these patriots keep training their kids to be medal winners, we are in good shape.

The key point is that, in principle, interest income is the change in price associated with the passage of time. Capital gains and losses are the changes in price related to changes in value—for bonds that means a change in the yield. We'll see in Chapter 4 when we get into bond taxation how well these economic principles hold up in practice.

Even the most doctrinaire libertarian could argue that, although taxation may amount to a kind of theft, some such theft would in fact be proper if and only if it went to guarantee the survival of citizens: through a public healthcare option, a negative income tax or basic income, and of course a solid national defense—no more, no less. To further aim the guns of government where none are needed is trigger-happy and thuggish.