Tuesday, June 27, 2017
  Search 
Home
Opportunities
Partners
Publications
About Us
 
 
Please enter your email here, we would like to keep you informed.
 
 
Connect With Us - Facebook RSS
<June 2017>
SuMoTuWeThFrSa
123
45678910
11121314151617
18192021222324
252627282930
Sections
Liberty In The News
Liberty Events
Conference Proceedings
Culture
Agriculture
Democracy
Development is the Key
Economic Freedom
Education for Life
Enterpreneurship
Environment
Freedom of Expression
Freedom to Trade
Globalization for the Good
Health is Wealth
Intellectual Property Rights
International Relations
Liberty is Security
Limited Government
Principles of Politics
Privatisation
Population - the ultimate resource
Property Rights
Regulatory Affairs
Rule of Law
Tax Freedom
Facts & Figures
Opportunities
Competitions
 Tax Freedom
 
Pranab's tax breaks for higher-income brackets justified
Mint, India Wednesday, April 07, 2010


We have always had a socialistic bent to our thinking and have been taxing the rich to supposedly prop up the poorer sections of society. This line of thinking is what, in the past, led to rates in excess of 80%. Thankfully, such flawed thinking has given way to a far more pragmatic and equitable taxation structure, writes Suresh Sadagopan in DNA.

Post the budget, finance minister Pranab Mukherjee was criticised for not changing the tax structure for individuals earning less than Rs 3 lakh a year. But there is no need to lament on this.

We have always had a socialistic bent to our thinking and have been taxing the rich to supposedly prop up the poorer sections of society. This line of thinking is what, in the past, led to rates in excess of 80%. Thankfully, such flawed thinking has given way to a far more pragmatic and equitable taxation structure.

...

...

...

In 1980, under the administration of Jimmy Carter, the US inflation rate had climbed to 14.8%; the top individual tax rate was 78% and unemployment was 7.4%.

During this period, the US economy was in one of the worst states since the Great Depression of the 1930s. Reagan had to devise a constructive, sound tax and monetary policy to pull the US out of its economic quagmire. He cut income-tax rates for the top personal tax bracket dramatically — they dropped from 70% to 28% in seven years. GDP growth recovered strongly after the 1982 recession and produced five straight quarters of growth averaging 8.5%.

Reagan’s policies were influenced by Arthur Laffer’s model that predicts that excessive tax rates actually reduce potential tax revenues, by lowering the incentive to produce goods. The model also predicts that insufficient tax rates (rates below the optimum level) will lead directly to a reduction in tax revenues.
Consider what a 1996 study by the Cato Institute, a libertarian think tank, found:

On 8 of 10 key economic variables, the US economy performed better during the Reagan years than during the pre- and post-Reagan years

Real median family income grew $4,000 during the Reagan period after experiencing no growth in pre-Reagan years; it fell almost $1,500 in the post-Reagan years

Interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency

...

...

This article was published in the Mint on Wednesday, April 07, 2010. Please read the original article here.
Author :
Tags- Find more articles on - laffer curve | Ronal Reagen | Suresh Safdagopan | tax breaks

Post your Comments on this Article

Name  
Email    
Comment  
Comments will be moderated

Tax Freedom
More Articles


 
An Initiative of
LIBERTY INSTITUTE, INDIA
All rights reserved.