What is common between high taxes on personal incomes and robbery? Both dispossess the earner of his legitimate income by unfair means. Is there any upper limit on personal income tax? No, there is none. The greatest flaw of  democracy is this power of taxation without any limit in the hands of the elected members of the legislature. Until the dawn of modernity, the people reposed their faith in the religious leadership, but found to their greatest horror that it was abused for the benefit of a few. So they shifted to the political leadership. Democracy and dictatorship were the two options, where one favoured capitalism and the other communism.

Communism caused such disillusionment that it was abandoned by the most faithful in favour of democracy. Unfortunately, it didn’t take much time for them to become disenchanted with democracy.

Democracy needs a large number of elected representatives and bureaucracy. In reality these two categories form a network of oligarchy, which converts democracy into the Dictatorship of the oligarchy! As against the Dictatorship of the Proletariat, it offers only another version of Dictatorship, which I have named The Dictatorship Of The Oligarchs. They live life like small monarchs in a democratic format. They think of the people once in five years or whatever is the term of their office before the next election. They don’t bother whether they get elected by less than 30% of the total number of voters or 40%. Rarely someone among them polls above 50%, which should be the minimum ideal percentage for someone to enter the legislature. Such a flawed election mechanism of democracy introduces a deformity in the system of governance from day one. That is what I call “taxploitation”.

Democracies, especially those of the India kind, tend to divide the people into several social,political, religious, linguistic,cultural and economic categories.One  such category is called BPL or Below Poverty Line. Special welfare schemes are drawn up to  reach succor to such people, particularly food at subsidized rates. That gives the elected members of the legislature  excuse to increase personal income tax in the name of the BPL persons year after year. In fact, not only personal income tax, but indirect taxes are increased without any scruples, causing distress to the people hovering just above the poverty line. While the Economists, who have invented the poverty line, have not yet drawn any richness line, it can’t be said as to how many people qualify to belong to the BRL or Below Rich Line. But one thing is certain, not more than 10% people in any democracy will cross the rich line, certainly not in India. The economists are happy to call them the middle class, which means neither poor nor rich. They are basically the people who feel the pinch of ever increasing personal income tax and indirect taxes. They are the most vocal critics of government policies. They are the class which sees the rich 10% cheating the country, meaning thereby the middle class. Theirs is the most vocal voice against the corporate, which are seen to be making windfall profits.

The perception of the 90% can’t be wrong. If a person from the middle class fails to pay income tax, he can be punished by way of fine and a term in jail. When the corporate swallow public funds, share holders’ money, banks’ money, provident fund deductions etc, they are rewarded by bail-out packages. The 90% pay taxes named in so many confusing terms that they always remain in debt, whereas the corporate or their owners remain wealthy even after declaring bankruptcy.Sample these: sales tax, purchase tax,luxury tax, entertainment tax, entry tax, octroi, VAT,income tax, gift tax,property tax, building tax and several such taxes. As if it was no hassle for the tax payer, the government of India was sold a brilliant novel idea of “service tax”. This when there are several other forms of taxes such as licence fees, registration etc, education cess etc and many more methods of extortion. The rich never bother to pay these. In fact, the corporate have been found to have escaped even customs duty. They fail to return the banks money in huge amounts and income tax. They are respectfully categorized as “defaulters”. Their names are not made public. The amount owed by them to the exchequer is never satisfactorily disclosed. The government makes very feeble attempts to realise revenue dues from them. When it tries, the corporate drag it to the courts, where cases take decades to decide until all the appeals are exhausted. The Vodafone case is perhaps a good illustration of what twist and turns court cases take in civil matters. Billions of dollars worth unrealized tax revenues and banks money are involved.Still that is not all. There is some more. That more is generation of black money or  earnings on which tax has not been paid in violation of the law of the land.

Black money has given rise to black economy. The iceberg of black economy is the sinful creation of economists of democracies , who came to mentor  the members of legislatures.Democracy is no governance of virtue. It professes rule of law, but rules by abuse of law. The greatest abusers are the legislators themselves. Their dealings are called “corruption”. The nexus between corporate and governments have discredited democracy at the turn of the last century. Democracy looked the best option, so long as the opposite of it in communism offered a convenient punching bag. Once that bag disappeared, all the black spots of the black deeds of the black economy of democracy surfaced. The acts of corruption of the democratic governments, bureaucracies and corporate have become so nefarious that even the UNO has to devise a convention against corruption. The Transparency International has been tracking it for decades. Nothing highlights it more than the Arab Spring, jasmine Revolution,Occupy Wall Street  movement, Transparency Revolution or the Lokpal Bill movement of Anna Hazare in India. The latest is the protest in the USA, UK and other countries against uninhibited taxation or increase in university fees or cut down in labour wages. This unrest  emanates from the legislators having converted democracy into the dictatorship of the oligarchs.

For the only reason that there is no upper limit on taxes, the legislatures have mistakenly come to believe that they have the divine power to levy any amount of taxes. That is wrong. That is nothing short of robbery. That is more than extortion. In the context of ubiquitous corruption from the developed to the least developed countries and the growth of the black economy over the legitimate economy, there has to be put an upper limit beyond which the state shall not be allowed to levy taxes on the earners and creators of wealth. It is not justified that only a few create wealth and all others consume it, especially by corrupt means. The state has the responsibility to create equal opportunities for employment and incomes. Rest can be left to the individual enterprise.

Limit on maximum tax is also necessary to avoid wasteful expenditure. Legislators have been found to be lodging complaints against officers charged with the responsibility of deciding contracts for purchase, such as defence equipments like trucks, tanks or helicopters. The rival bidders secure the official letter head from the legislator and write the letter of complaint as serves their interests. Such tactics delay decisions leading to more than 100% price increase, waste of precious time of all the officers in the government, courts and the legislatures. The Commonwealth Games, 2 G, Adarsh Cooperative Housing Society, S Band, coal block allocation and Tatra Trucks related scams have completely undermined governance in India in the last 8 years and have created a very ugly situation where the paid media is bent upon depicting a war between the Chief of the Army and the Government. In another case, a legislator complained against a Lt General, almost  destroying his career, though his complaint was found to be unsustainable. The communication gap between the Cabinet secretariat, who had made the necessary inquiries and the Army Chief, who had sent it for inquiry to the Central Bureau of Investigation (CBI) has created another unseemly controversy. Should such a legislator be not made to pay for his unfounded allegations against the officer? It is important to decide, since such complaints come in 1000s every year and dedicated staff of the Prime Minister’s Office in scores has the only duty to go through them and forward them to the  concerned ministry , get their comments or advise them to dispose it off under intimation to them. All costing a lot of tax payers’ money, giving the legislators enough justification to increase taxes further. If there is an upper limit on the legislature to impose taxes, such waste will be avoided and quality of governance will improve. Chances of corruption will shrink further, cleaning up the administration and ministration.Capitalism’s atrocities will not be tolerated anymore. The uprising against it in America, the symbol of capitalism, followed by protests in many countries against the world leaders in meetings like G20 etc should be taken seriously. The voice of the 90% can no more be ignored. The time of ethics deficiency in economics is coming to an end. The economic model of sucking the 90% by way of profits and taxes and public money from equity or banks for decades and then showing philanthropy towards the end of one’s life is not going to satisfy the general aspirations towards fair distribution of wealth and consumption.

For a healthy world socio-economic Order, taxploitation must end within this decade, otherwise it will be too late for capitalism and democracy to survive. Iraq, Afghanistan or Libya, as elsewhere, can hardly provide anymore justification for opening newer theatres of battle action. People are fast losing faith in democracy and capitalism. Is the world going to see something altogether new for them to repose their faith in?


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