Tuesday, July 15, 2008

Can tax be fair?

A tax proposal in the US congress, that says you only pay tax on what you consume... no income tax or capital gains tax... Eg. you buy a car, you pay tax, you dont buy a car, you dont pay tax... simple. 
I wonder if something like this can drive down an economy into recession... I wont buy a car to save tax. Many people will not buy a car for the same reason. The car company loses sales numbers, and shuts down. More people then dont have money to buy something else, and so on.  Maybe yes, maybe no. People still need to buy cars :-)
Does that reduce the responsibility of the government in a way? The government says - Ok, you paid tax for what you bought. We are not accountable to you now.
OR no... what business does the government have in a sale between two parties. If you collect tax in a deal between two entities, you are answerable to both of them.
Of course, it has its demerits. Most likely, it wont be implemented, but then, even in matters of law (which I expect Indians to excel in, since its mostly bakr bakr) , they have some ideas for improvization...

us and them - can Indian society produce Gates


Founder of Microsoft - Bill Gates, programmer
Founder of GE - Thomas Edison, inventor
Founder of 3Com - Metcalfe, inventor at Xerox
Founder of Ford - Henry Ford, inventor
Founder of Mercedes - Karl Benz, inventor
Founder of Apple - Steve Jobs, programmer
Founder of AT&T - Alexander Graham Bell, inventor
Founder of Cisco - Len Bosack and Sandy Lerner, inventors of the router

Contrast this now...

Founder of TCS - Jamshed Tata, businessman
Founder of Mahindra (TechMahindra) - Mahindra, businessman
Founder of Birla companies - GD Birla, businessman
Founder of Idea - Aditya Birla, businessman
Founder of BSNL - Government
Founder of SAIL - Government
Founder of Wipro - Azim Premji, businessman
Founder of Bajaj - Bajaj, businessman

and the list goes on and on

Hardly a few companies in India founded by scientists or engineers.

The difference is that Indian businesses are run or founded by bean-counters or government. Whether a software company, electronics company or a kirana shop, it does not make much of a difference to the founder. The companies work like a kirana shop anyway.
Companies are founded as investments by business families.

In US (or developed countries), companies are run by engineers and scientists. Companies in US are born out of innovation more frequently than companies in India.
American (or lets say, western) companies not just make profits, but they also innovate and research (well, if not all, then a higher percentage of those companies anyway)

Now obviously, the question arises - Are we lacking in ideas or inventions? Not really...
More importantly, its not easy to start a company in India (think corruption, infrastructure, law and order, social security and safety, legalities, etc).

(Please dont call Tata Nano as an innovation. They havent been able to provide decent quality in an Indica car which is 3 times the price of the Nano)