Why the Modi Government is Misplacing the Tax Burden on the Middle Class

India’s current tax policies, as seen under the Modi government, have increasingly turned the spotlight on the middle class to shoulder a disproportionate tax burden. This deviation from fair taxation is a result of complex economic and political landscapes, particularly the influence of the wealthy elite in shaping tax laws. Understanding why the middle class is being overburdened and what can be done to alleviate this burden is crucial.

The Middle Class Pay More Taxes

The middle class constitutes a significant portion of the national revenue through taxes. Despite the rhetoric of inclusive growth, the fact remains that the top 1% pay about 40% of the income taxes, while the top 50% shoulder nearly 97% of the income tax burden. This stark reality leaves the middle class bearing the brunt of the financial strain.

Why the Rich and Poor Aren’t Taxed As Heavily

For starters, the poor often lack the financial muscle to pay taxes, while the rich frequently pay off the government and legislators who write the tax laws. This leaves the middle class as the vulnerable segment on which the tax burden is disproportionately imposed.

The Influence of Wealthy Elites

The deep-rooted influence of the wealthy elite in Indian politics complicates the tax landscape further. Wealthy individuals often use their financial leverage to shape favorable tax laws that benefit them, at the expense of the middle class. This is reflected in the historical anecdote of a friend using his personal limousine without being caught by law enforcement. Wealthy individuals can afford to not only avoid punishment but also influence governmental actions to their advantage.

Historical Context and the Varna Hinduism Influence

The tax policies of the Modi/RSS/BJP government have been criticized for being rooted in Varna Hinduism, an ancient social hierarchy that promotes a caste-based system reminiscent of slavery. This system can be traced back to the Manusmriti, an ancient Indian legal code that ranks people based on their social status. In the 1980s, a friend’s personal limousine and a later purchase of a Jaguar XJ illustrate how the rich can navigate the tax laws to their advantage, often facing minimal scrutiny. This disparity highlights a systemic issue that still influences modern tax law, perpetuating a cycle of wealth and class inequality.

Consequences and What Can Be Done

Such imbalanced taxation has severe social and economic consequences. The middle class, often the backbone of economic stability, is increasingly strained, leading to a reduced purchasing power and economic prosperity. To mitigate these issues, the government can take several steps:

Reform Tax Laws: Revise existing tax laws to ensure a more equitable distribution of tax burden. This includes eliminating tax loopholes that benefit the wealthy and addressing hidden taxes that disproportionately affect the middle class. Invest in Public Services: Allocate a significant portion of the tax revenue to public welfare, education, and healthcare. By improving these sectors, the government can enhance the quality of life for all citizens, especially the middle class. Broaden the Tax Base: Encourage small and medium enterprises (SMEs) to come forward and pay taxes. This can be achieved through simplified tax systems and reduced formalities, thus ensuring a more diverse and fair tax base.

In conclusion, addressing the pervasive tax burden on the middle class requires a comprehensive and equitable approach. By confronting the root causes of this imbalance, the government can work towards a more just and prosperous society for all Indians.