by Rahul Chimanbhai Mehta Rrg at December 13, 2014 at 11:21PM

I have proposed wealth tax as follows. . Wealth tax = 2% of market-value of wealth minus 1000 sqft land per family minus 2000 sqft construction per family minus half the income taxes he paid on salary minus full taxes he paid on his business income minus PF he paid for his employees minus half the taxes his employees paid on their salaries minus excise , service tax, vat , electricity tax he paid minus (Rs 100 per member per year ) . Member can be voting or non-voting member. Any citizen can become member of 5 companies , trusts . . So in effect, wealth tax will come only on vacant land. . To this, I would add one more concept ----- wealth tax credit. . what is WTC? WTC is wealth tax payable is negative. When negative , it will become WTC. So next year, WTC will be substracted or added depending on next year's wealth tax payable. WTC will not be inheritable. . So say a person has zero wealth and he has paid income tax of Rs 5 lakhs for say 20 years. Then his WTC is Rs 1 crore. Now say he has zero income and he buys wealth of Rs 1 crore. Then for next 50 years, he wont need to pay any taxes. But if he passes away, then WTC transferred to his kids will be zero. . IOW, WTC is earned when person has less wealth and pays more income tax. And WTC enables him to keep his wealth without getting taxed till WTC runs to zero. . WTC will be helpful when persons have been very productive for years, but for few years, make losses, due to ups and downs. The WTC earned in previous years will ensure that they can use and keep wealth without wealth tax. . With above concept, WT of 3% is also viable. The benefit of 3% WT is that inheritance tax can be removed. Inheritance tax has many problems ---- it doesnt apply on trusts, doesnt apply naturally on companies and doesnt apply on foreign trusts and foreign companies. It is also difficult toapply inheritance tax on properties owned via chain of companies, banks and mutual funds . Whereas WT suffers so such problems. .

by Rahul Chimanbhai Mehta Rrg



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