Making a "true" NIT proposal

["Dr. Sanjeev Sabhlok" <sanjeev@sabhlokcity.com>]

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NIT (Friedman's) requires that "[a]n extra dollar earned always means more
money available for expenditure". I tried to dovetail this theory with the
Indian tax rates schedule. I find that NIT will essentially boil down to a
supplemental system in India due to the vast gap in income between the
poverty line (for two in urban areas of Rs. 12,000 appx., today) and the
taxable levels which are above Rs.70,000. For those whose income falls in
the range [12000,70000], an "extra [rupee] earned always means more money
available for expenditure [to the extent of the full rupee]."

However, persons in the range [12000,70000] will clearly have the incentive
to show their income lower than Rs.12,000, similar to the incentive of
those above Rs.70,000 to show lower incomes [the tax evasion problem]. The
programme will in essence boil down to the proper identification of the
poor, and will not quite rise above the suppplemental system in India for
quite some time to come. Despite these conclusions, it is well worth
implementing, since it will give the poor of India some respite and
breathing space after many decades of independence, provided all other
subsidies are eliminated.

Kindly check out these estimates/ conclusions. SS

					Year		Rural		Urban
Poverty line (Rs.)			1993-94	2470.08	3376.20
Poverty line (Rs.)	approximate	1999-2000	4446.14	6077.16
Assume 1 parent supports 1 child; so multiply p.cap.income by two [these
are liberal estimates]
Poverty line for 2	persons	1999-2000	8892.29	12154.32

Calculations for urban areas:
Gross Income	Taxable	Tax payable
120000		100000		9900
100000		80000		5500
80000		60000		1000
70000		50000		0
50000		30000		0
20000		0		0
12154		0		0
10000		0		-2154
8000		0		-4154
6077		0		-6077


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