9%

All the taxes worth talking about comes from 9% of the people living in most nations

I was recently watching a series on Netflix produced by Obama called ‘Working’. He talks about what actual work looks like in different strata of society.

The poor, end up working 3 jobs a day to barely make ends meet.

The middle, who often have tough acts to manage but also manage to get by on the income that they make.

The top of the pyramid is the ultra-rich who have money pouring out of every orifice of their body.

And then there is the 9%.

The 9% are educated, white-collar workers who like to brandish the flag of the middle class. They have no clue how hard it is for the poor and they think they are not rich.

The point that Obama missed out on is that they are not the middle class but the tax-paying class.

The first thing that people get wrong is, wealth when looked at from this perspective of statisticians represents the family wealth, not the individual wealth and certainly not Income.

Source: Statista

Globally, the top 9% are those who are worth more than $120,000 as a family fall in this bracket.

Source: Mint

In India, the number is actually around Rs 8 Lacs in wealth. If you earn Rs 2 Lac per annum or more you are probably in the 9%. Every single person reading this blog is a part of the 9%; some are part of the 1%.

The bottom 90% does not earn enough to pay taxes. The top 1% has myriad paths to avoiding taxes including escape to tax-friendly jurisdictions, lobbying for favourable tax laws, invention of philanthropies, etc.

The 9% have no such way out.

They are bound to their tax jurisdiction by their work, and cannot take off and resettle in another country as per their whims and fancies. Their incomes are not negligible but at the same time not large enough to force through special legislation.

The population of India is 1.4 billion and yet we have only 63 million taxpayers. Sure there may be those who are evading taxes but that number is not 1 billion.

In the UK which has a population of 67 million, there are only 9.2 million taxpayers.

In the US there are 157 million taxpayers in a population of 330 million but that is only because of their bat-shit-crazy tax code that starts taxing people from the first dollar in income. Despite that, 50% of the population does not file taxes and the bottom 50% of those filing taxes pay a mere $500 on average. Just for comparison, the 9% ends up paying $50,000 in taxes on average.

This seems to be consistent across countries.

Without the 9%, every government in the world would be bankrupt.

What if the 9% revolt?