A case for JND in Taxation

Latest news reports suggest that the government is planning to increase taxes. Hardly surprising, considering the proliferation in the number of government programs; which help our country by a miniscule amount (in quantitative terms) but aid the Swiss banking industry in a big way. Our fiscal deficit has hit double-digits and although our government officials would love to pretend that everything is hunky dory, only a rank moron would actually buy that.

I am not surprised by the fact that the government is planning to increase taxes but what worries me is the manner in which they are going to do that. I must confess that I am worried by the fact that I will have to pay more taxes. But that’s not the only reason why I am worried. I am worried more by the fact that if this government keeps raising taxes and cutting subsidies, then they may not win the next general elections. Years ago, BJP had described Congress as a ‘terrible alternative’. Unfortunately for BJP, that’s a description which suits them more these days. So we have a choice between a group of people whose tongues have the propensity to lick the boots of a certain Italian lady and a group of people who like to travel in chariots once every five years (and that’s being charitable to them). I never thought that I would ever support a Congress led government, but in this case I would prefer status quo.

So I have no doubt in my mind that the government is going to fleece me and still I want them to stay in power (Please feel free to call me a masochist). Now that my allegiance for the foreseeable future is clear, in my opinion this is how the government should go about fleecing the people of this country.

‘Just Noticeable Difference’ is a concept which can save the day for the government. ‘Just Noticeable Difference’ (JND) is defined as the smallest detectable difference between a starting and secondary level of a particular sensory stimulus. To keep a long story short, the government should increase the taxes, in each tax bracket, by an amount which is just slightly less than the JND for the majority of the people in that tax bracket. If they keep doing that over the next five years, some of us may not notice it even if our tax bill doubles over the next five years!!!!

And that’s just the tip of the iceberg. To find out the JND for each tax bracket, the government can conduct a survey which would in turn offer them umpteen opportunities to increase the number of zeros in their Swiss bank account. Who said that you can’t have your cake and eat it too?