[chdir]

Some stats on Income tax payers from India :

"Data shows only 1% of population pays income tax, over 5000 pay more than 1 crore ($145K USD)"

Only "six individuals fell in the high-end earning bracket of Rs 50-100 crore (7-14 Million USD) of salary income."

Wow ! Just 6 individuals. India's got NO shortage of millionaires & billionaires. The abysmal income tax collection clearly indicates a gaping problem with rules & their implementation.

- Source : http://indianexpress.com/article/india/india-news-india/data...

[tomp]

Judging from experience from other countries, people don't become billionaires by earning income (but rather by growing capital).

I think it's unfair that income is the primary base for tax, not capital, but that's life.

[mangamadaiyan]

Honest question: isn't the growth of capital also an income? And if it is, it should get taxed, no?

[antisthenes]

Growth of capital is not an income, because it is subject to uncertainties in valuation and depreciation.

Income is usually measured in a set amount of currency, and is generally perfectly liquid, while capital can sometimes only be valued if there's a buyer.

So no, it is not also an income. This is one of the most common misconceptions here on HN (I often see wealth and income used interchangeably)

[tomp]

Besides the points raised by other two commenters, the difference is also that capital gains (i.e. income from liquidating capital) is often taxed at different (lower) rates than job income. I think that't patently absurd, but I guess our world works according to the "might is right" principle.

[a3camero]

It's usually taxed when its sold, rather than when the increase in value happens. More info: https://en.wikipedia.org/wiki/Capital_gains_tax