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Tax Planning Story: Taxing Questions


How much tax is too much tax?


Josh ponders on Mahesh Das's tax burden.

Previous TaleTown Story: Aesop And Birbal

Saint Johns Easter mural"What are you thinking Pa?" Josh asked, as he walked alongside his father on their daily ritualistic trek.

"Obama has announced increased taxation," Rosh replied, "to continue to bail out those 'Too big to fail' (TBTF). Europe would follow suit."

"I don't think they have many other options. What it means for you and me is that our world is in deep shit, and going to get in deeper, at least for the moment."

"Pa, you promised to tell me about Mahesh Das?" Josh pouted and changed the topic. He didn't want to talk business. He knew it would bring Rosh back to depression.

"Mahesh Das?" Rosh was momentarily baffled. "Oh Birbal! Well, he was born in 1528, 14 years before Akbar, as the third son of a Hindu Brahmin family. His father was Ganga Das and mother, Anabha Davito."

"His economic and social status improved when he married the daughter of a respected and rich family."

"He was an accomplished poet, writing under his pen name 'Brahma' and serving at the Rajput court of Raja Ram Chandra of Reva. A collection of his verse is preserved to this day in the Bharatpur Museum."

"History differs on how he first met Akbar. But there are tales about how he had been invited by Akbar himself to come and visit him. Akbar had also reportedly given Mahesh his ring as a memento."

"So Mahesh travelled to the capital of Akbar's Empire - Fatehpur Sikri, to meet him and seek his fortune. He was awed by the splendor of this marvelous city."

"He was also in luck. Akbar was in his capital, and holding his famous Open Court in the Halls of Public Audience (Diwaan- E- Aam) that day."

"As he neared the gates of this building complex, he was stopped by one of the armed guards on duty."

"Where do you think you are going?" the guard asked him.

"To see the Emperor," answered Mahesh.

"Oh yeah?" the guard laughed sarcastically. "The Emperor has been waiting for you, wondering when Your Majesty would turn up."

"Well," said Mahesh. "I am here now."

"Fool!" guffawed the callous warrior. "You think the Emperor has nothing better to do than entertain bumpkins like you. Go away!"

Mahesh looked at the arrogant guard and half-smiled.

"Please, brother," he said softly. "No doubt you fought long and hard for the Empire and earned your stature. You've even got a cushy job inside the city walls now. I am here by your Emperor's personal invitation. Why stop me from entering and risk it all?"

The guard's jaw dropped.

"Why you impudent worm!" the guard snarled. "I'll ...I'll ..."

Seeing him go black and blue with rage, Mahesh quickly extracted Akbar's ring from his dust-weary clothes and waved it under the guard's nose. The man came unstuck when he saw the valuable ring.

"Where did you get this?" he finally asked.

"The Emperor gave it to me," Mahesh replied.

"What do you seek today?" the guard asked.

"My fortune," replied Mahesh.

The guard was perplexed. He still felt that this buffoon needed to be severely reprimanded for his impertinence. But, the ring looked precious. If it was indeed the Emperor's, its bearer could not be obstructed, delayed or prohibited.

'Perhaps he was here to receive some prize for his past favors,' he thought.

"You will be allowed entry on one condition," the guard conceded belligerently, "that I take half of whatever you'll get from the Emperor."

"Rip-off," Josh interrupted the tale.

"Yea, quite a steep service tax, isn't it?" Rosh responded. "What would you have done in a situation like this?"

"I would have gone away and returned another day," answered Josh, "when it was someone else's shift on guard duty."

"And what if the other guard also demanded as much?" asked Rosh.

"Then I would have gone away again and returned another day," answered Josh, "and kept doing it, until I found a guard who let me in without having to pay a bribe."

"What if that proved a bit tricky?" asked Rosh. "Even if you could find someone who allowed you a free entry, Akbar ruled a big kingdom and he was away a lot fighting rebels. So it could be a long time before Mahesh found the right man."

"And even if he did, it could be another long time before Akbar did an Open Court next. It is also possible that all guards were corrupt."

"Are you trying to lead me into greasing their palms?" asked Josh.

"That is a decision for you to make," answered Rosh. "I am just discussing scenarios while pointing out that there is an opportunity cost of waiting."

"Instead of paying that, some people prefer to pay a convenience cost for getting what they want done immediately. Like you may pay more to buy something now rather than later, or buy something dearer from the dairy next door rather than buying it cheaper from a distant supermarket."

"I could negotiate with them," answered Josh, "and shop around for the guard who took the least cut. Having to give away half of my earning would be a rip-off."

"So it is with taxes in many countries at the moment," Rosh said, as he walked on, lost in his own thoughts.

Next TaleTown Story: The Birth Of Birbal

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