How the money you don't pay affect you

Please go through the below simple Economics,  which will give a good idea on why Taxes are more important not only for Government but also how beneficial to its  citizens, indirectly!

A Government should invariably need GOLD to run the country for their day to day business!   Since the Gold cannot be pumped into market, it chose to use the Notes/Currency  instead!

And printing  the notes/currency  is done under the watchful eye of the IMF ( International Monetary  Fund).  A Govt. cannot print notes left & right! It has to be approved by IMF, however it can print any denomination of notes but it should be equivalent to the total weight of the  Gold,  the Government owns.

Let us compare two countries! I have taken America and India because we always compare our country with America! 

For calculation purpose let us assume that , Government of America holds  10kg of Gold and Government India   holds  same 10kg of Gold

And now:

America printed $ 1 dollar notes of  10000 nos which is  worth $10000.  So,  1 gram of gold is equivalent to 1 Dollar  (10000 grams=10000 notes)

India  Printed  ₹ 1  notes of 10000 nos  which is worth ₹ 10000. So here 1 gram of gold is equivalent to 1 Rupee ( 10000 grams=10000 notes)
Now the value of  Dollar and Rupee are same, i.e. $1 equivalent to Rs.1

Now,  American government releases $10000 notes into the market and sets 20% as tax for each transaction.  And   it  receives back $ 200  in the form of taxes.   Now,  the American Government, with that $200,  buy more 200 grams of Gold with that money and release another $200 worth of notes in the market. So now the American Government  hold 1 Ton and 200 Gms of Gold and American Market has  $10200 worth of notes.  And still 1 Gram of Gold is $1.   And this will keep on going  and the 1 Gram of Gold is $1 always as long as Government receives 100 % tax amount in return as it buys gold for the worth of tax received and printing more notes equivalent to the gold and releasing in the market!!

Now in India,  the   Indian Government too releases  ₹ 10000 in the market and sets  20% as tax.  But it  only receive back  ₹ 50 in the form of taxes!!  Which means only ₹ 2500 of the released amount  were transacted officially!    Because balance   of tax  for ₹ 7500 is till rotating in the hands of unwanted elements in the market, who does not want to pay tax!  This amount is “unaccounted money” which is called ‘black money’.  Though this ₹ 7500 still in the market,  it is not accounted in the books  of government officially.   So,  the money in the market is only Rs. 2500 as per government records!  Whereas ₹ 7500 is also being used in the market! This is called parallel economy!!   At the same time  the government now can only buy 50 Gms of gold from the tax amount it received.  So the Govt buys that 50 Gms gold and release ₹ 50 worth of notes into the market. Now the money in market is ₹ 2550 (₹ 2500 + 50) only officially,  whereas it is supposed to be ₹ 10050.  At the same time the Govt. has to meet  the demand for more notes, because those ₹ 7500 has gone into unaccounted!   So the government then decided to print more ₹ 7500 notes  and to release them in the market. Here comes the IMF which does NOT allow this !!   It asks the government to reduce the value of the rupee because the government is ‘pumping’ more notes against the same weight of Gold it holds, that is 10kg 50 Gms!  Government has no choice (because it did not receive 100% tax return  for the amount it released and it could not buy more gold)  and hence reduces the value of Rupee and pumps ₹ 7500 more notes into the market. So the market has now ₹ 17550 whereas Govt still only hold 10kg 50 grams!! 

So now the value of ₹ 1 has gone down to ₹ 1.74

So when compare to US Dollar  as above, which was $1 to Rs.1, it is now $1 to ₹ 1.74 !!!

The notes are pumped into the market  regularly to meet the demand of the market  and the value of the Rupee is depreciated every time when Gold reserves are same.  That the reason why the Rupee is 67.80 to a Dollar today!!

Had the Indian Government receives 100% tax in return, the value of Rupee would have NOT gone down drastically!! 

Now, can you all understand why the Governments need taxes?! And how, we citizens are benefited?   If Rupee is strong and stable then the value of our properties/assets  will be strong too!

That is the reason why the America is the richest country as  95% of citizens (at various brackets) are paying their taxes!!     Whereas in India?? Can anybody guess?! No marks for right guessing!  Just type in google “percentage of taxpayers in India”

This article is not supporting  Modi OR whosever talk against demonetization! This Article is to bring about  and to educate on how the Black Money damages and ruins the Country

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