Bad Tax of the Day, Pakistan Edition

Pakistan has a lot of problems.  We usually associate the country with violence, poverty, and instability, and to that list we can add one more: tax evasion.  I won’t pretend to rank these problems in any sort of way or pontificate on any sort of root causes, but it’s fair to say that it’s very difficult to maintain a functioning state when power and tax evasion are positively correlated.

It’s not like this fact is a secret in Pakistan.  And obviously tax evasion is a bad, especially when only those most capable of paying taxes aren’t.  But the NY Times, which as a newspaper is predisposed to the narrative fallacy, stretches the story when it links resentment against tax evasion to  the rising insurgency.  What I would really like to see is a comparative study: in countries with similar levels of GDP, what percentage of government revenue comes from an income tax?  And of that total, what percent is paid by the those in the 5th percentile of income?  I doubt that places like Laos, Cambodia, Kazahkstan, or Belarus exhibit much variance (though these may not be the most accurate comparison countries).

What is really scary, however, is how you could replace the Pakistani names and proper nouns and have a decently accurate description of America:

“This is a system of the elite, by the elite and for the elite,” said Riyaz Hussain Naqvi, a retired government official who worked in tax collection for 38 years. “It is a skewed system in which the poor man subsidizes the rich man.”

The problem starts at the top. The average worth of Pakistani members of Parliament is $900,000, with its richest member topping $37 million, according to a December study by the Pakistan Institute of Legislative Development and Transparency in Islamabad.

While Pakistan’s income from taxes last year was the lowest in the country’s history, according to Zafar ul-Majeed, a senior official in the Federal Board of Revenue, the assets of current members of Parliament nearly doubled from those of members of the previous Parliament, the institute study found.