this story originally appeared in on feb 4 2013 new delhi lowincome earners and entrylevel employees have been the biggest beneficiaries of tax cuts in the past 10 years the effective tax rate of a person earning 3 lakh a year has dropped from 141 in 200304 to 34 now an et analysis indicates middleincome earners have also seen a substantial drop in effective tax rate in contrast highincome earners and the uber rich have got only marginal relief in percentage terms an individual with a taxable income of 8 lakh a month was paying 325 tax in 200304 despite the reforms and tax cuts he pays 291 now see chart the data assumes significance in view of the nationwide debate on the possibility and desirability of higher tax rates on the very rich it is not possible to directly compare current income levels with those prevailing in 200304 today an entrylevel worker earns as much as 2500030000 a month ten years ago a middlelevel manager was making that much in order to make incomes comparable they were adjusted for inflation and the tax payable calculated on that income according to the tax slabs and rates prevailing in a particular financial year for instance 10 years ago the indexed value of an income of 10 lakh at todays prices was only 543 lakh the tax calculations did not take into account the various tax deductions and exemptions because it varies across individuals so the income is the net taxable salary of the individual after all deductions and exemptions while low and middleincome earners account for almost 95 of taxpayers in india it is the rich who bring in the largest chunk of the revenues as the table shows the 406 lakh taxpayers with an income of over 20 lakh a year account for 63 of the total tax collections in an interview with this paper last month the influential chairman of the prime ministers economic advisory council c rangarajan had suggested that to augment revenues the government could at some stage consider a higher marginal tax rate on those with substantially higher incomes in an interview with et now published on january 31 finance minister p chidambaram who will present the budget on feb 28 had alluded to the debate without indicating where he stood on the matter i have heard an argument that on some occasions when the government needs resources the very rich should be willing to pay a little more the argument is being put forward by very eminent people i am not endorsing or rejecting that argument he said