Levying tax on inheritance will check the obsession to accumulate wealth through illegal means for the next generation
The subject of tax is seldom an emotional issue as it mostly concerns the manner by which the government generates revenue and encourages or discourages certain sections of trade and industry. History shows that whenever the subject of tax becomes an emotional issue, some fundamental change follows. Today we are in the midst of such a situation. The present discussion on introducing an inheritance tax makes for such a situation. Though it was believed that the Union Budget 2013 will introduce 'Inheritance Tax', nothing really came out of it.
The Indian society is deeply family centric and that accounts for much of its strength, resilience and much of what is desirable in it. As a society the concepts of ‘paap’, ‘punnaya’, ‘dharm’, ‘karm’, the continuity of the soul through its journey of many lives, are well accepted and deeply embedded concepts. Yet we see around us, the wide prevalence and acceptance of corruption and criminalisation of society. Any attempt to resolve this troubling dichotomy leads to a web of interconnected cause-effect solutions that are obviously not appropriate to apply.
Our family-centric existence and value system, in the absence of any social economic and humanitarian safety net becomes our greatest flaw. In the absence of such a safety net, all our values, morality and deeply embedded concepts are sacrificed at the altar of the family. In the absence of such a safety net we completely and absolutely dedicate our lives to the accumulation of wealth for the next generation. The effort is largely wasted and the situation spirals out of control. India follows the policy of unfettered inheritance; no matter what the size of the inherited value it is not taxed. This in a family-centric society soon proves socially disastrous.
We have an inheritance law that allows for vast fortunes to be passed on to the next generation. This for our highly family-centric society works like sweet poison. An individual in our society is programmed for the accumulation of wealth for the next generation, and behaves like a ‘dynastic slave’. Of all the laws in our Constitution, the law of inheritance is the one that is closest to the heart-mind of any Indian. This is the law whose true spirit is fully imbibed in our culture and we hold it as a sacred right. This is one law, out of so many, that is engraved in the collective psyche and transcends all caste, creed, religion and social stature. ‘Baap ki Jaeydaad’ is dear to us, to a fault and a few make much out of it. In our country today we see the serious ill effects of unbridled inheritance. It is the root cause of all and every corruption that aims to accumulate wealth, because the corrupt know that the wealth will be passed on to the next generation, who shall hugely benefit from its compounded value and who in turn, shall add to the kitty and compound it ever more.
Surprisingly, the Western thinkers had envisioned such a situation and had largely protected their societies from this malady. They well understood that the free market system that they were propagating could soon degenerate into a corrupt and despotic oligarchy. They understood that unfettered inheritance will lead to polarisation or concentration of wealth and opportunity in a few hands and will hinder competition and enterprise. So they rationalised their inheritance policy. A rationalised inheritance policy in simple terms is as follows:
No tax is levied on inheritance of a value of say $1 million, beyond which the tax is 40 per cent.
The rationalisation has at its core the central principle of capitalist societies: the principle that social privileges should be earned, should be a reward for contribution to society, rather than handed out by government leaders or passed down by aristocratic dynasties. In 1935, Franklin Roosevelt took up the crusade, striking out at great fortunes, again for moral as well as economic reasons. “The transmission from generation to generation of vast fortunes by will, inheritance or gift,'' declared F.D.R., “is not consistent with the ideals and sentiments of the American people...Inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our Government.''
Countries that have not rationalised their inheritance policy all suffer from similar situations. India, Pakistan, Brazil have wealth and opportunity polarisation at pathological levels, they all suffer from rampant and socially accepted corruption and poor governance. Recently, Brazil stepped up efforts for collection of the inheritance tax. Egypt, an ancient civilisation, a society that had withstood the vagaries of modernity and the dialectics of many conflicts, scrapped their inheritance policy in 1996. Soon, polarisation of wealth and opportunity and a very high level of corruption made the society ungovernable with results that were seen by all and blamed on a kind of ‘spring uprising’.
Pakistan is one unfortunate country where the serious ill effects of unbridled inheritance in a feudal society have become very clear. The polarisation of wealth and opportunity is extreme and is tearing up the social fabric of society. The recent example of the Swat Valley brings forward what is in store for those societies that do not stop this polarisation. The Swat valley in Pakistan was taken over. The fact is the entire Valley was previously controlled by just four dozen landlords. The landlords and the elected leaders were mostly the same people, protected by a de-motivated and underpaid police force.
In India the extent of polarisation of wealth and opportunity can be gauged by the fact that 1, 20,000 individuals (0.01 per cent of the population) own more than 33 per cent of the nation’s wealth. Is it then surprising that 182 districts across 20 states have witnessed Naxal activity? All big ticket corruption has a singular driving force: To amass wealth to leave for the next generation. With the total absence of any social safety net the perpetrator of such misadventures find ready followers in the society. By this simple logic the evil is perpetuated. The polarisation spares no one, even the reasonably well off have to run hard and fast to remain in the same place. The polarisation of wealth and opportunity and the resultant mindset it generates in society leads only to civil chaos. This evil soon breaks the many unseen bonds so critical to the existence of the social fabric that the resultant anarchy cannot be held back.
It is not essential that all the superrich will oppose the introduction of inheritance tax, because many among them realise that it is good to be rich and powerful but it is better to be rich and powerful in a stable society. The Gates-Buffet initiative, where in the super rich have pledged 90 per cent of their personal wealth to charities after their deaths, is a case in point. Such business leaders realise that inheritance, like patents and trademark rights, is just another benefit that civilised society gives to individuals. At no time should this benefit be used to ransom the very society that grants it. The introduction of an inheritance tax, rationalised to the Preamble and the Directive Principals of State Policy of our Constitution, will be a big step in nation building, inclusive growth and a giant leap in our ability to govern this great country.
There is a very strong correlation between good governance and the presence of a rationalised inheritance policy. Societies that practice unfettered inheritance are generally poorly governed, the only exceptions to the rule worth quoting are Canada and Australia where there is no inheritance tax and yet good governance prevails. Russia and China also have no inheritance tax but the cultural situations are not comparable to India. Corruption and polarisation of wealth and opportunity have reached their extremes in our country. How long will it take us to react?
Courtesy: GOI Monitor
The current account deficit for the full fiscal year ending in March 2013 was $87.8 billion, or 4.8% of GDP, compared with $78.2 billion (4.2%) a year earlier
India’s current account deficit (CAD) for the March quarter was $18.1 billion, or 3.6% of GDP (gross domestic product), lower than expected and below the $21.7 billion deficit a year earlier.
The current account deficit for the full fiscal year ending in March 2013 was $87.8 billion, which was 4.8% of GDP, compared with $78.2 billion (4.2%) a year earlier.
The April-March CAD stood at $88.2 billion and the Q4 Balance of Payments (BoP) stood at a surplus of $300 billion versus a $600 billion deficit year-on-year. “The high current account deficit witnessed during 2012-13 and it’s financing increasingly through debt flows particularly by trade credit resulted in significant rise in India's external debt during 2012-13,” said the Reserve Bank of India (RBI).
“However, magnitude of increase in external debt was offset to some extent due to valuation change (gain) resulting from appreciation of US dollar against Indian rupee and other international currencies,” the central bank added.
The balance of payments for the January-March quarter was a $2.68 billion surplus, compared with a $5.7 billion deficit a year earlier.
For fiscal year 2012-13, the balance of payments surplus was $3.83 billion, compared with a deficit of $12.8 billion a year earlier.
India's external debt, as at end-March 2013, stood at $390.0 billion showing an increase of $44.6 billion or 12.9% over the level at end-March 2012. According to RBI, the increase in total external debt during financial year 2012-13 was primarily on account of rise in short-term trade credit. “There has been sizeable rise in external commercial borrowings (ECBs) and rupee denominated Non-resident Indian deposits as well,” it said.
Pay-to-prescribe is illegal, but doctors say they haven't been influenced by the money they get for promoting drugs they also prescribe to large numbers of their patients
This story was co-published with NPR.
When the blood pressure drug Bystolic hit the market in 2008, it faced a crowded field of cheap generics.
So its maker, Forest Laboratories, launched a promotional assault on the group in the best position to determine Bystolic's success: those in control of prescription pads. It flooded the offices of health professionals with drug reps, and it hired doctors to persuade their peers to choose Bystolic — even though the drug hadn't proved more effective than competitors.
The strategy worked. In the 2012 fiscal year, sales of Bystolic reached $348 million, almost double its total from two years earlier, the company reported.
Now, data obtained and analyzed by ProPublica suggest another factor in Bystolic's rapid success: Many of the drug's top prescribers have financial ties to Forest.
Top Bystolic Prescribers
Below are the top 20 prescribers of the blood pressure drug Bystolic in the Medicare prescription drug program in 2010, as well as the speaking fees they received from maker Forest Laboratories in 2012. Forest only began reporting such information last year. Some of the prescribers below also may have received meals, educational items or travel expenses from the company.
* The prescriptions attributed to Hew Wah Quon include 1,396 attributed to the doctor himself and 594 credited to his medical practice
At least 17 of the top 20 Bystolic prescribers in Medicare's prescription drug program in 2010 have been paid by Forest to deliver promotional talks. In 2012, they together received $283,450 for speeches and more than $20,000 in meals.
Nearly all those doctors were again among the highest prescribers in 2011, the most recent year for which Medicare data are available. Forest began disclosing its payments only last year; the company didn't specify which drugs doctors spoke about.
Dr. Bernard Lo, who was chairman of a national panel examining conflicts of interest in medicine, said he doesn't believe the findings are coincidental.
When there's no evidence a drug is better, "You have to question: Why are doctors prescribing this?" said Lo, president of the Greenwall Foundation, a New York City nonprofit that funds bioethics research. "What your evidence suggests is that there is a financial incentive for doctors who receive payments from drug companies" for pitching their products.
Until now, doctors' prescribing habits have been secret from all but pharmaceutical companies, which pay millions of dollars for such information from other firms that collect it.
ProPublica's analysis marks the first time anyone has matched payment data made public by drug companies with physician prescribing records from the Medicare drug program, which covers about 1 out of every 4 prescriptions in the U.S.
Reporters identified the drugs that were most actively promoted to doctors in 2010 and 2011 using rankings from Cegedim Strategic Data, a company that tracks marketing expenses.
The top prescribers of some of these drugs, in addition to Bystolic, also received speaking payments from the companies that made them. As a group, these heavily marketed drugs were new or had new uses, were expensive and often showed little benefit over existing medications or generics.
For example, 9 of the top 10 prescribers of the Alzheimer's drug Exelon received money from Novartis, the drug's maker. Eight of the top 10 for Johnson & Johnson painkiller Nucynta were paid speakers, as were 6 of the top 10 for Pfizer's antidepressant Pristiq.
The same was true for 7 of the 10 top prescribers of the asthma drug Advair Diskus, made by GlaxoSmithKline. One doctor made more than $100,000 from 2009 to 2012.
Many of the physicians spoke for several drug companies.
If financial relationships influence physicians to choose pricier brand-name drugs that have little benefit over generics, everyone pays the cost – particularly taxpayers, who spent $62 billion last year subsidizing Medicare Part D.
"I've never heard a doctor that said they were influenced, but obviously the companies are interested in doing it because the evidence overwhelmingly suggests that doctors are influenced," said Rita Redberg, a cardiologist at the University of California, San Francisco, and editor of the journal JAMA-Internal Medicine.
Companies are "not doing it for any reason except it improves their bottom line," she said.
A survey published in the Archives of Internal Medicine in 2010 found that physicians with industry relationships said they were more likely to prescribe a brand-name drug when a generic was available. And federal whistle-blower lawsuits against several pharmaceutical companies have alleged that payments are little more than thinly veiled kickbacks, which are illegal. Companies have paid billions of dollars to settle the cases.
Each of the top 20 prescribers of Bystolic wrote at least 530 prescriptions in Part D in 2010. ProPublica attempted to contact all those who also received money from Forest. Only a handful responded to phone calls, emails and faxed letters requesting comment.
The No. 1 prescriber of Bystolic, Los Angeles cardiologist Gary Reznik, said that if patients have blood pressure under control with another beta blocker, he doesn't switch them. But he believes Bystolic is more effective at lowering blood pressure and doesn't cause the slower heart rate and erectile dysfunction of other drugs in the class.
"If you don't have to be on a beta blocker, I would not start you on a beta blocker," said Reznik, who was paid $3,750 to give talks by Forest in 2012. "If you have to have a beta blocker, Bystolic would be my choice." Reznik prescribed the drug more than 2,500 times in 2010 and more than 2,900 in 2011, including refills dispensed, Medicare records show.
"I have never felt that there were any expectations or pressure on the part of the company that I would prescribe it more or at all," he said.
Another top prescriber, internist Mark Barats, of West Hollywood, Calif., said he uses smaller doses of Bystolic to achieve the same effects as higher doses of generic medications. "It has much less side effects, particularly much less side effects on the respiratory system," he said.
"I've never seen anything that contradicts what Forest said about Bystolic," said Barats, who was paid $3,750 to speak for Forest in 2012.
Dr. Henry Yee, who was paid $5,000 by Forest, said he chooses the drug for many of the same reasons as Reznik and Barats. The cardiologist, whose office is in the Los Angeles suburb of Alhambra, said he learned about the drug from company sales reps and from reading studies. He started prescribing it "even before I started speaking for the company," he added.
Yee said he believes drug companies ask him to speak for their products because is an influential specialist in his community. "I think it is most likely because a lot of doctors listen to me," he said.
Among the 17 top prescribers with Forest ties, speaking payments ranged from $1,250 to $85,750. Seven doctors also received at least $1,000 in Forest-paid meals.
But several prominent cardiologists say no studies have proved that the benefits cited by Bystolic's top prescribers are real. Dr. Steve Nissen, chairman of cardiovascular medicine at the Cleveland Clinic, said he understands why doctors would like to believe that the beta blocker has additional benefits. "Wishing it to happen isn't the same as proving it," he said.
In 2008, the U.S. Food and Drug Administration rebuked Forest for an ad claiming the drug was "novel" and superior to other products. The FDA said the claim wasn't factual.
"I don't see any purpose for Bystolic whatsoever," said Eric Topol, a cardiologist and chief academic officer of Scripps Health, a San Diego-based health system. Topol said he doesn't use the drug because it is expensive with no added benefit. "I have no idea how you could come up with a storyline for use of that drug."
Bystolic costs about $80 per month, compared with less than $10 for a generic cousin, according to Costco's pharmacy website. (Patient copays vary by drug plan.)
In an email, a Forest representative called Bystolic "an important treatment option" because it is effective and well-tolerated but didn't assert that the drug was superior.
Forest also defended its spending on physician speakers. The company "believes that patients benefit" from paid talks and other initiatives that "enable health care professionals to stay abreast of the latest treatment options available," a representative wrote.
Three years ago, Forest paid the government $313 million to settle civil and criminal allegations about its marketing of drugs, among other things. In its lawsuit, the government alleged that Forest made "cash payments disguised as grants or consulting fees, expensive meals and lavish entertainment, and other valuable goods and services" to doctors.
Forest denied those allegations despite settling the case.
More recently, in a lawsuit unsealed in April against the drug company Novartis, the U.S. government alleged the company's "own internal analyses showed that speaker programs had a high return on investment in terms of the additional prescriptions for its drugs written by the doctors who participated in the programs, both as speakers and attendees, with the highest return arising from payments to doctors as 'honoraria' for speaking."
Novartis disputed the allegations. In 2010, the firm pleaded guilty to a misdemeanor and paid $422.5 million to settle allegations that it illegally promoted Trileptal, an antiseizure drug, and paid kickbacks for prescribing it and other drugs. Trileptal isn't frequently used in the Medicare population.
Forest, Novartis and other drugmakers said they choose speakers based on their expertise and credentials.
Pfizer "explicitly prohibits the selection of speakers based on their prescribing behavior ... any inference to the contrary is misleading," a spokesman wrote in an email. Glaxo and Johnson & Johnson also said they don't choose speakers based on prescribing.
The spending by pharmaceutical companies on speaking and consulting fluctuates based on whether they have new drugs or are marketing older ones for new uses.
To date, only 16 companies have publicly reported their payments to physicians. All companies will be required to report such payments next year under the Physician Payment Sunshine Act, a part of the broader 2010 health overhaul law.
Boehringer Ingelheim Pharmaceuticals, the maker of the blood thinner Pradaxa, began reporting its payments just last month. Pradaxa, introduced in 2010, accounted for more spending on speakers than any other drug in 2011, according to Cegedim. Of the top 20 prescribers in 2011, six received speaking fees in the first quarter of this year.
Boehringer said it doesn't pay speakers based on prescribing.
The physician prescription tallies in this story are from Medicare Part D records in 2010. Recently obtained data for 2011 show similar patterns, however. The prescription counts don't include drugs paid for by other parts of Medicare or for patients with private insurance, on Medicaid or in the Veterans Health Administration system.
Some doctors say the drug company money can undermine patients' trust.
Nissen of the Cleveland Clinic said: "I don't want the patient sitting opposite to me in the exam room to have to worry about whether I am prescribing a drug because I am being paid by the company that makes the drug."