Re: No new university in Hyderabad
Brother, what I wrote is not flawed but it is your thinking and understanding of economics is flawed. What I wrote is not only practiced all over the world, but that is only way for a country to survive, develop, and prosper. Your logic that government job is to tax rich areas to spend on backward and poor areas means, making those who give taxes start thinking not only against the government but also against the country, that in the end becomes disaster for the country, its development and prosperity, effecting both rich and poor.
The vector path you mentioned is correct, but for achieving that, it is not what you wrote is correct, but it is what I wrote is correct.
First let me tell you about tax and why people pay tax: People requirements are two. One people fulfil themselves. Other is communal requirements that only government can fulfil. Government use taxes and other resources to fulfil communal requirements.
Communal requirements are infrastructure, amenities, local cleanliness, roads, pathways, policing, judiciary, health facilities, educational facilities, transport, sports and other recreational facilities, graveyards, religious facilities, effective and efficient bureaucracies, armed forces, etc … And those who pay taxes, they like all these for themselves in return for their taxes. If government collects taxes and do not fulfil communal requirements of tax-payers than tax-payers would not like to give tax to the government.
As for development around the country (underdeveloped areas), that also happens if government takes a portion of taxes and other resources for the purpose (meanwhile providing most communal facilities to tax-payers).
Regarding vector path you mentioned:
Investment —> economic growth —> increased tax revenue
It seems you do not how it works. Let me try to explain that (from what I know);
Investment: There are two types of investment. One is Private sector and other is public sector investment. Source for both types of investments are mostly rich, productive, and economically active population of country who invest themselves and pay taxes for government to invest. So, all countries in the world keep their rich, productive, and economically active population happy by spending their taxes and other resources in providing them with good life facilities and amenities.
If government would not do that then country would start losing this section of population, as many would stop working hard and productively, would start staying dissatisfied with their living standard and thus giving lower output, would get disgruntled with government and then avoid paying taxes (by whatever means, including bribing officials), or leave the country with their ‘wealth and talents’ if they get opportunity, etc.
That means no or lower private as well as public investment. Results would be low or negative economic growth, lower tax revenue, and economically deteriorating country. So, your vector path becomes upside down if government do not manage to keep those who are working hard, paying taxes, and generating resources deprived and unhappy.
Or, following your model, your vector path would become:
No or low Investment —> low or negative economic growth —> Stagnant or decreasing tax revenue —> deteriorating country.