India should levy a 2 per cent tax on net wealth over Rs 10 crore and a 33 per cent inheritance tax to tackle the issue of wealth inequality in the country, says a new study titled 'Proposals For a Wealth Tax Package to Tackle Extreme Inequalities in India'. The research, which is authored by Thomas Piketty (Paris =
conomics and World Inequality Lab), Lucas Chancel (Harvard Kennedy School and World Inequality Lab), and Nitin Kumar Bharti (New York University and World Inequality Lab), proposes a comprehensive tax package on the ultra-wealthy. The research suggests tax changes to ‘bring down the massive concentration at the very top of the wealth distribution.’ It calls for the creation of a valuable fiscal ecosystem for significant social sector investments.
Moreover, it also claims that said tax overhaul would only impact 0.04 per cent of the population (370,000 adults) leaving out 99.96 per cent of the adults unaffected by the tax.
"A 2 per cent annual tax on net wealth exceeding Rs 10 crore and a 33 per cent inheritance tax on estates exceeding Rs 10 crore in valuation will generate a massive 2.73 per cent of Gross Domestic Product (GDP) in revenues the research emphasises in its findings.
‘Redistributive policies to support poor’
The study suggests the inclusion of explicit redistributive policies to support the poor, lower castes, and middle classes in addition to the taxation proposal. It would allow a two-fold increase in the current public education spending which, it says, has remained stagnant at almost 3 per cent of GDP over the past 15 years. “This is well below the 6 per cent target set by the Indian government's National Education Policy 2020 (NEP 2020)," it implies.
‘Debates on Taxation Necessary’
The study stated that the taxation proposal should be extensively discussed to build a democratic debate on tax justice and wealth redistribution in the country.
There has been a rise of debates on income and wealth inequality in India ‘following the release of our study 'Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj'’ the research states.
The report claims that economic disparities in the country have reached some ‘historical highs’ since the early 2000s and that the link between extreme inequalities and social injustice can no longer be ignored. ‘The income and wealth share of the top 1 per cent population has risen to 22.6 per cent and 40.1 per cent, respectively, in 2022-23, the study noted.
The rise of top-end inequality inflated between 2014-15 and 2022-23 in terms of wealth concentration. “By 2022-23, top 1 per cent income and wealth shares (22.6 per cent and 40.1 per cent) are at their highest historical levels and India's top 1 per cent income share is among the very highest in the world, higher than even South Africa, Brazil, and the US," the research states.
