No vote-bank threat, less capital-flight risk from wealth tax: Nitin Kumar Bharti
vote-bank threat if a tax is imposed on the assets of the wealthy, as it will not impact 99.96% of the population, says Nitin Kumar Bharti, the lead author of a recent World Inequality Lab report that suggests imposition of a wealth tax to correct inequalities in India. Studies also show that such a tax causes little capital flight, he tells ET. Edited excerpts:
India's past experiments on wealth tax haven't worked; why do you think this could?
Wealth tax hasn't worked for several reasons — limited purview, easier evasion and, most importantly, lack of a strong government will. Today, evasion is less of a concern due to technological advancements, such as Aadhaar linkage and computerisation of land records and stock market trading. We propose to tax overall net wealth, not keeping any asset out of the purview.
But haven't wealth taxes failed in developed countries as well?
The narrative is changing now, and there is more debate about bringing back the repealed wealth taxes to tame the rising wealth inequality.
Don't you think this would lead to a wealth drain?
Capital flight is less of an issue as the «net wealth» is computed irrespective of the location, that is tax is proposed on worldwide assets. One could avoid double-taxation concerns. Often, people have reasons to keep their capital and assets in a certain country, so we don't know how much of an issue capital flight would be anyway. Studies have shown that fiscal repatriation-related international migrations are very small.
What can the government do to
