Rejig of riches: Study moots robin hood tax for equality

economictimes.indiatimes.com:

Thomas Piketty suggests India should impose a wealth tax on the ultra-rich to tackle inequality and create fiscal space for investments in the social sector.

The paper, released on Friday, suggests imposing a 2% annual tax on net wealth over ₹10 crore, and a 33% inheritance tax on estates exceeding ₹10 crore in valuation. This could generate revenue amounting to 2.73% of gross domestic product (GDP), it said.

According to the paper, Towards Tax Justice & Wealth Redistribution in India: Proposals, based on the latest inequality estimates, 0.04% of the adult population holds more than a quarter of total wealth, and imposing this tax would leave 99.96% unaffected. «Progressive wealth taxation, effective redistribution, and broad-based social sector investments are urgently needed to build an equitable and prosperous India,» said Anmol Somanchi, one of the four authors of the report.

Near Doubling of Public Spending
The other three authors are Piketty, Nitin Kumar Bharti and Lucas Chancel. Bharti, lead author of the study, noted that this may also help establish trust, as it would put the money to more transparent use. «To develop trust among the rich, the government could transparently allocate the wealth tax revenues towards social sector spending — such as improving the quality of public schools and hospitals — which will lead to a more educated and healthy labour force,» Bharti noted in response to ET's queries.

The additional revenue generated would allow a near doubling of the current public spending on