Congress has again made headlines as usual for their statements made with their handicapped senses. The recent controversy is regarding the wealth redistribution and inheritance tax remarks made by GOP’s leaders like Rahul Gandhi and Sam Pitroda. Pitroda’s example of an inheritance tax in the US exacerbated the situation for Congress which has been trying to damage control since Prime Minister Narendra Modi raised the issue at a rally two days ago.
The current government led by the Bharatiya Janata Party (BJP) has accused the Congress of claiming that the party’s manifesto promises to seize and redistribute the wealth of Indians, a charge it denies. In fact, Rahul Gandhi recently said that the Congress, if voted into office in the Lok Sabha elections, would conduct a financial and institutional survey to ascertain who is in possession of the wealth of the country, and would then undertake an exercise to redistribute the same. He also promised representation of each community in every sector.
Meanwhile, Sam Pitroda, Chairman of the Indian Overseas Congress, said that India should discuss introducing a policy similar to the inheritance tax, where the government takes 55 per cent of a person’s wealth after his death. After witnessing the foot in the mouth moment, quite conveniently, Pitroda has distanced himself and also issued a clarification on X stating that he was just expressing his views on the inheritance tax in the US. However, it is difficult to believe him as the then Finance Minister P Chidambaram had pushed for the inheritance law during the UPA 2 regime three times in 2011, 2012, and 2013.
So @INCIndia wants you to believe that @sampitroda’s proposal for an inheritance tax is NOT an INC proposal. If so why did their finance minister Chidambaram push for it THREE times during UPA2 in 2011, 2012 & 2013? They want to throw your parents out on the streets to die. https://t.co/dVTy4rw8MO pic.twitter.com/87ihn9c5yj
— Abhijit Iyer-Mitra (@Iyervval) April 24, 2024
Notably, the US does not have a federal inheritance tax. In some states, such as Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania, inherited assets are taxed. The payable tax depends on the amount of the inheritance and the relationship to the dead. This tax is only applied above a certain threshold and can go up to nearly 20 per cent of the inheritance.
Several other countries in the past have opted for wealth redistribution exercises in various forms, like Finland, Norway, and Sweden, which have relied on a progressive transfer system. However, Sweden and Norway don’t have inheritance taxes. India also has a progressive tax system in place, wherein the richest are taxed at least 30 per cent, of which a substantial part goes into welfare schemes targeted at the poor.
It has been observed that the left-liberals strongly favour death duties not because they are altruistic towards redistributing wealth, but because it circulates in their ecosystem by duping everyone to believe that they give away their wealth to tax protected organisations. This leads to a vicious cycle where jobs are created where performance is not monitored and is not under the radar of market scrutiny. Consequently, it creates an army of minions in the form of trust fund babies, who form the major units of such chaos.
Death duties are a part of the toolkit often used by the rich who have mastered the art to keep middle class aspirants out of the loop, who perhaps may try to climb up the ladder. This bears resemblance to how the Raj era froze the business class in India. The rich countries hypocritically advise and extend support to the developing countries to ditch the ladder developing countries used to elevate themselves.
The developed world tempts the emerging economies to become a for all sorts of untested social experiments. The so called economists hailing from the first world never encourage people to use the strategies they used to become rich in the first place.
Wealth redistribution, as a concept in history, has been viewed as very controversial. Right from the bloody revolutions of the past century that promised the poor the wealth amassed by the rich to contemporary debates in economics on how to address inequality and poverty. In old times, the idea was central to communist revolutions, but in recent times, economists have argued over wealth distribution due to rising income inequality.
The argument has been raised that India’s inequality gap has widened sharply under PM Modi’s decade in power, with the richest 1 per cent of the population now owning 40 per cent of the country’s wealth, as per a recent study done by several economists, including Thomas Piketty, who also helped Gandhi Scion frame his idea of minimum income guarantee in 2019.
The economists in the report titled ‘Income and Wealth Inequality in India: The Rise of the Billionaire Raj’, and published by The World Inequality Lab, stated that between the years 2014-15 and 2022-23 pronounced wealth concentration has reached its peak since the opening of the Indian economy in the 1990s. On the other hand, Indira Gandhi’s Garibi Hatao plan included the highest income tax rate of 97.75 per cent and wealth tax of 3.5 per cent and yet poverty only rose instead of decreasing.
According to the findings of the World Inequality Database, India’s income inequality is among the very highest in the world, behind only Peru, Yemen and a few other small countries.
However, it is worth noting that the trend in India is in line with the experience of other major economies. The study shows that between 1980 and 2014, income of top 0.1 per cent income earners in France and China rose six times faster than the income of the bottom 50 per cent. In India, the growth rate of top 1 per cent was 13 times higher, while it was nearly 77 times higher in the US.
The World Inequality Lab has been facing the ire of several economists. They have questioned the veracity of the parameters when it is not transparent. They have questioned how they estimated the income distribution when India does not conduct any official income surveys. If this preconceived notion is derived from some auxiliary data, then it is no more than a rhetoric and theatrics of the cabals. Another issue that the experts have pointed out is that liberal gangs failed to discern whether the interests of the rich and the poor actually converge. Voters are happy to vote for politicians who propose higher taxes for better amenities. This increases employment and wages, and augments property. Even though it does reverse rising inequality, the rich gain most in booms and lose most in recessions, yet voters prefer booms. The left liberals fail to cohesively convince voters of any clear link between soaking the rich and enriching the masses.
Famous economists like Milton Friedman and Friedrich Hayek have argued that redistributive policies have the potential to bring stagnation to the innovation and productivity levels. Thus, lower motivation and less avenues to invest would stump the growth and further invite an economic slowdown.
Meanwhile, Congress has been hell bent on vilifying those who generate wealth. GOP is projecting them as enemies and adversaries rather than contributors to economic prosperity. It is the duty of the sate to address the issue of equity; however, this does not mean that the right to private property is challenged.
Prime Minister Narendra Modi came down heavily on the Congress Party with regards to the inheritance tax. Addressing an election rally, Prime Minister Narendra Modi went all guns blazing at the Congress party’s malafide intention and said, “The Congress party’s alarming intentions are coming to light one after another. Not long ago, advisors to the royal family had suggested imposing higher taxes on the middle class. Now, they have taken another step forward..The Congress party now says it will impose an Inheritance Tax, even on the property inherited from parents. The wealth accumulated through your hard work will not be passed down to your children, but rather, the Congress government’s grasp will also snatch it away.In other words, the Congress mantra is – looting with the Congress continues both during life and after life. As long as you are alive, the Congress will burden you with more taxes. And when you are no longer alive, it will burden you with the weight of Inheritance Tax. Those who have considered the entire Congress party as ancestral property and handed it over to their children do not want an ordinary Indian to pass on their wealth to their children.
Prime Minister @narendramodi shreds Rahul Gandhi’s closest aide-cum-mentor-cum-policy advisor Sam Pitroda’s statement that @INCIndia will bring Inheritance Tax to fund Shahi Parivar’s extreme-Left Marxist-Leninist (ML) idea of ‘wealth redistribution’.
‘कांग्रेस पार्टी के खतरनाक… pic.twitter.com/pOkINMfZuE
— Kanchan Gupta 🇮🇳 (@KanchanGupta) April 24, 2024
The utopian idea of tax the rich debate is not an innocent error. Its a premeditated idea. The debate stems from the demand of universal basic income. But the concept of wealth redistribution that GOP is batting for is misconstrued and atrociously built argument.
