Two months after releasing a pathbreaking report on income and wealth inequality in India, the Paris-based World Inequality Lab has published a follow-up note making the case for a “comprehensive wealth tax package on the ultra rich”. The March report had said that “the ‘billionaire raj’ (a term used to define the post-2010s rapid rise of billionaires in the country, at odds with lives of millions, popularised by James Crabtree’s book of the same name) is now more unequal than the British colonial raj”.
Highlighting the extent of income inequality, the new report states:
“According to our latest estimates, it takes just 2.9 lakhs per year to make it to the top 10% of income earners and 20.7 lakhs to make it to the top 1%. By contrast, the median adult earns only around 1 lakh, while the poorest of the poor have virtually no incomes. The bottom half of the distribution (50% of the population) earns only 15% of the total national income (see Table 1). To get a sense of just how skewed the income distribution is, one would have to be very close to the 90th percentile to earn the average income.
In this situation of extreme inequality, the authors of the note – economists Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty and Anmol Somanchi – argue that a progressive wealth tax and an inheritance tax “would be an important step towards a more equitable growth path for India”.
The caste-economic inequality link
The authors have highlighted how the caste system plays a large role in how inequality functions in India. “Let’s be clear: Indian billionaires are largely an upper caste club. A progressive wealth tax package of the kind we propose is most likely to benefit lower castes and the middle classes at the detriment of only a tiny number of ultra-wealthy upper caste families. In that respect, besides addressing extreme wealth inequality, such taxes could also play a small role in weakening the rigid link between social and economic inequalities in India,” Somanchi has said.
24/05/2024