Can India go back to a wealth tax by appealing to the better side of the rich?
Wealth tax is a form of tax imposed on the market value of assets owned by an individual. The assets include cash, bank deposits, real estate, assets in insurance and pension plans, ownership of businesses, financial securities etc.
Benefits of wealth tax
- Redistribute wealth
The wealth owned by billionaires, which is lying without any productivity will be utilized for nation building. This will ensure that money is pumped into economy.
- Balance tax contribution ratio
The amount of tax contributed by salaried person out of his/her total salary is very high compared to billionaires who contribute only a minuscule amount. The wealth tax will ensure that they pay more.
- Fund social welfare
Many social welfare programmes are not implemented due to lack of budgetary funds. The money obtained through wealth tax can be used for social welfare measures.
Concerns due to wealth tax
- Tax evasion
A higher amount of tax will always encourage individuals to adopt evasion measures and stack their wealth in low tax destinations.
- Affects investments
To reduce their income from a particular territory, billionaires may stop investments. They may migrate to countries where there are low tax benefits.
Thus, there has to be balanced approach when it comes to wealth tax. Billionaires must be encouraged to invest more rather than keeping their wealth stacked.
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