Piketty Urges India To Tax Wealthiest Citizens, Warning Of Growing Inequality

French economist Thomas Piketty has called for India to implement taxes on its wealthiest citizens, pointing to the growing inequality in the country. Speaking at an event organized by a Delhi-based think tank and the Delhi School of Economics, Piketty urged India to honor the G20 finance ministers' pledge from July to work together in taxing the world's largest fortunes.

Piketty argued that India should take stronger steps to tax its wealthiest citizens, proposing a two per cent wealth tax on individuals with assets over Rs 100 million ($1.18 million) and a 33 per cent inheritance tax on properties above that threshold. He estimated that these measures could generate additional revenue of 2.73 per cent of India's GDP annually.

The concentration of wealth among India’s richest has now exceeded that of wealthier countries. According to a 2024 World Inequality Lab report he co-authored, Piketty revealed that the top one per cent of India's population controls 22.6 per cent of national income and 40.1 per cent of the country’s wealth, surpassing figures seen in the United States and Brazil.

This concentration of wealth has been driven by the rapid increase in fortunes among India’s elite. Over the past year, the combined wealth of India’s 100 billionaires grew by more than $300 billion, reaching a total of $1.1 trillion, primarily fueled by a stock market boom, as reported by Forbes.

India eliminated its wealth tax in 2015 and has consistently opposed proposals to bring it back. Finance Minister Nirmala Sitharaman has argued against implementing an inheritance tax, citing concerns about the potential impact on the middle class. Similarly, Chief Economic Adviser, V. Anantha Nageswaran expressed similar concerns at the same event, cautioning that higher taxes could result in capital outflows.

As discussions around wealth inequality and taxation heat up, Piketty’s call highlights the increasing tension between addressing economic disparity and safeguarding economic growth.

The debate over taxing the super-rich focuses on reducing inequality and how wealth should be shared. Proponents argue that taxing the wealthiest people more can help lower the gap between the rich and poor, and provide money for public services. They also say it can stop a few from controlling too much wealth. 

However, critics argue that high taxes could discourage people from investing or creating businesses, hurting economic growth. They believe rewarding wealth creation is important.