Piketty’s wealth tax is an idea that just can’t work
Live MintIndians who are not sure whether to be proud of fellow citizens crowding the world’s billionaire charts tend to see their ranks swell each time talk of inequality accompanies such rich lists. This comes on the heels of a World Inequality Lab paper by Thomas Piketty and three co- authors titled ‘Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj.’ Its very title is loaded with a hint of pluto- cracy and hence political relevance. So long as annual returns on capital exceed the growth of everyone’s income, he noted, the pie of wealth would expand faster, leaving no hope for earners to catch up in such a lopsided economy. The very visibility of share-price data would make equity chunks the focal target of any wealth tax, but this would penalize a productive device for public participation in pursuits of profit. And should an open intermediary’s capacity to mobilize funds weaken, overall capital allocation across the economy would turn more opaque and less efficient, with adverse consequences for all.
History of this topic
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