‘22.6% of income’: Why Thomas Piketty thinks India should tax the super-rich now

French economist Thomas Piketty has called on India to tax the richest, citing alarming levels of inequality. Speaking at an event hosted by Delhi-based think tank RIS and Delhi School of Economics, the author of Capital in the 21st Century urged India to act on the G20 finance ministers’ pledge in July to cooperate in taxing the world’s biggest fortunes.

“India should be more active in taxing the rich,” Piketty said, proposing a 2% wealth tax on individuals with assets exceeding 100 million Indian rupees (US$1.18 million), and a 33% inheritance tax on property above the same threshold. . According to his estimates, these measures could generate additional revenues equivalent to 2.73% of India’s GDP annually.

The concentration of wealth among India’s richest has exceeded that of wealthier countries. Citing the 2024 Global Inequality Lab report he co-authored, Piketty revealed that the richest 1% of India’s population control 22.6% of national income and 40.1% of the country’s wealth, figures that are higher than in the United States and Brazil.

This focus was fueled by the vast wealth of India’s elite. Last year, the cumulative wealth of India’s 100 billionaires rose by more than $300 billion, to $1.1 trillion, driven largely by a rising stock market, according to Forbes.

India abolished the wealth tax in 2015 and has resisted calls to reintroduce it. Finance Minister Nirmala Sitharaman has opposed an inheritance tax, citing the potential burden on the middle class. Chief Economic Advisor F. Anantha Nageswaran echoed this sentiment at the same event, warning that higher taxes could lead to capital outflows.

As debates rage about wealth inequality and taxes, Piketty’s call highlights the growing tension between addressing economic inequality and protecting economic growth.