India’s top 1% income reached historical highs: World Inequality Lab
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New Delhi: India requires a restructuring of the tax code, said a paper by World Inequality Lab, The Indian Express reported.
The paper, co-authored by economists Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi, has come out with a shocking finding that ‘India’s top 1 per cent income and wealth shares have reached historical highs’.
India’s top 1 per cent income share hit 22.6 per cent while the top 1 per cent wealth share peaked to 40.1 per cent, the study found adding that the country’s top 1 per cent income share is among the highest in the world overtaking South Africa, Brazil and the US.
The paper claims that the ‘billionaire Raj’ India led by ‘India’s modern bourgeoisie” is more unequal than the British Raj.
Calling the Indian tax system ‘ regressive when viewed from the lens of net wealth’, the paper argued for restructuring the tax code, adding that levying a ‘super tax’ of 2 per cent on the net wealth of 167 wealthiest families could add 0.5 per cent of national income in revenues.
It also added that this could help ‘create space for investments’.
“A restructuring of the tax code to account for both income and wealth, and broad-based public investments in health, education and nutrition are needed to enable the average Indian, and not just the elites, to meaningfully benefit from the ongoing wave of globalisation. Besides serving as a tool to fight inequality, a “super tax” of 2% on the net wealth of the 167 wealthiest families in 2022-23 would yield 0.5% of national income in revenues and create valuable fiscal space to facilitate such investments,” The Indian Express quoted the paper as stating.
The paper analysed data on the annual tax tabulations released by income tax authorities to know the distribution of top income earners between 1922 and 2020.
Marking a fall from 37 per cent in 1951 to 30 per cent by 1982, the national income reaching the top 10 per cent began steadily rising afterwards.
The paper claimed that the top 10 per cent share went up substantially over the next three decades since 1990s, reaching almost 60 per cent in most recent years.
Most glaringly, only 15 per cent of India’s national income has gone to the bottom 50 per cent, according to the report.
The report further pointed out that the top 1 per cent earns Rs 5.3 million on average, which is 23 times the average Indian earns.