The paper is released by World Inequality Lab as a follow-up to its previous study titled ‘Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj’ published in March 2024.
- It proposes a tax package for the ultra-wealthy that could generate revenue between 2.5% - 5% of GDP.
- This revenue should be spent on social sectors like health and education for facilitating redistribution.
Income and Wealth Inequality in India
- Trend: Inequality declined post-independence, began rising in the 1980s, and has skyrocketed since the 2000s.
- Income Inequality: Top 1% earn 22.6% of total pre-tax national income (up from 7.3% in 1980) while bottom 50% earn only 15%.
- Wealth Inequality: Top 1% control over 40% of total wealth (up from 12.5% in 1980) while bottom 50% hold only 6.4% of total wealth
Impact of Economic Inequality | Perpetuation of Poverty & Deprivation |
| Social Unrest & Conflict | |
| Reduced Social Mobility | |
| Political Instability | |
| Reduced Economic Growth |
Tax package proposed
In a moderate scenario, the tax could be:
- Wealth Tax: 2 % annual tax on net wealth exceeding Rs. 10 crores and 4 % for net wealth exceeding Rs. 100 crores.
- Inheritance Tax: 33% inheritance tax on estates exceeding Rs. 10 crores in valuation and 45% tax on estates exceeding Rs. 100 crores.