What did Pitroda say?
He supported the idea of an inheritance tax and cited the example of the United States. “There’s nothing wrong with accumulating wealth, but how far do you accumulate it? Tell me, America has an inheritance tax. So if a person has $100 million worth of wealth, and the When you die, you can probably transfer 45% to your children. 55% goes to the government. This is an interesting law, you created wealth in your generation, and now you have that wealth. You have to leave it for the people, and that’s not the full amount for me. I don’t think that’s the case in India, but if someone is worth $10 billion and their child dies, the people… People will have to discuss and debate these issues because nothing will be gained.”
Why the controversy?
Pitroda’s comments on inheritance tax come in the context of the parliamentary manifesto’s reference to dealing with “growing taxes.” inequality Citing Rahul’s speech, the Bharatiya Janata Party claimed the survey was a precursor to a “redistribution” of wealth.
What is inheritance tax?
This is a tax levied on property inherited when a person dies. According to the think tank Tax Foundation, taxation, estate tax and inheritance tax are largely similar as both are generally triggered by death. Inheritance tax is levied on the net value of the property owned by the deceased on the date of death. In contrast, inheritance tax is levied on the recipient of the estate as defined by the foundation.
Tackling inequality…
Inheritance taxes are sometimes justified to ensure ‘equality of opportunity’. The OECD paper argues that inheritance and gift taxes contribute to leveling the playing field between individuals by breaking wealth concentrations and redressing factors beyond recipients’ control, thereby increasing equality of opportunity. It states that it can increase social mobility and improve social mobility. The report cites Thomas Piketty, Saez and Zucman, who argue that, from a meritocracy perspective, inherited wealth should be taxed at higher rates than earned income or self-made wealth. There is. There are arguments against the tax, with critics in the United States arguing that eliminating the tax would increase investment, create jobs, and lead to economic expansion.
What is the global scene?
Several developed countries, such as the United States, United Kingdom, Japan, France, and Finland, have inheritance tax rates ranging from 7% to 55%. Since 2000, 11 countries and two tax jurisdictions have abolished inheritance taxes, according to data from the Tax Foundation. US President Joe Biden supported raising the inheritance tax rate to 61%.
Did India have an inheritance tax?
India had an inheritance tax with a top rate of 85%, but this system was abolished in 1985. Inheritance tax was incurred due to the death of the property owner. According to tax consulting firm Taxman, “property” is defined in the broadest possible terms, including all movable and immovable property, expected interest, interest in community property (joint inheritance), debts or enforceable rights, etc. included. In cases where property was jointly inherited, the inheritance obligation was imposed on the recipient of the estate who submitted a declaration of the inheritance received on the basis of which the competent authority completed the valuation.” To Mr. Taxman.
The country imposes several measures to bring about social equity, such as gift tax, wealth tax, and inheritance tax. The wealth tax was abolished in 2015, and the gift tax was abolished in 1998 but reintroduced in 2004, imposing income tax on gifts to relatives. In 2020, there was speculation that the federal budget would reinstate inheritance tax. In 2014, then Deputy Finance Minister Jayant Sinha supported the idea of introducing an inheritance tax, but it never progressed beyond the idea stage.
