‘22.6% of income’: Why Thomas Piketty thinks India should be taxed more heavily now

French economist Thomas Piketty has called for India to impose a heavier tax rate, citing dire inequality. Speaking at an event hosted by think tanks Delhi RIS and Delhi School of Economics, the Capital in the 21st Century secretary urged India to act on the promise of the G20 finance ministers in July to agree on paying the highest wealth tax in the world.

“India should be more consistent in taxing the rich,” Piketty said, proposing a 2% tax on people with assets over ₹100 million ($1.18 million) and a 33% inheritance tax on a house of the same size. According to his estimates, these measures could generate additional revenue equal to 2.73% of India’s GDP per year.

The wealth of the richest people in India has surpassed that of rich countries. Referring to the 2024 World Inequality Lab report he co-authored, Piketty revealed that the top 1% of the Indian population controls 22.6% of the country’s income and 40.1% of the country’s wealth, figures higher than in the United States and Brazil.

This increase has been fueled by the growing wealth of India’s elite. In the past year, the wealth of India’s 100 billionths rose by $300 billion, to $1.1 trillion, largely driven by the stock market rally, according to Forbes.

India abolished its wealth tax in 2015 and has refused to call it back. Finance Minister Nirmala Sitharaman opposed the inheritance tax, citing the potential impact on the middle class. Chief Financial Adviser V. Anantha Nageswaran echoed these sentiments in the same context, warning that higher taxes could lead to cash outflows.

As debates over economic inequality and taxation intensify, Piketty’s call highlights the growing tension between addressing economic inequality and protecting economic growth.