Wealth taxes account for only 4 cents of every dollar in tax income, and half of the world’s rich billionaires live in nations that do not tax the money they leave to their offspring. A 5% tax on the world’s multi-millionaires and billionaires could generate $1.7 trillion a year, enough to lift 2 billion people out of poverty and fund a global hunger-reduction strategy.” This has recently rated the widespread inequality in the world.
According to the most recent Oxfam poverty assessment for India, “just 5% of Indians own more than 60% of the country’s wealth, while the bottom 50% of India’s population owns only 3% of the wealth.” India’s richest man’s fortune will increase by 46% in 2024.
The drop in corporate tax from 30% to 22% has resulted in a massive loss of about Rs. 1 lakh crore. In the fiscal year 2022, the bottom 50 percent of the segment contributed up to 65 percent of the total, while the top ten percent paid little more than 3 percent. There is a huge disparity in numbers.
The growing disparity between rich and poor is obvious. It also demonstrates the unfortunate way in which the world runs; we live in a capitalist world. Capitalism has no alternatives, either better or worse. Inequality is here to stay, and the growing discrepancy will only worsen with time. Socialism has failed spectacularly.
The government must recognize that maintaining balance is critical at this time. Only fiscal policy with the proper balance and redistribution can help India get out of this mess. Fiscal capitalism has caused widespread financial problems around the world. Policies are designed to suit capitalists who want to increase revenue.
The government must consider capitalists while also considering revenue growth and the needs of the poor. Start-ups fail because the vast majority of wealth is owned by only the top 100. Higher GDP is an unreasonable way of judging an economy’s performance. Stock valuations do not accurately reflect unrealized wealth. Such values can never be measured accurately.
However, without capitalism, there would be insufficient employment opportunities. There would have been less growth and fewer job prospects. The private sector drives the economy, and the government can only supply a limited number of jobs.
The government has limited resources and cannot always make a profit. In such cases, redistribution comes to the rescue. India follows a pro-industry paradigm, which is why taxes are cheap. With a well-planned PLI scheme and infrastructure, the government will expand significantly and be able to create work for more people. It will set off a chain reaction of increased output, followed by investment, and then more production. While simply taxing the wealthy can provide less incentive. The same was true for industries when the tax was nearly 100% 50 years ago.