Good to see wealth redistribution not finding many takers

Political economist and author Gautam Sen has rightly warned against the implementation of a dangerous idea—wealth tax. He told a news agency that such a decision could drive India’s wealthiest individuals to move to tax-friendly destinations like Dubai. “The very rich like the Ambanis, Adanis, Mahindras, Tatas and I presume not more than 500 of the very rich, the billionaire class, they will emigrate from India to Dubai,” he has rightly cautioned. This is no fear-mongering. A lot of rich Indians millionaires have already shifted to Dubai, “70 per cent in fact, because Dubai has no income tax,” Sen said. A large number of high net-worth individuals (HNIs) in our country have actually participated in a quit-India movement. Henley & Partners (H&P), a UK-based global citizenship and residence adviser, had estimated last June that nearly 8,000 HNIs would leave India in 2023.

The Global Wealth Migration Review reported that about 5,000 millionaires left India in 2020. Morgan Stanley said in 2018 that 23,000 Indian millionaires had moved out of the country since 2014. It has been a huge loss to India, for had they not left Indian shored they would have spent their money-by way of personal spending, investment, and new start-ups, among others-within the country. This would have resulted in more production, employment generation, consumption—indeed a virtuous cycle’s veritable chain reaction, so to say.

Sen talked about another possibility: The billionaires “will re-register their businesses in UAE, which means India will only be able to collect corporate taxes from them because their business will remain in India.” And this, by the way, is no groundless fear. He mentioned the case of Sweden, which used to have a very significant inheritance tax. And Sweden is one of the highest tax countries in the world in history. “But you know, Sweden removed the inheritance tax because many of the rich were fleeing. For example, the owner of IKEA had migrated out of Sweden.” Further, 77 per cent of all household wealth of most Indian income tax payers is in their residence, Sen said. He added sarcastically: “You have to survey all of this and take it away from them. Put all these people in the street if you want equality. But the total amount of money you will generate from this very small number compared to the rest of India would be miniscule.”

Sardar Patel was similarly contemptuous towards such perverse egalitarianism. Legendary lawyer and jurist Nani A. Palkhivala narrated an anecdote in his book ‘We the People’. A zealous socialist urged Patel to redistribute the wealth of the superrich; he specifically mentioned a wealthy man’s name. Patel said that he knew the extent of that man’s wealth, adding, “If all of it were to be distributed equally among the people of India, your share would be four annas and three pies. I am willing to give you that from my own pocket if you undertake to talk no more about it.” The issue of wealth redistribution has come to the fore because of Rahul Gandhi’s predilection for it. Thankfully, the ruling dispensation has opposed it, and now economists are also doing the same.