Why Ex-RBI chief Raghuram Rajan criticises ‘wealth tax’? Challenges this big claim of economist Thomas Pikati, suggests...

Ex-RBI chief Raghuram Rajan, a respected economist and vocal critic, has now criticised the government levied wealth tax and the whole idea behind it. Calling it unnecessary, Rajan said that the wealth tax will not benefit anyone as, the rich find some or the other loophole to pass this tax. He also emphasised on the fact that even with a huge difference between poverty and wealth, levying wealth tax is not a solution for improving the economic condition of the country. His comments are backed by the notion that wealthy easiry. His comments are backed by the notion that wealthy can easily evade wealth tax. 

Why Rajan calls Wealth tax a bad idea?  

He instead suggested that the government instead should open more opportunities for the citizens and work towards making them more successful. He further suggested that the government should come up with such policies that help small and medium enterprises to grow. The statements of the economist came during a conversation on the ‘India and Global left’ podcast.  

He also highlighted the fact that in India, there is a huge difference between salary and wealth and in such a situation people talk about wealth and inheritance tax. According to the ex-RBI chief, this is useless as the wealthy know how to easily escape such taxes. Providing evidence to support his claims, Rajan brought attention to the point that no country in the world was able to gather so much money by levying wealth tax.  

Raghuram Rajan challenged economist’s claim 

In the same context, he also challenged a big claim by renowned French economist Thomas Piketty in which he said that this could be due to the lack of political will. Rajan said that the rich people can easily escape tax legally, which is the case in the US. Challenging the French economist, Rajan asked him to name any nation that has earned massive amounts from wealth tax. In a light jest, he suggested that if India wants to come at par with the economically wealthy nations, then it should bring a Communist revolution. However, he also said that this will lead to violence and bloodshed.  

He concluded that this will again bring lot of poverty so talking about wealth tax is useless.