'Some are born rich beyond imagination': Ex-CEA Kaushik Basu says inheritance tax is a must to curb inequality

Former Chief Economic Advisor Kaushik Basu on Wednesday backed inheritance tax, saying it is needed to curb inequality in the society. He said the biggest inequalities in life occur at birth. "Some are born abysmally poor, some rich beyond imagination. This has nothing to do with their hard work and has no moral justification," said the economist, who served as the CEA under the Manmohan Singh government. "This is the reason why an inheritance tax to curb inequality is a must in any civilized society," Basu said. 

A fierce debate erupted on inheritance tax after Sam Pitroda, the Chairman of the Indian Overseas Congress, spoke about a similar law in the United States and said wealth tax sounded fair to him. The Congress distanced itself from Pitroda's views, but the BJP mounted a sharp attack, with Prime Minister Narendra Modi saying the grand old party would loot people even after their death.     

The wealth tax proposal did not go down well with a host of economists, who believed such a move would hurt the Indian economy as investors would head for alternative places.  

Economist Sanjeev Sanyal said the Left loves death duties - not because it redistributes wealth but because it feeds its ecosystem. America's rich, he said, pretend to "give away" their wealth to tax-protected foundations/trusts. 

"First, the foundations create jobs for wokes where performance is not under market scrutiny (it is supposedly charitable, after all). Second, and even more importantly, it creates "trust fund kids" (TFKs) - the core constituency of the woke ecosystem. With access to huge wealth, but not in a position to deploy it in business and new round of creative risk-taking, TFK wealth is used for virtue signalling, second order narrative manipulation and other non-productive activities," he said. 

Sanyal then tried to demolish Pitroda's argument that wealth tax would bring down inequality. He said the US has had very high death duties for a long time, but many still call it an unequal society. Sweden and Norway do not have an inheritance tax, but these two countries are treated as "equality heaven", he said.

The economist called "death duties" a tool used by the rich to keep out middle-class aspirants who may climb in through multigenerational wealth accumulation. "This is similar to how the license permit era froze our business elite. Those who have climbed up are often tempted to kick away the ladder that they themselves climbed. Exact same reason that rich country economists advise poor countries to try all kinds of untested social experiments but not the strategies that made them rich in the first place," he added. 

Former Niti Aayog CEO Amitabh Kant said wealth redistribution and inheritance taxes are "lazy and regressive" policy choices. "Rather than fuelling growth and fostering job creation, they risk dragging India backward — stifling innovation, killing entrepreneurship, impeding progress, and creating no real jobs. Not for a young, aspirational, progressive, and dynamic India," he said.