'Death duty is a tool to keep middle class out': Sanjeev Sanyal blasts Sam Pitroda for 50% wealth tax idea

Congress leader Sam Pitroda on Wednesday sparked a massive outrage after he said a 50 per cent tax on wealth (inheritance tax) "sounds fair" to him. He said in America, there is an inheritance tax, under which when a person dies, half of his/her wealth goes to the government. Pitroda, the chief of the Indian Overseas Congress, faced massive backlash for this idea.

Noted economist Sanjeev Sanyal said the Left loves death duties - not because it redistributes wealth (it does not) but because it feeds its ecosystem. "America's rich 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," said the economist, who is also a member of the Economic Advisory Council to the Prime Minister.     
   
Sanyal said the US has had very high death duties for a long time. Sweden and Norway, he added, do not have inheritance tax. "Oddly, the same people who argue for death duties, also keep telling us that US is an unequal society and that Sweden/Norway are equality heaven," he added.

The renowned economist further added that the death duties are the tool used by the rich (who have perfected tax protection) 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 said.

In an interview, Pitroda said, "In America, there is an inheritance tax. If one has $100 million worth of wealth and when he dies he can only transfer probably 45 per cent to his children, 55 per cent is grabbed by the government. That's an interesting law. It says you in your generation, made wealth and you are leaving now, you must leave your wealth for the public, not all of it, half of it, which to me sounds fair."

"In India, you don't have that. If somebody is worth 10 billion and he dies, his children get 10 billion and the public gets nothing...So these are the kind of issues people will have to debate and discuss. I don't know what the conclusion would be at the end of the day but when we talk about redistributing wealth, we are talking about new policies and new programs that are in the interest of the people and not in the interest of super-rich only."

Pitroda, however, later said he mentioned the US inheritance tax in the US only as an example in his normal conversation on TV. "Can I not mention facts? I said these are the kind of issues people will have to discuss and debate. This has nothing to do with policy of any party including Congress," he clarified.

The Congress has also distanced itself from Pitroda's comments, saying his views don't reflect the position of the party.