India should tax capital income, not wealth or inheritance: Economist Daniel Waldenstrom
India should focus on taxing capital income, such as corporate profits and dividends, to address inequality. Economist Daniel Waldenstrom supports taxing capital income rather than imposing wealth or inheritance taxes. He suggests that high taxes may discourage saving and investment, which is crucial for economic growth. Broader access to education and a stronger pension system can help include…
New Delhi - Indian economist Daniel Waldenstrom argues that the country should concentrate on taxing capital income, such as corporate profits, dividends, and realized capital gains, rather than wealth or inheritance. Waldenstrom, a professor at the Research Institute of Industrial Economics, emphasizes that taxing capital income is akin to taxing labor, but cautions against levying taxes on the inherent value of wealth.
Taxes should be applied when companies generate profits or when owners earn income from their investments, including dividends and realized capital gains, Waldenstrom explains to ANI. He advises against taxing the inherent values of wealth and inheritance, as these taxes have proven difficult to implement effectively in various countries.
Waldenstrom advocates for a broader approach to taxation, which includes taxing capital income, profits, revenues, and interests, alongside taxing labor and consumption. He maintains that the issue isn't the presence of wealthy business owners but the limited participation of more individuals in the gains generated by successful companies.
The economist stresses the importance of widening access to education, household savings, and investment through financial markets and mutual funds, along with a more robust pension system. While acknowledging the existing income-tax framework in India, which taxes dividends and capital gains, Waldenstrom stresses that taxes should not be so high as to discourage saving and investment in the stock market.
India's economic outlook remains optimistic, according to Waldenstrom, underscoring that pro-growth policies are crucial for job creation, household income, and government revenues needed to finance infrastructure and human capital.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
