Taxing the Inheritance

Inheritance tax is an important issue. A flawed society with deep inequalities, institutionalized discriminations, lacking ethical or moral context or humanitarian concerns -except as symbolism for selfish good karma for better returns, meanwhile carry high sense of worth and place in universe. If they had compassion they would have worked on egalitarian value system to strengthen democracy. Technically before independence the land belonged to colonial Britain. The nincompoop feudals worked with colonizers to grab meanwhile conduit to exploitations for small titles and land rights. Hence after the socalled independence the state was expected to systematically conduct land reforms. They did attempt on abolishing of Zamindari system, conducted tenancy reforms as also ceiling on land holding so on. Since 'leaders' themselves were part of the cannibalised exploitative system these were performed half heartedly while corrupt and inept values saw to it was made ineffective. Only Kerala seems to be one of the state that was able to effectively work land reforms -an achievement considering that Kerala was a putrid pit of society lacking even basic humanity. It has much to do with revolutionary aspect of Communism. So then why Bengal failed, it too had long hold of communism? Bengal failed because the foundation was consolidated by caste cannibal feudals who saw these revolutionary ideas as only ideas meant for debating points in gentile discussions the nuances of which these primitives learned from long association with colonial masters (remember British colonizing of Indian subcontinent began in Bengal before shifting to Delhi). So when communism eventually took control of Bengal it lacked grassroot involvement hence was easily uprooted and thrown out. Kerala was successful since communism was deep rooted, very much aided by social movements that were nurtured by literacy and awareness through christian missionaries and earlier buddhist influence. Centuries of association with outside world from Rome, to Portuguese, to Chinese, to Arabs...exposed people to new possibilities despite vicious presence of caste cannibals/squatter degradation.  

Not only was egalitarian ideals of land reforms scuttled they used gandhian chicanery to work it as voluntary act of high morals -boodhan andolan. Cesspools of the world were left in this extreme exploitations and appalling negligence, while the litters learned the lessons of inheritance couched in mythical grandeur -these now are projected through mediocre entertainments as land of untold fortune and blessing. These putrid pits with absolute lack of morals is where the worst of humanity exist. Not surprisingly these have social indices worst than regions of sub-Sahara. The latest data (2020) shows one-third of children in India suffer malnourishment, severely impacting their physical development and cognitive abilities. People suffered due to lack of humanity, reflected through corrupt lackadaisical system hence lacked basic infrastructure and appalling negligence. As expected India fare badly on disparity indices, lacking humanist foundation, wealth is usurped by narrow section while trickle down was celebrated as progress. 

One would have thought they would atleast impose inheritance tax. Studies point to inherited wealth growing faster than earned wealth, which is essentially true in unenterprising rent seeking society, and much of big cities are run by rent seeking ancillary economy. Millions of migrants to big cities and tourists to temple towns know how sinister the hold is. Prime spots are occupied by worst of people mostly lacking basic decency or competence, just conniving to exploit and cheat. The undivided Hindu family is an expression of worst, lacking enterprise, expertise in incremental grab and ossifying the society in worst possibilities. They are repositories burdened through regressive culture and degrading traditions, mainstreamed as entertainment. With accumulated wealth they influence elections and policy makers, and are major source of corruption, nepotism and crony capitalism. Inbred and lacking competence they are limited by their own limitations. These value system therefore seeps into all other institutions as vested interests. The reason why Indians have such appalling standards in all field of reckoning. Excellence is rare and essentially an exception.  

India's Gini coefficient -measure of inequality, in 2010s -data accessed, was a high 0.45-0.50 while even disparity ridden US it is 0.41-0.48, EU is 0.30-0.35, Japan 0.32-0.38, S.Korea 0.30-0.35. As it is most Indians don't pay income tax -indeed it is the common people who contribute substantially through indirect tax. They recruit CAs (another of stellar career) to suggest how to avoid taxes and check for loopholes which policymakers so graciously provide. Even in USA 50-60% file tax returns, while in UK it is 90%, Sweden 90%, Germany 85%, it is also substantially high in East Asian countries, and relatively poor Brazil has 25% people paying income tax. And in India a meagre 1.5% file tax returns -and most of them are forced to since they are salaried government employees. Imagine the lack of responsibility, basic sense of collective good or gratitude to society or concern for well being of fellow citizens. Thomas Piketty, economist known for his work on income and wealth inequality, argues that inheritance tax plays a crucial role in addressing the perpetuation of wealth concentration within a small segment of the population. According to Piketty, without a progressive taxation system, inherited wealth tends to accumulate and perpetuate inequality over generations, leading to the concentration of wealth in the hands of a few individuals or families. So by taxing large inheritances at progressive rates, governments can mitigate the intergenerational transfer of wealth and promote greater social and economic equality. Now let us look at inheritance tax in capitalist countries. In the UK -from where India has emulated much of its system, inheritance tax is levied on estates above a certain threshold, with rates starting at 40%. USA has a federal estate tax with rates ranging from 18% to 40%, depending on the value of the estate. In France, inheritance tax rates vary from 5% to 45% depending on the relationship between the deceased and the beneficiary, as well as the value of the inheritance. Germany has inheritance tax rates ranging from 7% to 50%. In Japan inheritance tax rates range from 10% to 55% while in Korea inheritance tax rates range from 10% to 50%. The reason why there is hoopla created in India is to do with crony capitalism and sinister hold of corrupt money in the system that scuttles every egalitarian move.

To be fair India did have inheritance tax -known as estate duty, introduced by Nehru in 1953 (despite some valid criticism Nehru did attempt to place egalitarian liberal values as foundation of Indian state despite overwhelming odds). It was abolished by RajivGandhi government in 1985 -one wonders what was the compelling circumstances that forced him to remove this egalitarian law, and this when they had brutal majority wherein they could have introduced many much needed initiatives. In 2016 Modi government finished what little was left by abolishing wealth tax. The devious argument given for abolishing in all the above cases is that cost of collecting the tax was more than the tax collected! Aw poor tax collector.