Calls for wealth tax on ultra-rich rise: Who qualifies as super-rich in India, by the way?

What net worth qualifies a person as super-rich? (Representational image: Freepik)

Impose a wealth tax on the super-rich! The call for a wealth tax on the super-rich arises frequently from citizens around the world, but, unfortunately, it has not yet been addressed by the authorities concerned. This demand resurfaces time and again, only to fade into the background. Over the past two decades, the issue of taxing the ultra-rich has been widely debated and highlighted by the media as well.

Next month, the finance ministers of the G20 countries are expected to discuss the possibility of imposing a wealth tax on super-rich in their respective countries. Meanwhile, a survey has revealed that 68% of the global population believes the super-rich should be taxed more by their governments.

In India, this percentage is even higher, with approximately 74% supporting the idea of higher taxes on the wealthy. The survey, which included over 22,000 participants in the world’s largest economies, was conducted by the Earth4All initiative and Global Commons Alliance. Earth4All is an international initiative to accelerate the changes in systems needed for an equitable future on this planet, while Global Commons Alliance is an alliance of over 100 partners accelerating systems change to safeguard the global commons.

The survey participants globally believe that inequality and hunger are rising at the global level, necessitating immediate measures. They said that the world is facing a climate crisis and that, to deal with such issues, it is necessary to impose more taxes on the super-rich.

What net worth qualifies a person as super-rich?

In India, the super-rich or ultra-rich are generally defined as individuals or households possessing exceptionally high net worth or income. This includes High Net Worth Individuals (HNIs) with assets over $1 million (approximately Rs 7-8 crore) and Ultra High Net Worth Individuals (UHNIs) with assets of more than $30 million (around Rs 220 crore), according to various reports. These categories encompass top business executives, successful entrepreneurs, and individuals listed on prestigious wealth rankings.

Proposal to levy wealth tax on super-rich

The proposal to impose a wealth tax on the super-rich has been under discussion for at least 10 years and now the support on the issue has been growing over the years.

Now, it appears that international consensus is building on the issue of higher tax on ultra-rich. Brazil, the current president of the G20, looks to take up the matter next month at finance ministers’ meeting. The G20 countries would like to push for a joint declaration at a meeting on the taxation of wealth.

Gabriel Zucman, a French economist and a key influencer behind Brazil’s G20 proposal for progressive international taxation to promote tax justice, in a report outlined how “a global minimum tax on the ultra-rich” could work and how much it could raise.

According to Zucman, the super-rich pay significantly less tax than ordinary people. The proposal aims to establish a new international standard: billionaires in every country would be required to pay at least 2% of their wealth in taxes annually.

Owen Gaffney, co-lead of Earth4All, said, “Indians want a giant leap on climate and nature — 68% demand dramatic reforms across all economic sectors within the next decade. This is a strong mandate for planetary stewardship that cannot be ignored.”

Tax on high incomes and corporations to fund climate initiatives alongside a ‘polluter pays’ approach with income redistribution are also strongly supported, he said.