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Taxing super rich- a harakiri decisions to development

Pareto-propagated optimality criteria are indeed a great idea for policy making. However, the naive citizen with bigotry and hatred blames capitalism for inequality. It is noteworthy to mention that one cannot be made better off without making someone worse off. The rising number of super-rich in economies is often condemned for widening the rift between rich and poor. However, the progressive tax regime devised to narrow the gap seems to be more radical, as 74% of Indians support taxing the super-rich class.

The recent survey of Earth4All and the Global Commons Alliance seems to speak in a different tone altogether to address the prominent concerns of society, such as the climate crisis, global hunger, and inequality. The agenda will be put forward in the G-20 and is expected to bring a unanimous consensus on wealth taxation. French economist Gabriel Zucman’s report and argument over the polluter pays principle is based on preoccupied notions and beliefs that support levying high taxes on elite affluent. A quick tour of time will help you understand the reason to scrap the idea of a new taxation regime.

  1. Industrialists and corporations are the lifeline of every nation. No matter how you acknowledge their contribution to development, the new taxation regime will create a hollowness in the economy, as people would prefer to park their investments in less-taxable countries.
  2. Development at the cost of bridging the income disparity is merely a joke, as the investment will be siphoned off to other countries as per the comparative advantage theory of David Ricardo to mitigate the production cost. China and the UAE are some of the prominent areas where industrialist can shift their base.
  3. It may cause long-term economic losses, such as job cuts and unemployment, and have a greater impact on economic growth.
  4. The “polluter pays” principle was devised to penalise affluent people, while the poor easily escape from it. In a country where quality of life and standards are marginalised or have limited access to people, this is a sure mockery.
  5. The U.S. decision to back off from the Paris Convention and stop supporting such causes, considering its unnecessary expense augmentation in the past, shows the seriousness of developed nations towards such important concerns.
  6. Moreover, economic sufficiency will allow polluters to elude serious concerns by paying a meager amount. Can this be allowed? And does it justify the reason for allowing someone to disturb the natural resources frantically?
  7. The cascading effect may be detrimental for various sectors, including those where wealth accumulation is viewed as a prominent reason for investment, such as real estate, crypto, and other marketable securities.
  8. A public referendum cannot be considered a measure for policy formation. Past several incidences prove that public welfare is a tough decision to make and cannot be viewed from the perspective of public opinion or wooed for ulterior benefits such as freebies to social upliftment.