French economist Thomas Piketty for emulation of 20th-century wealth tax

French economist Thomas Piketty said countries should emulate the progressive wealth taxes of some European nations in the 20th century and formulate a similar tax system in the global context.

 

“Billionaires and progressive wealth taxes were part of the progressive tax package introduced in many European countries in the 20th century to finance their welfare state and public services. We just need to do the same in the 21st century, in a more global context,” he said in an email reply to a question.

 

Many European countries such as Sweden, France, Germany, Norway and Netherlands — in the 20th century — imposed taxes, including taxes on high incomes, inheritances, and wealth to redistribute resources and reduce inequality.

 

While these taxes played a role in funding welfare states, many countries phased out or reduced wealth taxes in the late 20th and early 21st centuries. This was due to capital flight and tax avoidance, administrative difficulties in valuing wealth accurately and shift in economic policy toward less redistributive models.

 

Some European countries like Norway and Spain still retain forms of wealth taxation, while others, like France, have restructured their approach to target specific assets, such as real estate, rather than broad wealth.

 

India abolished wealth tax in 2015, holding that it had become burdensome to the administration without substantial collections. And, it was replaced with a 2 per cent surcharge on persons declaring more than Rs 1 crore income.

 

Piketty has been advocating wealth tax on the ultra-rich to finance social infrastructure like health and education.

 

Speaking at an event alongside Piketty, chief economic adviser V Anantha Nageswaran on Friday cautioned that taxing capital more will drive it away.

 

Rejecting the idea of a “billionaire tax” suggested by Piketty, Nageswaran said: “Not all problems can be solved through fiat.”