A Covid Tax On The Rich Will Hurt Wealth Creation

Covid has hammered the poor, yet stock markets have boomed.

- Swaminathan S Anklesaria Aiyar

Massive printing of money by central banks has flooded the world, sending all stock markets soaring. The wealthiest have become wealthier. Some analysts say, let us impose a Covid tax on the unmerited stock market gains of billionaires to help the poor.

Analyst Shankkar Aiyar advocates taxing the rise in stock market wealth in 2020-21 — the exact rate should be left to politicians — of all dollar billionaires (assets over Rs 7,300 crore). For simplicity, the tax will apply only to listed shares (whose increase in value is transparent) and not unlisted shares, property or jewellery (which cannot be valued accurately and will spark litigation).

This sounds morally attractive. Proponents say a one-time tax for 2020-21 should not affect future investment and markets the way a permanent wealth tax (urged by Thomas Piketty and others to promote a fairer society) would. The tax will affect just 100 or so Indian billionaires, whose stock-market wealth has risen by an estimated Rs 13 lakh crore since last March. Some billionaires might even welcome a one-time transfer to the poor.