| 摘要 | How should a poor country treat its rich? Nearly three decades ago, India embarked upon free-market economic reforms after a failed dalliance with state planning that almost drove it to bankruptcy. It looked as though the country had settled the question. The world’s second most populous nation—like Deng Xiaoping ’s China before it—would shed its suspicion of private business. To get rich would be glorious in India, too.
Today things look less certain. Needing resources to fund an ever-expanding list of social programs for the poor, Prime Minister Narendra Modi ’s government has doubled down on soaking the rich. Last month’s budget proposes what the media have called a “super-rich tax”—a 25% surcharge on the tax levied against incomes over 20 million rupees (about $275,000) and 37% over 50 million rupees. This takes the effective tax rates up to 39% and 42.7%. (Currently, a 15% surcharge applies to incomes over 50 million rupees.)
The Modi administration has also weaponized a cockamamie idea pioneered by its predecessor—that large companies must spend 2% of their profits on projects in keeping with “corporate social responsibility.” It proposed three-year jail terms for executives whose mandatory CSR spending does not pass government scrutiny. An uproar has forced the government to promise not to “operationalize” this decision.
Add to this growing “tax terrorism,” the Indian term for harassment by officials, and some of the highest corporate tax rates in Asia (30% on large firms), and you get a picture of businessmen increasingly squeezed by a greedy government. Last month the founder of a popular Indian coffee chain, Coffee Day Enterprises , allegedly committed suicide citing pressure from creditors and harassment by tax officials.
“In India, being against the wealthy is associated with being pro-poor,” says Naushad Forbes, a former president of the Confederation of Indian Industry. “It’s a throwback to the populism of Indira Gandhi. ” Mr. Forbes adds that India is nowhere near where it was under Gandhi in the 1970s and 1980s—at one point marginal income-tax rates reached 97.5%. Nonetheless, the signs of excessive government zeal are familiar.
Last month, Finance Minister Nirmala Sitharaman waved off concerns about higher taxes by pointing out that “not more than 5,000 people” in India could be categorized as “super-rich.” But this is precisely the problem. In Indian public life, steeped for decades in leftist rhetoric, nobody points out the other side of the argument: In a nation of more than 1.3 billion people, a few thousand wealthy citizens already shoulder a disproportionate share of the tax burden.
According to analysis by the business newspaper Mint, the top 1% of India’s taxpayers contribute one-third of income taxes. At first glance this appears similar to the U.S., where the top 1% pay 37% of taxes, or the U.K., where they pay about 30%. But in India the top 1% accounts for just 840,000 people, or 0.06% of the population. Compare that to America where the top 1% is made up of 1.4 million people, or 0.4% of the population. The problem is not that wealthy Indians pay too little in taxes. It’s that there are too few wealthy Indians.
For now the new taxes, which also apply to foreign companies structured as trusts, have helped batter financial markets. The benchmark Nifty fell nearly 6% last month after foreign portfolio investors pulled out more than $1 billion.
But instead of worrying about market fluctuations—driven by not only capricious tax policy but also broader concerns about sluggish growth, anemic corporate balance sheets, and a global slowdown—Ms. Sitharaman and her officials ought to consider something more fundamental: Can India afford to drive away its wealthy?
Many elite business families have other options. Their children typically study in the U.S. or U.K., and are often as comfortable in New York, Toronto or London as at home. And it’s not as though the rest of the world’s wealthy are beating a path to India to breathe Delhi’s famous air or experience Mumbai’s legendary traffic. Last year Morgan Stanley reported that 23,000 U.S.-dollar millionaires had exited India since 2014. Many have relocated to better-run Dubai and Singapore.
In his Independence Day speech on Aug. 15, Mr. Modi showed signs of grasping the problem. “Wealth creation is a great national service,” he declared. “Let us never see wealth creators with suspicion.” This is welcome rhetoric, but for it to mean anything it will have to percolate to the bureaucracy.
What could Mr. Modi do to show that he indeed values wealth creators? For starters, the government could keep a promise first made by then-Finance Minister Arun Jaitley in 2015 to lower corporate taxes to 25%. It could also revoke draconian powers of arrest and seizure handed to relatively low-level tax officials, and end the practice of setting them revenue targets, which only increases abuse and corruption.
Reversing the super-rich tax in the face of protest would signal not weakness, but rather reasonableness. Scrapping the absurdity of mandatory CSR spending would signal that India understands a basic tenet of capitalism: Companies do good by pursuing profit.
Mr. Modi says he wants nearly to double the size of India’s economy, to $5 trillion by 2024. This won’t happen unless India exits the ranks of countries that harass the rich and joins those that welcome them. |
