New Delhi: Amid the ongoing Lok Sabha polls, the chairman of the Indian Overseas Congress, has stirred up a major controversy by advocating for an inheritance tax law in India during an interview. He emphasised the importance of policies that promote wealth redistribution and explained how the inheritance tax works in America.
"In America, there is an inheritance tax. If one has 100 million USD worth of wealth and when he dies he can only transfer probably 45 per cent to his children, 55 per cent is grabbed by the government. That's an interesting law. It says you in your generation made wealth and you are leaving now, you must leave your wealth for the public, not all of it, half of it, which to me sounds fair,”, Pitroda remarked.
He said, “In India, you don't have that. If somebody is worth 10 billion and he dies, his children get 10 billion and the public gets nothing...So these are the kinds of issues people will have to debate and discuss. When we talk about redistributing wealth, we are talking about new policies and new programs that are in the interest of the people and not in the interest of the super-rich only”.
“This is a policy issue. The Congress party would frame a policy through which the wealth distribution would be better. We don't have a minimum wage (in India). If we come up with a minimum wage in the country saying you must pay so much money to the poor, that's the distribution of wealth. Today, rich people don't pay their peons, servants, and home help enough but they spend that money on vacation in Dubai and London...When you talk about the distribution of wealth, it is not that you sit on a chair and say I have this much money and I'll be distributing it to everybody," Pitroda added during an interview.
What is Inheritance Tax Law?
An inheritance tax is a type of tax that is levied on the recipients of inherited assets. This tax is paid by the recipient of a bequest and not the estate of the deceased. Although no federal inheritance tax exists in the United States, the federal government imposes an estate tax. In the U.S., inheritance tax is not a common practice, and it is only collected by six states as of 2023. The states that collect inheritance tax are Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
The taxation depends on the state in which the deceased lived or owned property, the value of the inheritance, and the beneficiary's relationship to the decedent. When someone passes away and leaves behind assets to their heirs, these assets are subject to inheritance tax, which may be assessed by the state or states where the decedent lived or owned property. The value of the inheritance and the relationship between the recipient and the deceased are the main factors determining the tax rate. It's essential to understand the rules and regulations of the state in which the decedent lived or owned property to determine if an inheritance tax applies.
However, a few hours later, Pitroda made a clarification in a post on X saying, “It is unfortunate that what I said as an individual on inheritance tax in the US is twisted by Godi media to divert attention from what lies the PM is spreading about the Congress manifesto. PM’s comments Mangal Sutra & gold snatching is simply unreal”.
“I mentioned US inheritance tax in the US only as an example in my normal conversation on TV. Can I not mention facts? I said these are the kinds of issues people will have to discuss and debate. This has nothing to do with the policy of any party including Congress”, he said in another post. “Who said 55% will be taken away? Who said something like this should be done in India? Why is the BJP and media in panic ?”, he added.
Meanwhile, Prime Minister Narendra Modi has lashed out at Congress, saying the dangerous intentions of the Congress Party are coming to the fore one after the other. "The prince's advisor to the royal family had said some time ago that more taxes should be imposed on the middle class. Now these people have gone one step further”, PM Modi said during a rally in Surguja on Wednesday.
PM Modi said, “Now Congress says that it will impose Inheritance Tax, it will also impose a tax on the inheritance received from parents. Your children will not get the wealth that you accumulate through your hard work, rather the claws of the Congress government will snatch it away from you”.
“That means Congress's mantra is - Congress's loot during life and even after life. As long as you live, Congress will hit you with higher taxes. And when you are no longer alive, they will impose an inheritance tax on you. Those people who considered the entire Congress Party as ancestral property and gave it to their children, do not want an ordinary Indian to give his property to his children”, he added.
