By Eashaan Agrawal
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On 11th August US senator Bernie Sanders made headlines when he proposed the imposition of a ‘Billionaire Tax’ by introducing the Make
Billionaires Pay Act along with Senators Ed Markey and Kirsten Gillibrand, The
aim of the act was to hold the billionaires socially accountable for the gains
they made out of the ensuing pandemic at the cost of people who have been
struggling to make ends meet.[1]
The key provisions of the act are:
1) The tax imposed will be sixty percent of the total gains made during the pandemic.
2) The gains will be calculated from March 18th, 2020 to January 1st, 2021.
3) No one who has a net worth of less than one billion dollars will be liable for the tax.
4) The estimated revenue to be raised from this act is around $421 Billion.
5) The act will also empower Medicare to pay all out of pocket healthcare expenditure for everyone in America for the next one year.[2]
The timing of this development is very pertinent. With the
development of the world’s first vaccine by Russia and the rapid progress of
other vaccines by other nations, the issues of affordability and economic
ability of the masses have come into the front fore. The situation becomes
particularly important in India where economic disparity is starker, the per
capita income much lower than the advanced western economies, and insurance not
being the norm amongst the general population.
In any developing economy growth and prosperity are often
accompanied by a rapid rise in economic inequalities between the have nots and
the richest people, this rise in inequality is, however, gradually overturned
with maturing of the economy and leads to a more economically egalitarian
society. This is what is an oversimplification of the theory proposed by Simon
Kuznets and has been regarded as the process of economic development. In India,
the policy focus has been of similar orientation and has gained support from
economists such as Jagdish Bhagwati.[3]
However, the recent pandemic has changed this and shown that economic
inequality is not only the result of economic growth and market forces but also
the lack of enough safety nets for the common population.
One of the major impacts was seen in the healthcare infrastructure
of India. Many people were during the pandemic had to bear the burden of expensive
tests and cots of ventilators. This sudden expenditure is not characteristic of
an Indian household and led to a debt trap. Further, the lower levels of
domestic saving[4]
meant that over a period of time the debt trap is only going to increase.
Another area that saw the exacerbation of inequality was the
education sector. The pandemic has given a boost to the digital mode of
learning, this though convenient for the middle class and the rich is really a
distant dream for those at the bottom of the chain.[5] This will only alienate the children from
education and further even reverse the benefits gained from increasing
enrolment percentage of children in school.
The earnings of the poor have also suffered a huge setback. With
social distancing measures and successive lockdowns, physical work has taken a
hit and the new norm has become work from home.
Despite being inconvenient it is possible for most of the people having
the wherewithal to work and thus earn. This is not the case for the people at
the base of the pyramid, who depend on their physical skills to earn a wage and
thus sustain themselves. This is further aggravated by the migrants’ crisis who
have been displaced from their place of work and now face the bleak possibility
of not returning due to the fear of state governments.[6]
All of this just shows that inequality is not just a result of
economic growth and there is a need to strengthen social institutions to
ameliorate the situation. The solutions vary. There is a need to make insurance
a norm so that the people do not have to part away with their life savings to
get medical treatment. This has begun with Ayushman Bharat and can go a long
way with proper implementation and universalization.
Universal Basic Income can also be a solution by ensuring a
guaranteed payment at the time of crisis and can reduce the risk of uncertainty
and reduce inequality. Access to education is also an aspect that needs to be
looked at.
[1] https://www.theguardian.com/commentisfree/2020/aug/11/the-pandemic-is-helping-the-rich-get-even-richer-its-time-to-tax-their-obscene-wealth#:~:text=The%20pandemic%20is%20helping%20the,to%20tax%20their%20obscene%20wealth&text=Jeff%20Bezos
[2]https://www.sanders.senate.gov/download/make-billionaires-pay-fact-sheet-redo?id=6435747D-99F2-4BEB-A1C2-9BFC46C20451&download=1&inline=file
[3] https://www.livemint.com/Politics/zvxkjvP9KNfarGagLd5wmK/Everything-you-wanted-to-know-about-SenBhagwati-debate.html
[4] https://www.livemint.com/Politics/zvxkjvP9KNfarGagLd5wmK/Everything-you-wanted-to-know-about-SenBhagwati-debate.html
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Eashaan is a 2nd year law student at National Law University Delhi. A voracious reader, he loves to travel to new places and experience the culture of different places. His interests include Constitutional Law, Contracts and Law of Crimes.
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