Wealth distribution: The estate tax in the USA, mentioned by Sam Pitroda. Everything you need to know.

Wealth distribution: The inheritance tax in the USA, mentioned by Sam Pitroda. Everything you need to know.

Political conflict over wealth redistribution erupted after Sam Pitroda, chairman of the Indian Overseas Congress, advocated an inheritance tax system in India similar to the existing tax system in the United States. Pitroda is in favor of a 50 percent inheritance tax. This means that half of everything a person has accumulated will be taxed on his death and his heirs will only be able to get the remaining 50 percent.

In the United States, there is a similar inheritance tax, which is a state tax levied on the money or property you receive from the estate of a deceased person. Unlike the federal estate tax, the inheritance tax is paid by the heirs. As of 2021, only six states impose an inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Tax rates and exemptions vary by state, with some states exempting certain classes of heirs or setting lower tax rates for transfers to close family members. Inheritance tax rates can range from less than 1% to 20% of the value of the inherited property and cash.

However, the tax is calculated on the amount of assets that exceeds a certain threshold. For example, the tax is levied on inherited assets that exceed $1 million.

Rent townhouse in New York 70 319,00 $

USA,New York

7 Bedrooms

6 Bathrooms

929 м²

Sale villa in Miami 1 623 369,00 $

USA,Miami

4 Bedrooms

5 Bathrooms

256 м²

Sale flat in New York 3 932 584,00 $

USA,New York

3 Bedrooms

3 Bathrooms

139 м²

Sale flat in New York 1 491 260,00 $

USA,New York

1 Bedroom

1 Bathroom

60 м²

Sale flat in Fort Lauderdale 1 424 005,00 $

USA,Fort Lauderdale

4 Bedrooms

4 Bathrooms

165 м²

Sale flat in San Francisco 1 979 055,00 $

USA,San Francisco

3 Bedrooms

2 Bathrooms

141 м²

If a person inherits property worth $3 million, the tax will only be applied to the remaining $2 million. In an interview with ANI, Pitrada said: "In America, there is an inheritance tax. If a person has $100 million in assets at the time of death, they may only be able to pass on about 45 percent to their children, while the remaining 55 percent goes to the government. It's an interesting law."

Forty years ago, India had a similar taxation system that was abolished by then Prime Minister Rajiv Gandhi in 1985 with the aim of simplifying the tax system and encouraging investments and savings. This tax, also known as the estate tax, was introduced in India in 1953. The tax was levied on the transfer of assets from a deceased person to their heirs. It was based on the total value of the estate left by the deceased, and the heirs were required to pay a certain percentage of that value as tax to the government. Since then, there have been periodic calls to reintroduce this tax, especially in light of the growing income inequality and concentration of wealth in the hands of a few. However, no concrete measures have been taken on this issue so far.