Critics of a progressive wealth tax caution against potential negative effects on economic growth and investment. They argue that imposing a 2%–6% tax on the ultra-rich could lead to capital flight, reduced entrepreneurship, and lower foreign investment, which may hamper India's economic development.
While acknowledging the significant wealth disparities highlighted by the Centre for Financial Accountability's "Wealth Tracker India 2026" report, opponents emphasize the importance of creating an environment conducive to wealth generation and job creation.
They suggest that alternative measures, such as improving tax compliance and broadening the tax base, may be more effective in addressing inequality without discouraging economic activity.
The debate continues on how best to balance social equity with growth, with policymakers cautious about adopting measures that could have unintended economic consequences.