Nikhil Kamath Says Income Inequality Can't Be Fixed But Gap Can Be Reduced

Zerodha co-founder Nikhil Kamath recently shared his views on wage growth, asset price inflation, and income inequality on Twitter, sparking an thought-provoking discourse.

What Happened: Kamath voiced his perspective on the income inequality issue via social media platform X on Friday and discussed the importance of wage growth in comparison to asset price inflation, intricately linking it to the organic levelling of income inequality.

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Kamath further expressed scepticism about the effectiveness of wealth rebalancing in society, pointing out that competition would inevitably recreate inequality. He stressed that the objective should not be to eliminate inequality but to manage its magnitude.

The entrepreneur also highlighted the potential benefits of inheritance tax, arguing it doesn’t discourage entrepreneurs or increase business costs like some income or indirect taxes.

Why It Matters: Kamath’s tweet comes at a time when wage growth and income inequality are hot topics in India. Kamath suggests that if wage growth exceeds asset price inflation, it can organically level income inequality.

The Zerodha co-founder’s also suggested that even if wealth was distributed equally, differences in work effort and competition would inevitably create income disparities again. This hints at the need for a more nuanced approach to tackling income inequality.

Kamath opined that inheritance tax as an alternative to other forms of taxation, such as income tax or indirect taxes, could also help close the gap as it doesn’t discourage entrepreneurs from building wealth in the way some income taxes do or drive up the cost of doing business via indirect taxes

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