The Hindu Editorial Summary

Topic 1: Inheritance Tax and Inequality: A Debate in India

GS-3 Mains Exam  : Economy

Revision Notes

Question : Evaluate the effectiveness of inheritance tax as a tool for reducing wealth inequality. How does the implementation of inheritance tax align with constitutional mandates for reducing inequality and providing equal opportunity?

• Sparked by: Sam Pitroda, Chairman of Indian Overseas Congress, proposed an inheritance tax for wealth redistribution.
• Main concern: Wealth inequality allows a few to control resources and influence decisions, harming the majority.

Impact of inequality:

• Hurts economic growth (reduced productivity, income, education spending).
• Limits opportunity (place of birth dictates life outcomes – 1/3 variation in consumption in India).
• Increases social unrest (political polarization and conflict).
• Creates negative economic cycle (low income leads to low consumption, savings, high debt, hindering future growth).

Government’s obligation: The Constitution mandates reducing inequality and providing equal opportunity.

Inheritance Tax

• Differs from wealth tax: levied once on inherited wealth above a threshold.
• Reduces wealth concentration and encourages productive investments.
• Counters argument of “freebie” for inheritors who didn’t earn the wealth.
• Funds innovation through tax revenue (vs. dynastic control).
• Example: Japan’s inheritance tax reaches 55%.
• India abolished its “estates duty” (inheritance tax) in 1985 due to administrative costs.
• Economist Rishabh Kumar shows its effectiveness (reduced top 1% wealth share from 16% to 6% between 1966-1985).

Land Value Tax (LVT)

• Taxes rental value of land, not the buildings on it.
• Borne by landowner, not tenants.
• Efficient revenue source as land is unresponsive to tax changes (unlike labor).
• Useful for redistribution in rural India (feudal caste structures) and urban India (politician-builder nexus).

Potential Benefits

• Economists Ghosh & Patnaik suggest a 2% wealth tax & 33.3% inheritance tax on top 1% could raise 10% additional GDP for public spending.
• Funds social programs like living wages, healthcare, employment, and food security.

Conclusion

Inheritance tax and land value tax can be instruments for reducing inequality and funding social programs. Technological advancements make these achievable with political will.

Additional Information by Arora IAS

Inheritance Tax: Pros and Cons

Pros:

• Reduces Inequality: By taxing large inheritances, inheritance tax can help redistribute wealth and reduce income inequality. This can lead to a more balanced and stable society. (Example: Studies show that countries with inheritance taxes tend to have lower Gini coefficients, a measure of income inequality.)
• Funds Social Programs: Revenue generated from inheritance tax can be used to fund important social programs like education, healthcare, and infrastructure. This can benefit everyone in society, not just the wealthy. (Example: Proposals in the US suggest using inheritance tax revenue to fund free college tuition.)

Cons:

• Disincentivizes Investment: High inheritance taxes could discourage wealthy individuals from investing or taking risks, potentially harming economic growth. (Example: Some argue that high inheritance taxes in Europe have led to capital flight, where wealthy individuals move their assets to countries with lower taxes.)
• Double Taxation: In some cases, inherited assets may have already been taxed once when earned. Inheritance tax can be seen as an additional burden on these assets. (Example: Businesses argue that inheritance tax on family-owned companies essentially taxes the same wealth twice.)
• Administrative Complexity: Valuing and collecting inheritance tax can be complex and expensive for the government. (Example: India abolished its inheritance tax partly due to the challenges of administration.)

 

Land Value Tax (LVT)

Pros:

1. Promotes Efficient Land Use: By taxing vacant land at the same rate as developed land, LVT discourages land speculation and encourages owners to use their land productively.
2. Boosts Revenue: LVT provides a stable source of income for governments, as land value is less volatile than property values.
3. Reduces Urban Sprawl: Discourages sprawling development by making it less profitable to hold onto undeveloped land.
4. Fairer Taxation: LVT taxes location, a benefit bestowed by society, not the effort or investment of the landowner.
5. Economic Efficiency: Doesn’t penalize investment in buildings and improvements, encouraging development and innovation.

Cons:

1. Transitional Issues: Shifting from a property tax to LVT can be complex and require careful planning.
2. Potential Short-Term Disruption: May initially disrupt land markets and construction as landowners adjust.
3. Administrative Challenges: Determining land value can be complex, requiring accurate land valuation systems.
4. Impact on Low-Income Landowners: Could disproportionately burden those holding undeveloped land with limited financial resources.
5. Political Opposition: Landowners who benefit from the current system may resist its implementation.

 

 

The Hindu Editorial Summary

Topic 2: Climate Change and Mental Health

GS-2 Mains Exam  : Health

Revision Notes

Question : Discuss the impact of climate change on mental health, focusing specifically on the vulnerability of individuals with schizophrenia. How does rising global temperatures exacerbate the risks associated with schizophrenia?

Basic Concept : Schizophrenia is a serious mental illness that affects a person’s ability to think, feel, and behave. People with schizophrenia have a distorted relationship with reality.

Example:

• Rahul has schizophrenia. He often hears voices that aren’t there (auditory hallucinations). He also believes people are reading his mind or trying to control him (delusions). These experiences make it difficult for Rahul to function in daily life.

Symptoms of schizophrenia can include:

• Delusions: Believing things that are not true, even when there is evidence to the contrary.
• Hallucinations: Hearing, seeing, or feeling things that are not there.
• Disorganized thinking and speech: Difficulty thinking clearly or expressing thoughts clearly.
• Extremely agitated or very little movement: Restlessness or lethargy.
• Flat or inappropriate emotional responses: Difficulty expressing emotions according to the situation.
• Social withdrawal: Withdrawing from others or losing interest in connecting with them.

Back to Editorial

Heatwaves and Mental Health:

• Rising temperatures linked to climate change. (Unusually high temperatures reported in India)
• Climate change disproportionately harms vulnerable populations (elderly, poor, marginalized).
• Climate change linked to new mental health issues:
  • Eco-anxiety (worry about environmental damage)
  • Eco-paralysis (feeling helpless to act)
  • Solastalgia (distress from environmental change)
• May worsen existing mental health conditions.

Heatwaves and Existing Conditions:

• Studies show heatwaves affect people with schizophrenia more than those with heart/kidney disease.
• People with mental health conditions at higher risk of heat-related deaths, especially those with:
  • Schizophrenia
  • Anxiety
  • Bipolar disorder
• Study (2021): 8% of surveyed people had schizophrenia (up from 2.7% in 2012).

Why Schizophrenia Increases Heat Risk:

• Dysfunction of the hypothalamus, a brain region controlling body temperature, may be a key factor.
• The hypothalamus also regulates heart rate, hunger, thirst, mood, and sleep.
• Antipsychotic medications can disrupt the hypothalamus, raising body temperature.
• This, combined with high ambient temperatures, can be fatal.

Mental Health Challenges for Schizophrenics:

• Psychotic symptoms (hallucinations, delusions)
• Anosognosia: inability to recognize illness
• These challenges can make it difficult to seek help during heatwaves.

Social Factors Affecting Vulnerability:

• Marginalization, lower economic status, and loneliness are risk factors for both schizophrenia and heat-related illness.

Recommendations:

• Families and caregivers of schizophrenics should be aware of the increased heat risk.
• Educate yourself on heat illness symptoms and emergency cooling measures.
• This will help ensure everyone’s safety during heatwaves.