The International Monetary Fund has kindled the fires of tax controversy in the October issue of its Fiscal Monitor by suggesting that higher taxes on top earners may not be as damaging for growth as is commonly supposed (see http://bit.ly/2ypO2sX).
The International Monetary Fund has kindled the fires of tax controversy in the October issue of its Fiscal Monitor by suggesting that higher taxes on top earners may not be as damaging for growth as is commonly supposed (see http://bit.ly/2ypO2sX).
The paper discusses how fiscal policies can help support ‘inclusive growth’ in the face of rising inequality and slow economic growth in many countries. It argues that progressive taxation that is ‘not excessive’ does not inhibit growth and suggests that marginal tax rates on top income earners in advanced economies could be ‘significantly higher’ than the current trend.
The IMF acknowledges that ‘extremely progressive’ tax systems, such as those in Sweden and the UK in the 1970s with tax rates approaching 100%, could be damaging, but sees ‘no clear evidence that progressivity levels seen since 1981 in OECD countries have been demonstrably harmful for growth’.
Emerging markets and low-income developing countries, the IMF argues, should focus on gradually expanding the coverage of personal income taxes and raising indirect taxes, including excise taxes on luxury goods and consumption.
The UK currently sits around the median point among advanced economies on a scale of how progressive its tax and spending policies are.
The International Monetary Fund has kindled the fires of tax controversy in the October issue of its Fiscal Monitor by suggesting that higher taxes on top earners may not be as damaging for growth as is commonly supposed (see http://bit.ly/2ypO2sX).
The International Monetary Fund has kindled the fires of tax controversy in the October issue of its Fiscal Monitor by suggesting that higher taxes on top earners may not be as damaging for growth as is commonly supposed (see http://bit.ly/2ypO2sX).
The paper discusses how fiscal policies can help support ‘inclusive growth’ in the face of rising inequality and slow economic growth in many countries. It argues that progressive taxation that is ‘not excessive’ does not inhibit growth and suggests that marginal tax rates on top income earners in advanced economies could be ‘significantly higher’ than the current trend.
The IMF acknowledges that ‘extremely progressive’ tax systems, such as those in Sweden and the UK in the 1970s with tax rates approaching 100%, could be damaging, but sees ‘no clear evidence that progressivity levels seen since 1981 in OECD countries have been demonstrably harmful for growth’.
Emerging markets and low-income developing countries, the IMF argues, should focus on gradually expanding the coverage of personal income taxes and raising indirect taxes, including excise taxes on luxury goods and consumption.
The UK currently sits around the median point among advanced economies on a scale of how progressive its tax and spending policies are.
