IMF says high earners should pay more tax
The IMF has suggested that major economies should raise taxes on high earners.
The Fund said many rich countries could take advantage of benign economic conditions to raise taxes in order to reduce deficits and tackle inequality.
The analysis comes less than two weeks after the Trump Administration outlined major tax reforms, which included a reduction of 4.6% in the top level of income tax to 35%.
Vitor Gaspar, head of fiscal affairs at the IMF, said there was little empirical evidence to suggest that additional revenue could be generated by lowering tax rates despite that “being a conceptual possibility”. The IMF also urged governments to consider different types of wealth taxes and to increase capital gains taxes. It said that taxes on land and property were “both equitable and efficient, and remain underused”.
How can we tackle economic inequality?
While the Credit Protection Association realises that public services need to be funded and that steps need to be taken to tackle inequality, simply raising taxes on high earners could disincentivise the job creators and wealth creators that drive our economy.
A broader plan is needed which would include increasing childcare availability, raising the minimum wage towards the living wage, transforming jobs with better education and training and having a fairer overall tax system which removed many of the loopholes that helped people avoid tax and also tackled tax evasion.
Progressive tax reforms, such as a Land Value Tax, would help address inequality at root and redistribute economic power rather than simple hit those who are creating jobs and driving the economy forward.
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