IMF backs new taxes on corporations and the wealthy, furthering organization's historic shift
- Increasing taxes on the wealthy and corporations could help the global
- That's according to officials at the
International Monetary Fund, who say it could level playing fields.
- This further cements the
IMF's shift toward progressive economics, as wealth taxesgrow in popularity.
Lifting taxes on wealthy individuals and corporations could improve the global rebound from the coronavirus recession, officials at the International Monetary Fund said Wednesday.
New stimulus and an improved rate of vaccination led the IMF to raise its global growth forecast earlier in the week, but the organization is already looking beyond the initial rebound. Governments will eventually need to retract their fiscal support to avoid possible debt risks. Balancing stimulus with austerity will be a key challenge in the coming years, and reforming both domestic and international taxes can help bring about a more equitable and environmentally friendly economy, the IMF said."To help meet pandemic-related needs, a temporary COVID-19 recovery contribution levied on high incomes is an option," a team led by Vitor Gaspar, director of the fiscal affairs department at the IMF, said. "Over the medium term, revenue collection should be bolstered, especially in low-income developing countries, which could help finance development needs."
The statement marks a major contrast with past IMF statements. The organization previously preached the neoliberal themes of cutting government spending and lowering taxes as ideal for economic growth. Critics have often accused the IMF of pushing austerity that stifled growth, particularly in developing economies.The institution's tone changed after the global financial crisis, and this marks further evolution on its part.
The IMF stressed its mixed outlook for the recovery in emphasizing the need for greater tax revenue. The organization now sees the global economy expanding 6% in 2021, up from the previous estimate of a 5.5% bounce. Growth in 2022 was also revised higher in the IMF's latest outlook report. Hefty
Tax hikes, as well as health care investments and employment programs, can help even the playing field between large and still-struggling economies, the organization said.
"Governments have gone to exceptional lengths to shore up their economies, but further work is needed to get ahead of the COVID-19 pandemic, provide flexible yet targeted support now, adjust when a recovery is firmly in place, and set the stage for a greener, fairer, and more durable recovery," the IMF said."Until the pandemic is brought under control, however, fiscal policy will have to remain flexible and supportive," the IMF said Wednesday.
One-off wealth taxes have gained traction worldwide
In December, a panel of experts also called for a one-off wealth tax in the UK. Their proposal was a simple 1% tax for five years on individual wealth over £500,000. That Wealth Tax Commission found that such a levy could raise just around £260 billion (around $357 billion). It's not without precedent, as the UK has had one-off taxes before, although that proposal might meet resistance from the UK's Conservative Party.In the US, there's Sen. Elizabeth Warren's Ultra-Millionaire Tax Act. It targets households with a net worth between $50 million and $1 billion, who would see a 2% tax, and those with a net worth over $1 billion would be taxed 3%. That's not a one-off measure, but it could raise $1.4 trillion over 10 years.
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