Thursday, October 12, 2017

IMF Fiscal Monitor: Progressive Taxation Need Not Deter Growth

The latest from the IMF is a must read for progressives even if it runs contrary to the nonsense coming out of the White House:
At the global level, inequality has declined substantially over the past three decades, but within national boundaries, the picture is mixed: some countries have experienced a reduction in inequality while others, particularly advanced economies, have seen a significant increase that has, among other things, contributed to growing public backlash against globalization. Excessive levels of inequality can erode social cohesion, lead to political polarization, and ultimately lower economic growth, but whether inequality is excessive depends on country-specific factors, including the growth context in which inequality arises, along with societal preferences. This Fiscal Monitor focuses on how fiscal policy can help governments address high levels of inequality while minimizing potential trade-offs between efficiency and equity. It documents recent trends in income inequality, including inequality both between and within countries, then examines the redistributive role of fiscal policies over recent decades and underscores the importance of appropriate design to minimize any efficiency costs. It then focuses on some key components of fiscal redistribution: progressivity of income taxation, universal basic income, and public spending policies for achieving more equitable education and health outcomes. The analysis relies on the existing theoretical and empirical literature, IMF work on inequality and fiscal policy, country experiences, and new analytical work, including various static microsimulation analyses based on household survey data. Simulations using a dynamic general equilibrium model calibrated to country-specific data and behavioral parameters illustrate the potential impact of alternative budget-neutral tax and transfer measures on income inequality and economic growth.

7 comments:

Barkley Rosser said...

There you go. The IMF has been taken over by commies.

ProGrowthLiberal said...

Dan Crawford of Angrybear is reposting my post on this topic (with my permission). There are some good comments over at Angrybear - check them out.

rosserjb@jmu.edu said...

Are you suggesting my comment is not a good one, pgl? Gosh, shame on me.

ProGrowthLiberal said...

Good comments on both blogs - I should have made that clear.

rosserjb@jmu.edu said...

I just checked and found zero comments so far on AB on this good post. So, I guess no comments are better than my comments (just teasing), :-).

Anonymous said...

Inequality will always be with us. It always has. Some things never change.

Jim Walker, Realtor said...

The IMF Monitor tale reminded me of the idiom "Don't kill the goose that lays the golden egg" from the old fable.