IMF Fiscal Monitor: "Tackling Inequality"

Published on 
10/12/2017

As International Monetary Fund and World Bank Group Annual Meetings (“IMF/WB Annuals”) kicked off Monday, the IMF just published its Fiscal Monitor, half-yearly publication, titled “Tackling Inequality”.

“Excessive levels of inequality, the IMF says, 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 Guardian relayed this publication in an article titled “Higher taxes for rich will cut inequality without hitting growth”.

“The Washington-based IMF used its influential half-yearly fiscal monitor, The Guardian analyses, to demolish the argument that economic growth would suffer if governments in advanced Western countries forced the top 1% of earners to pay more tax. The IMF said tax theory suggested there should be “significantly higher” tax rates for those on higher incomes but the argument against doing so was that hitting the rich would be bad for growth".

"But the influential global institution said: “Empirical results do not support this argument, at least for levels of progressivity that are not excessive.” The IMF added that different types of wealth taxes might also be considered”.

You can read The Guardian’s full article here and read more about this Fiscal Monitor issue here - with videos and briefings in English, French, Arabic and Spanish.

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