IMF intensifies income inequality push

The International Monetary Fund is suggesting countries examine a range of new tax policies to combat the rising inequality it says can be a drag on global economic growth.

{mosads}The IMF, which has increasingly concentrated on income inequality in recent months, makes clear that it’s not making policy prescriptions on how to deal for the issue for either advanced or developing economies. 

But the IMF paper also insists that there are ways to battle inequality, and redistribute income, while also having positive effects on growing the economy and the job market.

“When it comes to fiscal redistribution, design matters,” David Lipton, the IMF’s first deputy managing director, said in a statement. 

“Redistribution, if poorly designed, or pushed too far, can be distortive,” he added. “But some redistributive fiscal policies can in fact help improve efficiency and support growth, such as those that enhance the human capital of low-income households.”

The paper comes as the IMF has also become a lightning rod in Congress, and a central part of the debate on a potential aid measure to Ukraine.

It also comes just weeks after the IMF released another paper detailing the problems that income inequality –which Democrats have made a key part of their political message in recent years –can cause for the global economy. 

Still, some of the policies the IMF suggests deserve a deeper look are often scoffed at in the U.S., especially by Republicans.

The IMF paper, for instance, says that a carbon tax could be an “innovative” approach, and suggests that a top income tax rate higher than the U.S.’s current 39.6 percent might be optimal for raising revenues. 

The paper also calls for countries to reassess their roster of tax breaks, and to more effectively tax multinational corporations. 

On the spending side, it suggests increasing the retirement age, an idea that Democrats have panned, and for increased access to education.