OECD urges raising taxes on high earners

[muriel_volestrangler]

Source: MarketWatch

Governments in a number of developed economies should consider introducing or raising taxes on wealth and property as part of a range of measures designed to halt and reverse rising income inequality, the Organization for Economic Cooperation and Development said Monday.

In its first report on the subject since 2008, the OECD said the gap between rich and poor in most of its 34 members has continued to widen. The average income of the richest 10% of the population in developed economies is now nine times that of the poorest 10%, having been five times as large in the 1980s.

Since the mid-1990s, differences in income have risen rapidly even in countries such as Sweden and Germany that have traditionally had the least inequality. Only two OECD members--Mexico and Chile--have managed to buck the broader trend, but that was from the starting point of having the most unequal income distributions.

The OECD said that rising inequality was fueling dissatisfaction with social and economic structures in a number of developed economies.

Read more: http://www.marketwatch.com/story/oecd-urges-raising-taxes-on-high-earners-2011-12-05

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No news to DUers, but the OECD is an influential body completely embedded in the international capitalist system, so analysis and recommendations from it are taken seriously by governments.

More from the OECD here:

Society: Governments must tackle record gap between rich and poor, says OECD

05/11/2911 - The gap between rich and poor in OECD countries has reached its highest level for over over 30 years, and governments must act quickly to tackle inequality, according to a new OECD report.

“Divided We Stand: Why Inequality Keeps Rising” finds that the average income of the richest 10% is now about nine times that of the poorest 10 % across the OECD.

The income gap has risen even in traditionally egalitarian countries, such as Germany, Denmark and Sweden, from 5 to 1 in the 1980s to 6 to 1 today. The gap is 10 to 1 in Italy, Japan, Korea and the United Kingdom, and higher still, at 14 to 1 in Israel, Turkey and the United States.
...

The OECD underlines the need for governments to review their tax systems to ensure that wealthier individuals contribute their fair share of the tax burden. This can be achieved by raising marginal tax rates on the rich but also improving tax compliance, eliminating tax deductions, and reassessing the role of taxes in all forms of property and wealth, the report says.

http://www.oecd.org/document/40/0,3746,en_21571361_44315115_49166760_1_1_1_1,00.html

[Magoo48]

1. I like to believe that occupy is shaking the good words loose here and there.

[dipsydoodle]

2. Income inequality growing faster in UK than any other rich country, says OECD

Top 10% have incomes 12 times greater than bottom 10%, up from eight times greater in 1985, thinktank's study reveals.
http://www.guardian.co.uk/society/2011/dec/05/income-inequality-growing-faster-uk

I don't quite understand the method of this comparison. If the top earners halved their income they still probably be rich whilst the poor would be no better off. :shrug:

[xchrom]

3. +1

[muriel_volestrangler]

4. And that is why higher taxes on high earners are important

as well as better education and training for well paid jobs (which the OECD also highlights as a reason the top 10% has done better - new technology benefits have flowed to better paid jobs, not the population in general). The poor would be better off if higher taxes helped redistribute the advances in the economy from new technology. And the top 10% would still be, as you say, rich, even after paying more tax.

[dipsydoodle]

5. The issue is compounded in the UK

by the dual taxation systems of PAYE and NH payments. Overdo the marginal tax rates and some will simply elect payment in a form not liable to NH payments. The end result could be an actual reduction in overall receipts by HMRC.

Within reasonable limits payments into pension funds are not taxable and neither dividends nor interest payments are to NH payments.