Keep up with the news by installing RT’s extension for . Never miss a story with this clean and simple app that delivers the latest headlines to you.


IMF says taxing super rich can boost economic growth

Published time: February 27, 2014 10:40
Edited time: March 01, 2014 10:53
Reuters / Kim Kyung-Hoon

Reuters / Kim Kyung-Hoon

A new International Monetary Fund study has found that taxing the super wealthy doesn’t stunt the economic growth of a country, and that redistribution can actually spur gross domestic product.

The paper argues inequality is harmful to a country’s growth, and that redistributing wealth using taxes can reduce inequality and boost growth and the length of growth cycles.

“There is surprisingly little evidence that increases in tax rates impede medium-to-long-run economic growth,” the IMF paper says.

Redistribution is a "win-win situation" and overall has a "pro-growth effect", and isn’t a job killer, as many other economists argue.

Growth inequality is more common in countries that redistribute less, and more equal societies have "faster and more durable growth". The paper addresses extremes in the formula that sometimes suggest huge redistribution has a negative effect on growth.

America’s tax authority, the International Revenue Service, released a report in November 2013 that shows that the US’s richest 1 percent now owns 31 percent of its wealth, while the rest of the population experienced an income rise of only 1 percent.

A recent Oxfam study shows that up to 146 million Europeans are at risk of falling into poverty by 2025, and 50 million Americans are currently suffering from severe financial hardship.

"We find that higher inequality seems to lead to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly negative) effect," the IMF paper states.

However, the report admits that labor supply could be adversely affected by a top heavy tax scheme.

“Redistribution that takes from the rich and gives to the poor is likely to reduce the labor supply of both the rich (who are taxed more) and the poor (insofar as they receive means-tested benefits that reduce incentives to work),” the report said.

The IMF study, compiled by researchers Jonathan Ostry, Andrew Berg and Charalambos Tsangarides and published by Oliver Blancard, the institution’s chief economist and released on Wednesday, is meant to serve as a ‘discussion note’ and not an official stance of the Washington-based institution.

"Redistribution, Inequality, and Growth" stops short of declaring the paper economic gospel, as the authors admit the data, and discipline of economic theory, is complex and many different variables are at play.

‘Tax the rich’ has become the main mantra of Warren Buffet, America’s second richest man, who has urged Congress to raise taxes on millionaires to 30-35 percent.

Comments (28)


Эдвард Рассел 02.03.2014 14:21

Who care's now. This study should have been done and implemented way to long ago. To many stupid Globalist Greedy Mother phucker's out there.


BRICSIAN 02.03.2014 02:45

IMF please don't show the tax carrot. If you are genuinely interested for equality and redistribution of wealth, please advocate the following -

1) Heavy engineering, scientific, technological and pharma sectors for large corporations.
2) Consumer goods for small and medium enterprises. Large corporations must be out of consumer goods sector.
3) Retail sector for micro and privately owned businesses. The super-rich must be out of retail.
4) State resources and social sector under full govt. control.
5) 51% govt. share in banking and public transport.


Regula 01.03.2014 20:32

What is really needed is a wage redistribution, more than a tax redistribution. But that seems to be taboo for the IMF.

View all comments (28)
Add comment

Authorization required for adding comments

Register or



Show password


or Register

Request a new password


or Register

To complete a registration check
your Email:


or Register

A password has been sent to your email address

Edit profile



New password

Retype new password

Current password



Follow us

Follow us