IMF: Income disparities can hurt economies
WASHINGTON – The International Monetary Fund warned Thursday that wide income inequality can slow economic growth and is proposing ways to reduce it. Its recommendations include: Raising property taxes. Taxing the rich more than others. Raising the eligibility age for government retirement programs.
Such proposals have typically encountered stiff opposition from policymakers. IMF officials say it is up to individual countries to decide whether and how to try to reduce income disparities. But if they do, its report released Thursday highlights ways it says governments can use tax and spending policies to reduce inequality without inhibiting growth.
The proposals are the latest sign of the IMF’s growing concern about income inequality. It’s an unusual focus for a global lending organization best-known for providing loans paired with strict budget cuts.
Thursday’s report puts the weight of the IMF behind the notion that large wealth gaps can depress growth, a move welcomed by advocacy groups for emerging economies.
Similarly, a survey by The Associated Press late last year found that a majority of economists think income inequality in the United States is weakening its economy.