Monthly Archives: March 2014


IMF “Taxing The Super Rich Can Boost Economy”

IMF says taxing super rich can boost economic growth

Published time: February 27, 2014

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.

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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.

http://rt.com/business/imf-tax-rich-report-984/

U.S. markets mixed at close; Dow Jones up 0.30%

Investing.com – U.S. stocks were mixed after the closing bell on Friday.

At the close of U.S. trade, the Dow Jones Industrial Average rose 0.30%, the S&P 500 index gained 0.28%, while the Nasdaq 100 index declined 0.10%.

Meanwhile, across the Atlantic, European stock markets were mixed at close. France’s CAC 40 was up 0.27%; Germany’s DAX gained 1.08%; Britain’s FTSE 100 declined 0.01%; and the EURO STOXX 50 rose 0.16%.


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Forex

Investing.com – The U.S. Dollar was lower against the Japanese Yen on Friday.

USD/JPY was trading at 101.79, down 0.33% at time of writing.

The pair was likely to find support at 101.56, today’s low, and resistance at 102.69, Monday’s high.

Meanwhile, the U.S. Dollar was down against the Euro and the British Pound, with EUR/USD gaining 0.67% to hit 1.3802 and GBP/USD rising 0.34% to hit 1.6745.


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China manufacturing PMI 50.2 vs. 50.1 forecast

Investing.com – Manufacturing activity in China fell less-than-expected last month, official data showed on Saturday.

In a report, China Logistics Information Center said that Chinese Manufacturing PMI fell to an annual rate of 50.2, from 50.5 in the preceding month.

Analysts had expected Chinese Manufacturing PMI to fall to 50.1 last month.


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