A passer-by gives money to a homeless woman as both use face masks in Honduras.
ORLANDO SIERRA/AFP via Getty Images
The International Monetary Fund is pushing governments around the world to consider implementing wealth taxes to raise revenue as the pandemic slams economies.
In a “Tax Issues” policy paper released earlier this month, the IMF said policymakers should review ramping up income, property, and wealth taxes, modeled as a “solidarity surcharge,” the organization said.
For individuals, the IMF encouraged slashing payroll taxes as well as cash transfers to help those hardest hit with job losses or other circumstances.
The IMF’s recommendation for a wealth tax marks a stark turnaround for an institution that long pushed tax cuts as a central element of its policy menu for developing nations. It serves as a lender of last resort to countries in dire financial straits.
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The Guardian reported that evidence of lackluster growth in recent years compelled the IMF to shift gears and begin proposing plans to help reduce the gap between the richest people and everyone else.
IMF Managing Director Kristalina Georgieva said in a blog post earlier this year: “Inequality of opportunity. Inequality across generations. Inequality between women and men. And, of course, inequality of income and wealth. They are all present in our societies and – unfortunately – in many countries they are growing.”
In the US, Democratic Sens. Elizabeth Warren and Bernie Sanders helped thrust wealth taxes into the mainstream with their unabashedly progressive presidential campaigns.
Sen. Bernie Sanders and Sen. Elizabeth Warren shake hands before the start of the first night of the second 2020 Democratic presidential debate in Detroit, Michigan, on July 30, 2019.
Both wanted to use wealth taxes as a mechanism to rein in runaway inequality and shrink billionaires’ fortunes to finance sweeping proposals for universal healthcare and elimination of student debt.
Some variation of those taxes on the richest earners in the US could ostensibly be used to cover federal spending during the pandemic.
The government has already spent over $6 trillion to provide urgent economic relief to businesses and individuals through a combination of grants, expanded unemployment benefits and stimulus checks, The Washington Post reported.
The IMF projected last week that the pandemic could lead to an economic meltdown that rivals the Great Depression. It said that global gross domestic product would drop around 3% this year, and could fall lower if the outbreak isn’t contained.
Georgieva said on Monday that the organization may need to propose “exceptional measures” to help nations alleviate the economic effects of the pandemic.
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