Photo: Jessicamulley on flickr
An international group of economists is recommending that the United States adopt policies that would make higher-income Americans pay more in taxes to help boost the U.S. economy.The organisation for Economic Co-Operation and Development favours eliminating some tax breaks for high-income individuals on mortgage interest and health insurance. It also proposes reducing tax breaks corporations receive when they borrow to make investments.
Some of the ideas the group advocated in its latest survey have been championed by the Obama administration. The Paris-based group also endorsed job training proposals in the administration’s 2013 budget and praised its efforts to expand mortgage modification programs to combat foreclosures.
The OECD tends to advocate left-leaning economic policies. The endorsements are unlikely to sway Republicans in Congress who have opposed proposals the Obama administration has pushed.
The group is composed of 34 of the world’s leading industrialized nations. It was begun in 1948 as a European organisation created to help administer the Marshall Plan for the reconstruction of Europe after World War II. In 1961, it expanded to include leading industrialized countries around the world. The organisation’s goal is to promote economic practices that promote growth.
Twice a year the group publishes global growth forecasts. The most recent of those forecasts in May warned that the euro zone region could contract by as much as 2 per cent this year unless more forceful action was taken to deal with the European debt crisis.
The OECD predicts the U.S. economy will grow 2.4 per cent this year and 2.6 per cent in 2013. While that’s only modest growth, it would represent improvement from last year’s 1.7 per cent growth rate for the U.S.
In Tuesday’s report, the group’s economists made a number of broad recommendations aimed at improving U.S. growth prospects and dealing with such issues as growing income inequality and long-term unemployment.
— The Federal Reserve’s interest rate policies should continue to support economic growth.
— Congress and the Obama administration should strike an agreement that would avoid a sharp jump in tax rates and across-the-board spending cuts. Those are scheduled to go into effect at the end of the year if a deal isn’t reached.
— Various programs proposed by the administration’s budget request in February for dealing with the unemployed “should be implemented without delay.”