O’Reilly, P. (2018), “Tax policies for inclusive growth in a changing world“, OECD Taxation Working Papers, No. 40, OECD Publishing, Paris.

This paper, Tax policies for inclusive growth in a changing world, has been prepared in support of Argentina’s G20 Presidency. While this paper is focused on taxation policy, it forms part of a broader contribution that the OECD has made in support of Argentina’s G20 presidency. Against a backdrop of increased inequality and persistently low productivity growth, this paper considers the challenges and opportunities confronting policy makers in a rapidly changing world as a result of globalisation, technological change and the changing world of work. The paper focusses on:

  • The impact of the tax system on the market distribution of income, by supporting employment, skills investments, and labour market formality.
  • How shifting tax mixes towards growth-friendly taxes can be combined with measures to improve progressivity, particularly through base-broadening and through removing inefficient and regressive tax expenditures. • Ways in which personal income taxes and social transfers can foster inclusive growth by raising the efficiency and equity of labour and capital income tax systems.
  • How tax policy can foster business dynamism and productivity, including through support for investment and innovation, and can raise efficiency by continuing to combat BEPS.
  • How tax capacity can be raised, and how tax administration can be strengthened, including through international co-operation The paper provides tax policy advice and recommendations to support governments in their pursuit of tax and transfer policies conducive to inclusive growth, while supporting innovation and increased productivity growth; preserving the revenue-raising capacity of the tax system; and ensuring the sustainability of public spending.

Hagemann, R. (2018), “Tax Policies for Inclusive Growth: Prescription versus Practice“, OECD Economic Policy Papers, No. 24, OECD Publishing, Paris.

Against a backdrop of the widening income distribution in most countries, OECD governments need to formulate policies that support sustainable and inclusive economic growth. Tax policies play a crucial role in this endeavour. Both tax theory and mounting empirical evidence suggest that many countries could achieve both higher and more broadly shared income growth. Many countries, however, seem hesitant to fundamentally restructure their tax systems to achieve higher and more inclusive growth. This reluctance begs a key question: Why forego tax policy reforms that hold the obvious promise of win-win outcomes of both higher and more inclusive growth? To offer some concrete answers to this question, this paper reports the findings of a synthesis of cross-country empirical work on the ranking (in terms of efficiency and distributional impact) of major tax instruments on the one hand, and, on the other, country-specific tax policy assessments reported in several dozen OECD Economic Surveys since 2008. The paper identifies a wide range of factors, some common to many countries and some country-specific, that prevent governments from adopting tax structures more favourable to inclusive growth. These include political economy forces, legal obstacles, administrative constraints, and intergovernmental fiscal arrangements.

Cournède, B., J. Fournier and P. Hoeller (2018), “Public finance structure and inclusive growth“, OECD Economic Policy Papers, No. 25, OECD Publishing, Paris.

Tax and spending reforms offer numerous opportunities to promote inclusive growth. There is potential for so-called win-win reforms that simultaneously boost economic output and enhance income equality. Other changes in the structure of public finances will produce benefits only along a single dimension, while some involve trade-offs between average income gains and adverse distributional effects. Empirical analyses of the experience of OECD countries provide evidence about which tax and spending reforms influence prosperity and income distribution — and by how much.

(Source: OECD iLibrary)

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