Pres­i­den­tial tax pro­pos­als will widen Amer­ica’s wealth gap, Ox­fam warns

The Guardian - - INTERNATIONAL - Amanda Holpuch New York Ni­amh McIn­tyre

Tax re­forms pro­posed by Don­ald Trump would in­crease the gap be­tween rich and poor and see the US slip be­low Greece on a global in­equal­ity in­dex, re­searchers warn.

The US is al­ready do­ing “very badly” at ad­dress­ing in­equal­ity, but it could fall a fur­ther six places from its rank­ing of 23rd on the com­mit­ment to re­duc­ing in­equal­ity in­dex if the tax plan is passed.

Com­pil­ers of the in­dex, which was de­vel­oped by Ox­fam, spent a year look­ing at poli­cies on tax­a­tion, so­cial ser­vice spend­ing and em­ploy­ment for 152 coun­tries. “When you al­ready have coun­tries like Por­tu­gal and Slove­nia rank­ing higher than the United States, we think that’s a con­cern,” said Paul O’Brien, vice-pres­i­dent for pol­icy and cam­paigns at Ox­fam Amer­ica.

The Trump ad­min­is­tra­tion plans to slash cor­po­rate tax rates from 35% to 15%. With its par­al­lel pro­posed cuts in in­di­vid­ual in­come tax, the in­dex’s re­searchers says this would see the US fall­ing be­hind Greece, Spain and Ar­gentina.

O’Brien said: “The rea­son we did this com­par­a­tive in­dex is in large part to chal­lenge pol­i­cy­mak­ers like Pres­i­dent Trump to look to other economies and other so­ci­eties; to give peo­ple smarter ways to give ev­ery­one an op­por­tu­nity to lift them­selves from poverty.”

The UK is ranked 17th, but comes 109th in terms of the pro­por­tion of bud­get it spends on ed­u­ca­tion – just be­low Kaza­khstan and Cam­bo­dia. In 2014, the UK spent 11.78% of its bud­get on ed­u­ca­tion, while Zim­babwe spent al­most three times that pro­por­tion. Achiev­ing the UN’s sus­tain­able de­vel­op­ment goals for ed­u­ca­tion is es­ti­mated to re­quire a 20% spend. The UK’s tax struc­ture is ranked only 96th in the new in­dex, on ac­count of its rel­a­tively low cor­po­ra­tion and in­come tax rates, but it rises to 33rd on tax over­all be­cause of its rel­a­tively ro­bust abil­ity to col­lect tax rev­enues.

Swe­den is the coun­try most com­mit­ted to re­duc­ing in­equal­ity, with Nige­ria – Africa’s rich­est coun­try in terms of GDP – 152nd and bot­tom of the list. One in 10 Nige­rian chil­dren still die be­fore their fifth birth­day, and an es­ti­mated 112 mil­lion of the 182 mil­lion pop­u­la­tion live in poverty.

Threaded through the new re­port are stark facts that ex­plain some of the ways the US has earned its low rank­ing. In 2012, 43.3% of cor­po­ra­tions in the US paid no fed­eral in­come tax. US em­ploy­ers are re­quired to pro­vide zero days of paid ma­ter­nity leave, while Swe­den of­fers 480 days. The US fed­eral min­i­mum wage of $7.25 (£5.50) is well be­low the $10.60 an hour reck­oned to be needed for a fam­ily of four to stay above the fed­eral poverty line.

“In­equal­ity is not in­evitable but the di­rect re­sult of a gov­ern­ment’s pol­icy choices,” said Max Law­son, head of global pol­icy at Ox­fam. He said rich coun­tries par­tic­u­larly fall down on cor­po­ra­tion tax: the G20 av­er­age has de­clined from 40% in 1990 to 28.7% in 2015.

“We only found one coun­try which had ac­tu­ally raised cor­po­ra­tion tax, and that was Chile,” Law­son said. “If we don’t do some­thing pro-ac­tive about this global trend, we could see the de facto end to cor­po­rate tax in our life­times.”

The re­port also iden­ti­fies suc­cess­ful ef­forts to turn around in­equal­ity in coun­tries such as Namibia, where sec­ondary ed­u­ca­tion is free to all, and Pales­tine, which has the high­est rel­a­tive spend on min­i­mum wage in the world – and also scores highly on labour rights. Aus­tria, where at least 4% of staff must be classed as dis­abled in any con­cern em­ploy­ing more than 25 work­ers, tops the in­dex’s em­ploy­ment rank­ings.

A woman and child in La­gos, Nige­ria – at the bot­tom of the Ox­fam in­dex

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