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Redistributing wealth through taxation not a drag on economic growth: IMF paper

The Canadian Press

OTTAWA - A new paper by researchers at the IMF appears to debunk a tenet of conservative economic ideology — that taxing the rich to give to the poor is bad for the economy.

The researchers say they have looked at a vast amount of data from countries around the world and found little evidence that redistributing wealth through taxation hurts economic growth, except possibly at the extremes.

Instead, the researchers say that increasing economic equality — even through taxation — helps an economy grow faster and leads to longer lasting periods of economic expansion.

The authors concede that the conclusions tend to contradict economic orthodoxy, which holds that taxation is a job killer.

But they say that many previous studies failed to make a distinction between pre-tax inequality and post-tax inequality, hence often compared apples to oranges

The International Monetary Fund itself calls the controversial paper a "staff discussion note" that does "not necessarily" represent IMF views or policy. It was authorized for distribution by Olivier Blanchard, the IMF's chief economist.