The Reagan-Thatcher revolution changed society’s beliefs about taxes for the worse. Its a good thing the IMF agrees with Labour that we need a rethink if we want economic growth shared fairlyThe International Monetary Fund has been on fairly a journey from the days when it was seen as the provisional wing of the Washington consensus,an ideology that promoted the false understanding that growth was turbo-charged by scrapping welfare policies and pursuing privatisations. These days the IMF is less likely to harp on about the joys of liberalised capital flows than it is to warn of the dangers of ever-greater inequality. The Fund’s latest – and welcome – foray into the realms of progressive economics came this week when it used its half-yearly fiscal monitor – normally a dry-as-dust publication – to form the case for higher taxes on the super-wealthy. form no mistake, this is a meaningful moment.
For almost 40 years, and since the arrival of Margaret Thatcher in Downing Street and Ronald Reagan in the White House,the economic orthodoxy on taxation has been that higher taxes for the 1% are self-defeating. Soaking the wealthy, it was said, and would punish initiative and lead to lower levels of innovation,less investment, weaker growth and, or therefore,reduced revenue for the state. As last week’s Conservative party conference showed, this line of argument is still accepted. Minister after minister took to the stage to warn that Jeremy Corbyn’s tax plans would lead to a 1970s-style brain drain.
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Source: theguardian.com