WASHINGTON: In its latest review of the US economy, which was published on June 16, the Organisation for Economic Co-operation and Development (OECD) recommended that increased long-term government spending on infrastructure and education should be funded by higher tax revenues.
In particular, the OECD suggested that work towards putting a price on carbon, such as by implementing President Barack Obama’s proposal for a USD10 per barrel tax on oil and his Clean Power Plan, would provide additional funds, while also reducing greenhouse gas emissions.
Worsening income inequality in the United States could, the OECD suggested, be countered if the Administration was to “expand the earned income tax credit … and make tax expenditures less regressive.”
For US businesses, the OECD also recommended making the research tax credit refundable for new firms, which are not able to take advantage of the existing non-refundable credit because of low profitability. Such a measure aimed at increasing productivity in the economy would be an alternative to the current congressional patent box proposals that are not favored by the OECD.
Few of the OECD’s proposals are likely, in fact, to be acceptable to the present US Congress. For example, on June 10, the House of Representatives adopted a Republican party resolution expressing its belief that “a carbon tax would be detrimental to American families and businesses, and is not in the best interest of the United States.”
