World Economy

OECD: US Bucking Trend as Others Hike Taxes

In raising tax, the US was placed 31st out of the research body’s 35 members.In raising tax, the US was placed 31st out of the research body’s 35 members.

The Organization for Economic Cooperation and Development says US revenues as a share of gross domestic product has recently fallen while the share of economic output taken by governments in developed economies as taxes has risen to its highest level since records began 50 years ago.

In the US, taxes as a share of gross domestic product fell in 2016 to below the level recorded in 2007, the year before the financial crisis hit and briefly reduced tax revenues for governments around the world, the Wall Street Journal cited the OECD as reporting, newsmax reported.

According to the OECD, “the US government—at national, state and local levels—raised the equivalent of 26.2% of GDP in taxes last year, placing it 31st out of the research body’s 35 members.” Only Turkey, Ireland, Chile and Mexico taxed less, the WSJ explained.

The OECD report comes as senate Republican leaders plan a make-or-break floor vote on their bill as soon as Thursday—a dramatic moment that will come only after a marathon debate that could go all night. Democrats are expected to try to delay or derail the measure, and the GOP must hold together at least 50 votes from its thin, 52-vote majority in order to prevail.

According to the congressional budget office, the proposed changes will amount to 0.6% of GDP over the coming decade.

The OECD also warned that rising private debt loads in both advanced and developing economies pose a risk to growth as Canada, South Korea and the UK lead the world in household borrowing, Bloomberg reported.

“Household and corporate debt in many advanced and emerging market economies is high,” the Organization for Economic Cooperation and Development said Thursday in a pre-released section of a report to be presented next week.

“While higher indebtedness does not necessarily imply that problems are just around the corner, it does increase vulnerability to shocks.”

With the global economy showing its most even expansion since the financial crisis, debt levels and credit quality are among the risks that could trigger a downturn. Consumer debt tops 100% of GDP in Canada, with South Korea and Britain both above 80%.

On corporate borrowing, the OECD warned about a shift in risk from banks to the bond market and a “substantial” decrease in credit quality.



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