AltAusterity Digest #24 December 23-29, 2017

As the Republican tax cuts make their way through Congress, the Economist looks at the progressiveness of America’s recent tax system, coupled with a vast inequality in social spending. Although America’s top income bracket in 2016 totaled 46%, compared to France’s 55% and Sweden’s 57%, the system tends to be more progressive due to the absence of any consumption taxes (VAT) and numerous tax deductions for lower-income earners, who benefit most as a percentage of income. While the Republican tax cuts won’t be dismantling these measures, they will be cutting the corporate and estate taxes which had already fallen from 4.4% of GDP in 1976, to 1.7% in 2016. These cuts will further restrict the spending power of already regressive social policy.

As projections for sluggish future growth in the world economy emerge, the OECD suggests further policy action to promote private sector investment, trade and productivity. Among it’s suggestions are higher wages for more inclusive growth, dealing with unsustainable levels of household debt, improving the design of insolvency regimes and removing tax subsidies for housing. While projections for overall world growth in 2018 and 2019 float between 3%-4%, it is expected to largely be driven by a growth rate over 6% in India and China.

The Canadian federal government ran a $5.9 billion deficit this fiscal year, making a downward change of just over $2 billion from 2016-2017 ($7.8 billion deficit). This downward trend in spending was met with an increase in revenues – up $6.9 billion from the previous year – to total $146.3 billion. Personal and corporate tax revenues increased by 6.2% and 6.8% respectively, excise and duty tax revenues rose by 8.9% and GST revenues by 11.5%. These figures come after the Liberals have recommitted to increased deficit spending.

As the Greek government resumes talks with its international creditors, the country’s largest labour unions have called for a general strike against bailout-linked austerity policies. The strike will see both public sector and private sector unions participate, protesting successive pay and pensions cuts as well as tax increases. The strike is set to take place December 14th. The bailout program is set to end in 2018, after which, Greece will have to self-finance through bond sales.

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