Stiglitz Argues Tax Reform is Key to Fighting Inequality in New Roosevelt Institute Paper

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Nobel-winning economist Joseph E. Stiglitz offers proposals for restructuring individual and corporate income taxes to promote growth and equity.

The objective of tax reform is to create a more efficient tax system, which simultaneously advances a variety of societal goals.

For decades, the debate over taxation in the United States has been dominated on the right by those who want to slash taxes and spending and on the left by those who view taxes as a necessary evil. What’s been lost is the perspective that made the New Deal possible: the understanding that government can use taxes to redress inequality and provide for the public good. In a new white paper, “Reforming Taxation to Promote Growth and Equity,” Roosevelt Institute Senior Fellow and Chief Economist Joseph E. Stiglitz reframes the debate with a full slate of tax proposals that he argues are key to future prosperity.

"Tax reform is not an end in itself. Nor is the object of tax reform just to raise more money to reduce the deficit," says Stiglitz. "The objective of tax reform is to create a more efficient tax system, which simultaneously advances a variety of societal goals: higher employment and growth, a better distribution of income, and less environmental degradation."

In this white paper, Stiglitz presents reforms to corporate and individual income taxes, as well as alternative ways of raising revenue. He calls for taxing capital as regular income, boosting inheritance taxes, and restructuring corporate taxes to get money out of tax havens and make companies pay the price when their actions have an adverse effect on the economy or the environment.

Stiglitz draws on President Franklin D. Roosevelt's view that government must function in the red during hard times in order to protect the American people, and that deficit reduction can be done in a way that does not shift all the cost onto those same Americans. By restructuring our tax system to increase growth and fight economic inequality, Stiglitz argues that the U.S. has an opportunity to ensure that Roosevelt's vision comes to pass today, just as it did in the boom period following World War II.

Stiglitz, a professor at Columbia University in New York, has a proven record as a leader in the public debate around economic policy. His Nobel Prize-winning work on information asymmetry reshaped mainstream economic thought, forcing economists to acknowledge that the models they use in classrooms do not perfectly reflect how markets function in the real world. He was also a lead author of the 1995 Report of the Intergovernmental Panel on Climate Change, which shared the 2007 Nobel Peace Prize and helped draw attention to one of the defining policy challenges of this generation. More recently, his focus on rising inequality served as a precursor to the Occupy movement. With this latest paper, he sets out to shift the national dialogue away from austerity and toward a future of shared prosperity.

Last month, Stiglitz testified before the Senate Budget Committee on the topic of why inequality matters and what can be done about it. Click here to read his statement from the hearing.

Click here to listen to Stiglitz describe the key arguments of the paper.

For more information, or to arrange an interview with a member of the Roosevelt Institute’s Four Freedoms Center economic team, please contact Tim Price.

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Tim Price
Roosevelt Institute
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