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52. Pakistan\'s Roller-Coaster Economy: Tax Evasion Stifles Growth
- Author:
- S. Akbar Zaidi
- Publication Date:
- 09-2010
- Content Type:
- Policy Brief
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- Over the last sixty years, Pakistan\'s economy has seen severe ups and downs. Once considered a model for other developing nations, Pakistan has been unable to sustain solid growth. Furthermore, a third of its population now lives below the poverty line, and its literacy rate is abysmally low. Pakistan\'s economic instability stems in large part from low government revenue resulting from the elite\'s use of tax evasions, loopholes, and exemptions. Fewer than three million of Pakistan\'s 175 million citizens pay any income taxes, and the country\'s tax-to-GDP ratio is only 9 percent. Tax evasion means fewer resources are available for essential social services. Pakistan spends too much on defense and too little on development: It has spent twice as much on defense during peacetime as it has on education and health combined. The government knows how to increase its revenue through tax reform, but the rich and powerful have resisted such measures for fear of lowering their own incomes. Without sufficient revenue the government will continue to be burdened with an unsustainable debt. It needs to end tax exemptions for the wealthy and develop broader, long-term economic plans for sustain able growth. In the past, the United States and other Western nations have come to Pakistan\'s rescue by paying off debts and funding development initiatives. Pakistan\'s elite has no reason to support reform as long as these bailouts come with no conditions attached.
- Topic:
- Development, Economics, and Monetary Policy
- Political Geography:
- Pakistan and United States
53. An Update on EU Financial Reforms
- Author:
- Nicolas Véron
- Publication Date:
- 12-2010
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- In the context of a transatlantic comparison, the first thing to be mentioned is the difference between the time sequence of financial reforms in the European Union and its equivalent in the United States. The financial crisis started simultaneously on both sides of the Atlantic, with the initial disruption of some financial market segments in August 2007 and the major panic episode of September through October 2008. But they are not at the same stage of policy reaction and especially regulatory reform now. At least four reasons can be identified for this difference.
- Topic:
- Economics, Global Recession, Monetary Policy, and Financial Crisis
- Political Geography:
- United States and Europe
54. Comparing EU and US Responses to the Financial Crisis
- Author:
- Karel Lannoo
- Publication Date:
- 01-2010
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies
- Abstract:
- Since 2003, the EU and the US have conducted a vibrant regulatory dialogue on financial regulation, but domestic priorities seem to have taken precedence in response to the financial crisis. This paper compares the institutional and regulatory changes occurring on both sides of the Atlantic. On the institutional side, it compares macro- and micro-prudential reforms. On the regulatory side, it compares four key areas: bank capital requirements, reform of the OTC derivative markets, and the regulation of credit ratings agencies and hedge funds. It concludes by highlighting certain implications for the regulatory dialogue.
- Topic:
- Economics, Monetary Policy, and Financial Crisis
- Political Geography:
- United States and Europe
55. The Substitution Account as a First Step Toward Reform of the International Monetary System
- Author:
- Peter B. Kenen
- Publication Date:
- 03-2010
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Today, the international monetary system is based largely on the US dollar, but reserve currency diversification has begun, thanks to the advent of the euro, and it is apt to continue. Eventually, the renminbi could acquire reserve currency status, and the resulting reserve currency diversification could be more disruptive than it has been to date. To forestall that possibility the quasi-currency issued by the International Monetary Fund (IMF), Special Drawing Rights (SDRs), could be made to play a larger role in the international monetary system, precluding potentially disruptive diversification and achieving more orderly growth in the stock of international reserves.
- Topic:
- Economics, International Political Economy, International Trade and Finance, and Monetary Policy
- Political Geography:
- United States
56. The Realities and Relevance of Japan's Great Recession: Neither Ran nor Rashomon
- Author:
- Adam S. Posen
- Publication Date:
- 06-2010
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Japan's Great Recession was the result of a series of macroeconomic and financial policy mistakes. Thus, it was largely avoidable once the initial shock from the bubble bursting had passed. The aberration in Japan's recession was not the behaviour of growth, which is best seen as a series of recoveries aborted by policy errors. Rather, the surprise was the persistent steadiness of limited deflation, even after recovery took place. This is a more fundamental challenge to our basic macroeconomic understanding than is commonly recognized. The UK and US economies are at low risk of having recurrent recessions through macroeconomic policy mistakes—but deflation itself cannot be ruled out. The United Kingdom worryingly combines a couple of financial parallels to Japan with far less room for fiscal action to compensate for them than Japan had. Also, Japan did not face poor prospects for external demand and the need to reallocate productive resources across export sectors during its Great Recession. Many economies do now face this challenge simultaneously, which may limit the pace of, and their share in, the global recovery.
- Topic:
- Economics, Markets, Monetary Policy, and Financial Crisis
- Political Geography:
- United States, Japan, and United Kingdom
57. Higher Taxes on Multinationals Would Hurt US Workers and Exports
- Author:
- Gary Clyde Hufbauer and Theodore H. Moran
- Publication Date:
- 05-2010
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- As presidential candidate, Barack Obama repeatedly advocated tax “reforms” aimed squarely at US-based multinational enterprises (MNEs). As president, he again declared—in the same State of the Union address that laid out an ambitious goal for export expansion—that “it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America."
- Topic:
- Economics, International Trade and Finance, Markets, and Monetary Policy
- Political Geography:
- United States
58. The Constitutionalization of Money
- Author:
- James M. Buchanan
- Publication Date:
- 06-2010
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The market will not work effectively with monetary anarchy. Politicization is not an effective alternative. We must commence meaningful dialogue with acceptance of these elementary verities. Far too much has been said and written in elaboration of the first statement, which too often is taken to be equivalent to the assertion that "capitalism" or "the market" has failed. Admittedly claims for market efficacy without qualifiers can be found. But economists should know that anarchy can only generate disorder rather than its opposite.
- Topic:
- Markets and Monetary Policy
- Political Geography:
- United States
59. Plunder! How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives, and Bankrupting the Nation
- Author:
- Chris Edwards
- Publication Date:
- 06-2010
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- New data from the Bureau of Labor Statistics show that there are more union members in the public sector than in the private sector in the United States. Thirty-nine percent of state and local government workers are members of unions, compared to just 7 percent of private sector workers. What problems are caused by the high level of public sector unionism?
- Topic:
- Monetary Policy
- Political Geography:
- United States
60. Progressive and Regressive Taxation in the United States: Who's Really Paying (and Not Paying) their Fair Share?
- Author:
- Brian Roach
- Publication Date:
- 12-2010
- Content Type:
- Working Paper
- Institution:
- Global Development and Environment Institute at Tufts University
- Abstract:
- The 2010 debate over extending the 2001 and 2003 Bush tax cuts often focused the fairness of the tax distribution in the United States. Unfortunately, discussions of tax fairness rarely take into account the distribution of the overall tax system, typically focusing only on the federal income tax or on federal taxes without consideration of the state and local tax system. This paper updates a 2003 analysis (Roach, 2003) to present a current assessment of the distribution of all components of the U.S. tax system, including recent trends. The results show that the overall federal tax system is quite progressive. But when state and local taxes are included as well, the overall U.S. tax system is only slightly progressive. Further, most of the progressivity of the overall tax system occurs in the lower half of the income spectrum. At upper-income levels, progressivity levels off and actually reverses at the highest income levels. Median-income taxpayers pay about 25% of their total income in taxes, while taxpayers in the top 1% pay about 31% of their income in taxes. Thus claims that America has a “highly progressive” tax system do not appear to be valid.
- Topic:
- Economics, Social Stratification, and Monetary Policy
- Political Geography:
- United States