With economic inequality at an all-time high, some U.S. presidential candidates are proposing dramatic shifts to the U.S. tax code. How have similar plans worked elsewhere in the world?
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Economic Policy
The United States’ ability to influence events abroad depends on the health of its economy, which has suffered a historic blow from the COVID-19 pandemic. Lockdowns and other disruptions caused by the pandemic triggered a sharp recession, a surge in unemployment, and massive economic uncertainty. Economists also worry about slowing growth and uncertainty over President Donald J. Trump’s trade war.
Many experts point to rising inequality and stagnating wages, exacerbated by the pandemic impact. Government rescue and stimulus spending has topped trillions of dollars, creating debt levels not seen since World War II. At the same time, almost everyone in Washington agrees that there needs to be a massive investment in infrastructure, as the country’s crumbling roadways, rusting water pipes, and delay-ridden mass transit systems are costing the economy billions of dollars.
But disagreements persist over how much the federal government should do, and how to pay for it all. The 2017 tax reform, which cut both individual and corporate rates, was the most sweeping change to the U.S. tax system since the 1980s. Its proponents, including Trump, say it will boost growth and spur business investment while making it harder for firms to avoid taxes overseas. But critics say the policy is ballooning the already dangerously high U.S. debt and disproportionately benefiting wealthy individuals.
At the same time, more competitive foreign economies and the rise of automation are reshaping the U.S. labor market. Members of both parties have blamed global trade deals for the dramatic loss of manufacturing jobs, but many experts believe that new technologies are primarily responsible. The Democratic nominee, former Vice President Joe Biden, favors policies to help workers, including more protections for unions, modernizing the education system to give students cutting-edge skills, and retraining workers whose industries are being transformed. Other Democrats, meanwhile, press for more radical measures—including a universal basic income and the breaking up of monopolistic firms.
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