News / Economy

OECD Adds Its Voice to US Debate on Taxes

WASHINGTON - The Organization for Economic Cooperation and Development is weighing in on the U.S. political debate over whether the wealthy should be taxed at an even higher rate than they are now.  In its latest report on the U.S. economy, the organization, which represents 34 of the world's biggest economies, says the U.S. recovery is gaining traction but that the country faces steep challenges due to rising income inequality between rich and poor.

Economically, the United States remains one of the strongest countries in the world, but there are signs its competitive edge is slipping.  Despite a reputation as a global leader in technology and innovation, OECD Deputy Secretary-General Richard Boucher says the U.S. is falling behind in education.

"The United States is one of three countries out of the 34 (in the OECD) that we've studied that spends less on education of disadvantaged students than we do on other students.  Usually it's the other way around," Boucher said.

It's a situation the OECD says has led to rising income disparity -- with those in the highest income brackets receiving a better education and, therefore, greater opportunities to succeed.  
Another contributing factor is what the OECD calls "tax code distortions".

"There are elements of the tax code that are favoring the kind of income that the richest people make.  We come at it somewhat from the inequality point of view but also from the fact that we think the government tax system ought to be a lot more neutral," Boucher said.

Perhaps unwittingly, the OECD appears to have inserted itself in the middle of a hot political debate...one exemplified by billionaire Warren Buffet, who once remarked that he paid a smaller percentage in taxes than his secretary.

"I think that people at the high end, people like myself, should be paying a lot more in taxes," Buffet said.

Earned income in the U.S. is taxed at a higher rate than investment income. That disparity is at the heart of President Barack Obama's proposal to impose higher taxes on Americans earning more than $250,000 a year.

Republicans call that a tax grab -- akin to declaring war on the country's job creators, says rising conservative star Paul Ryan.
 
"Class warfare will simply divide the country more.  It will attack job creators and it doesn't grow the economy," Ryan said.

President Obama disagrees. "If asking a millionaire to pay the same tax rate as a plumber makes me a class warrior, a warrior for the working class, I will accept that.  I will wear that as a badge of honor," Obama said.

The issue could further divide the country in an election year.

Republican presidential candidate Mitt Romney, who co-founded a private equity firm, admits he paid less than 14 percent on his investment income in 2010.  Compare that to some wage earners who paid 35 percent. Romney proposes bigger cuts in government spending and lower taxes for all.  It's a position that runs counter to the approach favored by President Obama: fewer cuts to social programs, and more infrastructure spending - paid for in part, by higher taxes on the rich.

You May Like

UN Ambassador Power Highlights Plight of Women Prisoners

She launches the 'Free the 20' campaign, aimed at profiling women being deprived of their freedom around the world More

Satellite Launch Sparks Spectacular Light Show

A slight delay in a satellite launch lit up the Florida sky early this morning More

Fleeing IS Killings in Syria, Family Reaches Bavaria

Exhausted, scared and under-nourished, Khalil and Maha's tale mirrors those of thousands of refugees from war-torn countries who have left their homes in the hopes of finding a better life More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs

World Currencies

EUR
USD
0.8916
JPY
USD
121.32
GBP
USD
0.6487
CAD
USD
1.3252
INR
USD
66.401

Rates may not be current.