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OECD Urges US To Broaden Tax Base

by Leroy Baker, Tax-News.com, New York

16 April 2004

In its 2004 Economic Survey of the United States, released this week, the Organisation for Economic Cooperation and Development (OECD) suggested that although the country's economic rebound is picking up speed, the country's tax base may need to be widened in order to balance the books.

The OECD review predicted growth of 4.5% this year (representing an increase of 0.3% on its November estimate), slowing to 3.7% in 2005.

However, it urged the US authorities to take action over the current account and budget deficits in order to avoid stunting economic growth in the future.

Additionally, the multilateral body argued that although the recent tax cuts played a part in the country's recovery, the US tax base should be widened, in addition to cutting back on government spending.

If this does not have the desired effect of reducing the ballooning deficit, the OECD suggested that the government should consider the introduction of a national value added tax (VAT).

Separately, the International Monetary Fund (IMF) warned this week that President Bush's economic plans rest on "somewhat optimistic assumptions", including a rebound in tax revenue, no unexpected costs, stringent spending restraint, and an unchanged Alternative Minimum Tax (AMT) regime.

The OECD's 2004 Economic Survey of the United States can be found in the Tax-News Resources section.

 

 






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