Grant Wardell-Johnson interviewed the Director of the OECD Centre for Tax Policy and Administration, Pascal Saint-Amans, on the future of capital taxation.
Governments throughout the world are increasingly concerned with rising inequality. In much of the developed world, the period from the Second World War to the 1980s saw diminished inequality. This has now reversed with many emerging economies also experiencing growing disparity of incomes. Recently, I interviewed the Director of the Centre for Tax Policy and Administration, Organisation for Economic Co-operation and Development (OECD), Pascal Saint-Amans, on the future of capital taxation.
An extract of our interview is below.
Grant: Inequality is making headlines across the world at the moment. Do you think the world is experiencing rising inequality? Why?
Pascal: Yes, inequality is rising across the OECD. But the picture is not as straightforward as is sometimes presented. We need to pay attention not just to inequality within countries – which is rising, but also to inequality between countries – which is falling. Moreover, there are large differences across the OECD – the picture in some countries such as the United States (US), where there is larger rise in inequality, is different from some European countries where the rise has been more modest.
There are a lot of factors which can explain why inequality has increased. Top income households have pulled away from the rest of the income distribution in many countries. This is true with respect to income, but even more so with respect to wealth. There is rising inequality in salaries, which could mean that top managers and professionals are taking a large share of the productivity gains. But the gap between those who earn mostly capital income and those who earn wage income also need to be considered.
Inequality also need to be considered from the perspective of businesses. OECD research suggests that some firms at the frontier have increasing market power, with big increases in growth and productivity, while many more companies lag behind – which are often small and medium enterprises (SME).
Read the full interview transcript – Rising inequality and the future of capital taxation (PDF 196.1KB).