President Trump’s tax reform plans could vastly increase inequality, warns study


A new Commitment to Reducing Inequality index, which has just been published by charity Oxfam and consultancy Development Finance International, assesses the impact of national policies around taxation, social service spending and labour that help to redistribute wealth.

If President Donald Trump’s tax reform plans are successful, they would greatly increase the gap between rich and poor in the US, research has warned.

According to a new Commitment to Reducing Inequality (CRI) index, which has just been published by charity Oxfam and consultancy Development Finance International, the US would drop a further six places from its current ranking of 23 out of 152 countries around the world. In terms of tax policies alone, it would plummet 33 places from 26th to 59th, just below Peru, Chile and Sri Lanka.

The CRI index does not assess legislation that prevents inequality but instead focuses on policies around taxation, social service spending and labour that help to redistribute wealth.

Paul O’Brien, Oxfam America’s vice president for policy and campaigns, told the UK’s Guardian newspaper: “When you already have countries like Portugal and Slovenia ranking higher than the United States on the overall index, we think that’s a concern considering the wealth of the US.”

Threaded through the CRI index, which provides global rankings on national inequality, are various facts behind why the US has earned its low ranking. For instance, US employers are required to pay for no maternity leave compared with Sweden’s 480 days, while the US federal minimum wage of $7.25 is well below the $10.60 an hour required for a family of four to stay above the poverty line.

But the situation is expected to worsen if the White House passes its proposed $4 trillion fiscal 2018 budget plan, which has now been released by the House of Representatives budget committee.

However, the budget plan is expected to become a similar flashpoint for Republican in-fighting as efforts to replace the Affordable Care Act. Attempts to repeal the law, widely known as Obamacare, have now collapsed following a tug-of-war between moderates who wanted to keep healthcare benefits for low income citizens and conservatives who were keen to cut them.

Because the 2018 spending blueprint links future tax cuts for businesses and individuals with $203 billion worth of mandatory spending cuts intended to hit benefits for the poorest in society, it could face similar challenges.