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Business and Economics > Corporate Taxation

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Cover Staff Discussion Notes
Broadening the Gains from Generative AI: The Role of Fiscal Policies
Fernanda Brollo
,
Era Dabla-Norris
,
Ruud de Mooij
,
Daniel Garcia-Macia
,
Tibor Hanappi
,
Li Liu
, and
Anh D. M. Nguyen
Generative artificial intelligence (gen AI) holds immense potential to boost productivity growth and advance public service delivery, but it also raises profound concerns about massive labor disruptions and rising inequality. This note discusses how fiscal policies can be employed to steer the technology and its deployment in ways that serve humanity best while cushioning the negative labor market and distributional effects to broaden the gains. Given the vast uncertainty about the nature, impact, and speed of developments in gen AI, governments should take an agile approach that prepares them for both business as usual and highly disruptive scenarios.
Keywords:
Artificial intelligence; AI; technological change; labor market; fiscal policy; social protection systems; tax systems; IMF Staff Discussion Note SDN2024/002; gen AI; advance public service delivery; role of fiscal policies; replacement ratio; job displacement; income support; tax treatment; market power; Labor markets; Corporate income tax; Automation; Capital income; Global
Cover IMF Staff Country Reports
Djibouti: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper focuses on empowering diverse futures. The economy of Djibouti grew at an unprecedented rate during the last decade, but the investment-led economic expansion did not translate into tangible labor market’s improvements. The capital-intensive nature of the country’s growth model limits job creation, while growing skill mismatches in the labor market have increased structural unemployment. While access to education has increased dramatically since the 2000s, more could be done in improving the quality of education and expanding vocational and adult learning. Moreover, stepping-up diversification would support the development of more labor-intensive sectors, further spreading the benefits from growth to all Djiboutians. The timely collection of labor market statistics remains a key constraint for supporting decision-making and job creation. The design and implementation of adequate policy frameworks to foster job creation requires complete and timely labor market data. The frequent collection of basic labor market data, such the unemployment rate, remains a priority for policy design and implementation.
Keywords:
revenue productivity; productivity of the VAT; SOE governance; telecom cost; sector investment lag; Corporate income tax; Labor markets; Personal income tax; Middle East; North Africa; Sub-Saharan Africa; Africa; Middle East and Central Asia
Cover IMF Working Papers
Searching for Wage Growth: Policy Responses to the “New Machine Age”
Andrew Berg
,
Edward F Buffie
,
Mariarosaria Comunale
,
Chris Papageorgiou
, and
Luis-Felipe Zanna
The current wave of technological revolution is changing the way policies work. This paper examines the growth and distributional implications of three policies when “robot'' capital (a broad definition of robots, Artificial Intelligence, computers, big data, digitalization, networks, sensors and servos) is introduced in a neoclassical growth model. 1) cuts to the corporate tax rate; 2) increases in education spending; and 3) increases in infrastructure investment. We find that incorporating “robot'' capital into the model does make a big difference to policy outcomes: the trickle-down effects of corporate tax cuts on unskilled wages are attenuated, and the advantages of investment in infrastructure, and especially in education, are bigger. Based on our calibrations grounded on new empirical estimates, infrastructure investment and corporate tax cuts dominate investment in education in a "traditional" economy. However, in an economy with “robots” the infrastructure investment dominates corporate tax cuts, while investment in education tends to produce the highest welfare gains of all. The specific results, of course, may depend on the exact modeling of the technological change, but our main results remain valid and can provide more accurate welfare rankings.
Keywords:
Technological change; Artificial Intelligence; robots; growth; income distribution; fiscal policy; public investment; education; corporate tax tax cut; way policy; infrastructure investment; IMF working paper No. 2024/3; ICT capital; Robotics; Skilled labor; Unskilled labor; Wages; Europe; Global
Cover IMF Working Papers
Labor Taxation in the Western Balkan: Looking Back and Forward
Mr. Alain Jousten
,
Mario Mansour
,
Irena Jankulov Suljagic
, and
Charles Vellutini
This paper examines how labor taxation (personal income taxes and social security contributions) in the Western Balkan contributes to labor market outcomes such as high informality and a significant gender gap in participation rates. We find that limited progressivity combined with high tax wedge on low incomes poses a major twin equity-efficiency challenge in the region, resulting in low redistributive capacity and inadequate incentives to enter the job market. Policy implications are discussed with a view to alleviating the excessively high tax wedges on low incomes, while improving progressivity of income taxation.
Keywords:
Western Balkan; labor taxation; labor tax wedge; personal income tax; corporate income tax; social security contributions; income taxation; SSC reduction; employer SSCs; Labor taxes; Tax wedge; Wages; Labor markets; Europe
Cover IMF Staff Country Reports
United States: 2018 Article IV Consultation – Press Release; Staff Report and Statement by the Executive Director for United States
International Monetary Fund. Western Hemisphere Dept.
Unemployment is low, inflation is well contained, and growth is set to accelerate. During the course of this administration, the economy is expected to enter the longest expansion in recorded U.S. history.
Keywords:
ISCR; CR; rate; Q1; pro-growth economic policy agenda; economy; potential GDP; Q4; liability positions vis-à-vis nonresident; IMF staff estimate; Core CPI inflation; Inflation; Administration in revenue administration; Income; Personal income; Global
Cover IMF Staff Country Reports
Ireland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper estimates the cyclical position of the Irish economy. Assessing the business cycle in Ireland is complicated by the open character of its labor market and large presence of globally active multinationals. However, analysis suggests that the Irish economy is in the midst of a cyclical upswing. All methods suggest a positive output gap in 2017, while the labor market shows signs of upward wage pressures, as net immigration has been weak so far. These signs are consistent with a cyclical upswing, amid strong estimated potential output growth, and point to risks of a boom-bust cycle, should the economy continue to push the growth momentum.
Keywords:
ISCR; CR; commercial real estate; price; CRE price; labor force gap; growth labor force growth; exit tax; CRE market; Labor force; Corporate income tax; Personal income; Labor markets; Unemployment rate; Global; Europe
Cover IMF Staff Country Reports
Belgium: 2018 Article IV Consultation - Press Release; Staff Report
International Monetary Fund. European Dept.
This 2018 Article IV Consultation highlights that the economic recovery in Belgium is gaining momentum, with real GDP growth expected to approach 2 percent in 2018 after an estimated 1.7 percent in 2017. It is driven by strong investment and solid consumption growth, and supported by favorable financial conditions as well as a strengthening recovery throughout Europe. Employment growth has picked up, thanks in part to past reform efforts. The fiscal position has improved, reflecting a mix of cyclical, structural, and one-off factors. The medium-term outlook, however, remains subdued in the absence of further structural reforms to raise potential growth, and subject to both external and domestic risks.
Keywords:
ISCR; CR; Belgium; authority; employment growth; productivity development; productivity growth; labor market measure; Belgium's productivity growth; Productivity; Labor markets; Corporate income tax; Employment; Labor taxes; Global; Europe
Cover IMF Staff Country Reports
Bosnia and Herzegovina: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes government spending in Bosnia and Herzegovina (BiH). The size of the public sector in BiH is one of the largest in the region, owing mainly to a complex and highly decentralized governance structure. BiH spends a greater share of public resources on current spending items, notably on wages and social transfers. Moreover, poorly targeted social benefits generate adverse incentives with respect to informality and labor force participation. To enhance economic growth, BiH will need to refocus its spending and increase its efficiency, chiefly on spending on human and physical capital.
Keywords:
ISCR; CR; BiH Agency for Statistics; NICs; rate; BiH; tax rate; health indicator; SSC rate; enrollment rate; SSC revenue; labor market outcome; public sector rank; SSC collection; Social security contributions; Labor markets; Employment; Global; Eastern Europe; Europe; Southern Europe; Central Asia
Cover IMF Staff Country Reports
Spain: Staff Report for the 2014 Article IV Consultation
International Monetary Fund. European Dept.
This 2014 Article IV Consultation highlights that economic growth in Spain has resumed, and unemployment is falling. Exporters are gaining market share, and the current account is in surplus for the first time in decades. Financial conditions have improved sharply, with sovereign yields at record lows. Business investment is rebounding strongly and private consumption has also started to recover owing to improved employment prospects and rising confidence. Executive Directors have welcomed the improving Spanish economy. They have stressed that labor market reform should be accompanied by product and service market liberalization to maximize the gains to growth and jobs.
Keywords:
ISCR; CR; government tax Reform Proposa; government Tax Reform Proposal; rate; government; vis nonresident; increase VAT; trend productivity growth; committee's recommendation; Employment; Unemployment; Labor markets; Wages; Corporate income tax; Europe; Global
Cover IMF Staff Country Reports
United States: Selected Issues
International Monetary Fund
This Selected Issues paper for the United States discusses the microeconomics of the country—household wealth and savings. Households’ consumption-saving decisions have an important bearing on the U.S. economic outlook. This paper demonstrates how households with consistently lower income, which have shown growth in the years prior to the crisis, experienced larger declines in their saving rates and a larger rise in their indebtedness before the crisis, contributing significantly to the dynamics of the mean saving rate.
Keywords:
ISCR; CR; recession; mortgage; saving rate; CIT rate; banking crisis; LTU rate; output loss; Corporate income tax; Income; Residential mortgages; Mortgages; Housing; Global