As agreed in past decisions, including 2002 18, progressivity and predictability in the flow of resources to recipient countries, especially low income and LDC countries, are essential UNDP principles.

Reduction in each band would be based on linear cuts, with developing countries subject to lower cuts (two thirds of the developed country cuts), with the element of progressivity across the bands with higher tariffs subject to deeper cuts.

Meanwhile, investment and exports are plummeting as well. America s automatic stabilizers the progressivity of our tax systems, the strength of our welfare system have been greatly weakened, but they will provide some stimulus, as the expected fiscal deficit soars to 10 of GDP.

California s government collects about one half of its income tax revenue from the top 1 of the state s taxpayers. But the system s extreme progressivity makes proceeds so volatile that the state continually experiences boom bust cycles of rapidly rising revenue, inevitably followed by collapse.

As income inequality has increased dramatically in some countries, such as the US it is moving to the forefront of the debate, reinforcing the traditional political divide. Nonetheless, the center right and the center left are arguing about the degree of redistribution, not about the need for some progressivity in taxes and transfers.

According to a recent study, restoring tax rates on dividends and capital gains to their pre 1997 levels of 28 could finance a reduction in the US federal corporate tax rate from 35 to 26 . This change would both reduce the incentive for corporations to shift investments abroad and increase the progressivity of the US tax system.

Ours does not have to be an age of austerity governments, even in the poorest countries, have options to foster a socially responsive economic recovery. These include, among other measures, debt restructuring, increasing the progressivity of taxation (on personal income, property, and corporations, including the financial sector), and curbing tax evasion, the use of tax havens, and illicit financial flows.

But a rate cut would be costly in terms of foregone revenues each percentage point would reduce corporate tax revenues by about 100 billion over the next decade. Moreover, recent studies indicate that a significant share of the corporate tax burden falls on capital, so a reduction in corporate taxes would weaken the progressivity of the tax system at a time when income inequality is at an all time high.

An increase in the corporate tax rate appeals to many US voters who believe that corporations are not paying their fair share of taxes and are worried about widening income inequality. But, in a world of mobile capital, raising the corporate tax rate or simply leaving it at its current level would be a bad way to generate revenue, a bad way to increase the tax system s progressivity, and a bad way to help American workers.

A recent study found that taxing capital gains and dividends as ordinary income, subject to a maximum 28 rate on long term capital gains (the pre 1997 rate), could finance a cut in the corporate tax rate from 35 to 26 . Such a change would reduce corporations incentives to move investments abroad or shift profits to low tax jurisdictions, while increasing the progressivity of tax outcomes by shifting more of the burden of corporate taxation from labor to capital owners.