IMF warns that income inequality can reduce economic growth

In IMF Issues Income Inequality Warning, Suggests Ways To Slow It Christopher S. Rugaber reports that:

The International Monetary Fund warned Thursday that wide income inequality can slow economic growth and is proposing ways to reduce it.

Its recommendations include: Raising property taxes. Taxing the rich more than others. Raising the eligibility age for government retirement programs.

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Government tax and spending policies can be effective in reducing inequality, the report said. Such policies have lowered the income gap by an average of one-third in advanced economies, mostly because of money transferred to the poorest households.

Last month, an IMF research paper concluded that countries with steep income inequality were more likely to have briefer and weaker periods of economic growth. It also argued that efforts to redistribute income don't necessarily hinder economic expansion.