Washington, Oct 12 (IANS) US officials have slammed International Monetary Fund (IMF) for discounting President Donald Trump administration’s tax cuts endeavours in the newly-released economic outlook, revealing the rising tension between the IMF and its largest shareholder.
A senior official with the US Treasury Department said on Wednesday that the IMF shouldn’t be rating the odds on whether the administration can enact an overhaul to the US tax code, Xinhua news agency reported.
In the latest World Economic Outlook released on Tuesday, the IMF revised up its US growth forecast to 2.2 per cent in 2017 and 2.3 per cent in 2018, 0.1 and 0.2 percentage point higher than its projection in July. The fund, however, didn’t take into account the impact of Republican tax cuts plan because of political uncertainties.
Moreover, IMF chief economist Maurice Obstfeld disputed the US tax cuts plan that would raise fiscal deficit.
“Given where the US is, in terms of its overall debt level and the off-the-balance-sheet obligations going out into the future as the population ages, we feel that whatever the tax reform plan looks like, it should not increase the deficit,” he told reporters on Tuesday.
Mick Mulvaney, head of the Office of Management and Budget, criticized the IMF fiercely.
“There are folks that are invested in seeing this fail because if it works then what is their argument for re-regulating?” Mulvaney said in an interview with the Financial Times published on Wednesday.
Trump, together with US Congress Republicans, released a unified framework for tax code reform last month, which would cut tax rates for businesses and individuals.
A recent study by Tax Policy Center, an independent think tank based in Washington, said that the top one percent of US earners would benefit most from Trump’s tax plan rather than the middle class.