U.S. Urged to Cut Budget Deficit, Change Taxation
WASHINGTON -- An international economic association called on the U.S. to reduce its budget deficit and change its tax structure to encourage national savings.</br></br>In its annual review of the U.S. economy, the staff of the Organization for Economic Cooperation and Development said that the nation's budget deficit is too high and its savings rate too low. The result: a heavy dependence on foreign capital to finance U.S. economic growth.</br></br>Correcting that problem, the report said, requires a "two-pronged attack": Reducing the budget deficit and eliminating "structural impediments to private savings in the tax system."</br></br>The report suggested cutting tax breaks for housing and increasing taxes on Social Security, as two ways to boost savings. It also said integrating "the personal and corporate income tax systems remains a matter of priority." And it said an increase in gasoline taxes "would have beneficial environmental effects."</br></br>The OECD report came as the Treasury and the president's Council of Economic Advisers are studying ways to boost the nation's low savings rate. The study is expected to be completed by the end of the year, and may result in proposals for part of the president's annual budget, scheduled for release Jan. 8.