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Pimco's Gross says higher taxes would improve U.S. economy

NEW YORK, Oct 31 (Reuters) - Bill Gross, co-founder and co-chief investment officer of bond giant Pimco, said Thursday that tax reform in the United States would improve the nation's economic growth.

"Growth depends on investment and investment in part depends on an equitable rebalancing of personal income taxes, capital gains and carried interest," Gross said in his monthly letter to investors.

Gross also said that, by broadly increasing taxes, the United States could improve its competitive stance and "challenge more productive economies such as Germany and Canada."

Gross, whose $250 billion Pimco Total Return Fund is the world's largest mutual fund, also said that developed economies function best when income inequality is minimal.

Pacific Investment Management Co., a unit of European financial services company Allianz SE, had $1.97 trillion in assets as of Sept. 30, according to the firm's Web site.