The IMF

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No, not really – this isn’t about the Impossible Missions Force, it is another IMF. No Jim Phelps or Ethan Hunt – instead we have Dominique Strauss-Kahn and Christine Lagarde.

I would like to disavow them, though. I detest the International Monetary Fund. The IMF, as it is known, is often the lender of last resort for many developing countries and those who have found themselves in rough financial straits due to combinations of bad economic policies and economic downturns. Most often the IMF loan conditions make things worse and in many cases, the money that they “loan” is just a back door way of  sending money to places that we politically don’t want to touch…there is little chance that it will ever be paid back – Argentina defaulted on a $1 billion loan in 2002.

Why is the IMF relevant to us? The US provides over 17% of the funds for it, almost three times the next largest contributor – so this is our taxpayer money that the IMF is playing with.

Last week, Christine LaGarde, the head of the IMF who replaced disgraced Dominique Strauss-Kahn, said this of the Greek people:

“As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”

This is a very true statement. Greece has a very lax attitude towards paying tax and as the government jacked up the rates, compliance fell even more. The New Yorker notes:

Greeks, by contrast, see fraud and corruption as ubiquitous in business, in the tax system, and even in sports. And they’re right to: Transparency International recently put Greece in a three-way tie, with Bulgaria and Romania, as the most corrupt country in Europe. Greece’s parliamentary democracy was established fairly recently, and is of shaky legitimacy: it’s seen as a vehicle for special interests, and dedicated mainly to its own preservation. The tax system had long confirmed this view, since it was riddled with loopholes and exemptions: not only doctors but also singers and athletes were given favorable rates, while shipping tycoons paid no income tax at all, and members of other professions were legally allowed to underreport their income. Inevitably, if a hefty chunk of the population is cheating on its taxes, people who don’t (or can’t, because of the way their income is reported) feel that they’re being abused.

The result has been a vicious circle: because tax evasion is so common, people trust the system less, which makes them less willing to pay taxes. And, because so many don’t chip in, the government has had to raise taxes on those who do. That only increases the incentive to cheat, since there tends to be a correlation between higher tax rates and higher rates of tax evasion.

Notice the favorable “carve outs” that are used in every “progressive” tax scheme to favor one group over another, effectively changing a revenue generation system to a system of political patronage and graft…sort of like ours in the US.

The facts notwithstanding, the Greeks are finding this statement from Lagarde is hard to take seriously. It seems that Christine, the EU elitist that she is, doesn’t pay taxes either. The UK Independent reports:

It was called her “Let them eat cake” moment. Now Greece will be saying: “Make her pay tax”.

The IMF chief Christine Lagarde was accused of hypocrisy yesterday after it emerged that she pays no income tax – just days after blaming the Greeks for causing their financial peril by dodging their own bills.

The managing director of the International Monetary Fund is paid a salary of $467,940 (£298,675), automatically increased every year according to inflation. On top of that she receives an allowance of $83,760 – payable without “justification” – and additional expenses for entertainment, making her total package worth more than the amount received by US President Barack Obama according to reports last night.

Unlike Mr. Obama, however, she does not have to pay any tax on this substantial income because of her diplomatic status.

This doesn’t change the fact that Greece needs to find a way to achieve better compliance with reasonable tax policies but it indicates that there are more than enough elitist bureaucrats out there who are more than willing to cut special deals for themselves while calling balls and strikes on the rest of the world.

“Do as I say, not as I do” is a universal concept.

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