Christine Lagarde, managing director of the International Monetary Fund, said “something of a schizophrenia” applies to many global governments when it comes to collecting taxes.
“On one hand, they really want to go after the uncollected or yet-to-be collected,” Lagarde said at a World Bank conference in Washington, speaking with Bloomberg Editor-at-Large Tom Keene on a panel at George Washington University. “On the other hand, you have competition between governments, some of them saying, my corporate tax rate is only going to be so much.”
Lagarde also said the U.S. and Japan have “tax space,” or room to readjust their taxation policies to restore public finances, and that European policy makers have “more often than not” pursued quick fixes as they try to put their fiscal house in order.
“Surprisingly they will eventually increase taxation on labor,” Lagarde said, something she said should be avoided during times of economic hardship.
Asked about President Barack Obama’s announcement today that he is nominating Janet Yellen, vice-chairman of the Federal Reserve, to take over the top spot when Chairman Ben S. Bernanke’s term ends in January, Lagarde said “I am overjoyed.”
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