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IMF Head Lagarde Accused of Double Standard on Taxes

May 30, 2012

International Monetary Fund managing director Christine Lagarde has been taking heat in recent days for bitterly criticizing the Greeks for not paying their taxes, when she does not pay taxes on her own $467,940 salary and $83,760 yearly allowance.

Lagarde, a former French finance minister, became head of the IMF last year after Dominique Strauss-Kahn became embroiled in accusations of assaulting a hotel chamber maid in New York and a journalist in France.

With Greece facing increasing pressure in the European Union to buckle under to a stringent austerity program amid mounting protests and political turmoil, Lagarde made some stinging comments in an interview last Friday with The Guardian newspaper in the U.K. Lagarde compared the situation of the Greeks to poverty-stricken schoolchildren in Niger who are forced to share the same chair in school.

Christine Lagarde

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

When asked about how she felt about children in Greece, she replied, “Well, hey, parents are responsible, right? So parents have to pay their tax.”

Turns out, though, that Lagarde, like most other employees of United Nations institutions like the IMF, pays no income tax. The Guardian pointed out in a follow-up article Tuesday that the Vienna convention on diplomatic relations states, “A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal.”

Even in countries like the United States that impose taxes on U.N. employees, the U.N. has set up a system that reimburses the income taxes paid by U.S. citizens who are also U.N. employees, Forbes noted. Not only does the U.N. reimburse staff members who have to pay U.S. income taxes on their U.N. earnings, but also half the related self-employment taxes.

Sounds like a great deal for U.N. and IMF employees. And of course, since the U.S. contributes 22 percent of the budget of the U.N., it effectively ends up paying a good chunk of those employees’ taxes in the end.

Comments (1)
Give me a break. Lagarde doesn't pay tax because she is the beneficiary a situation that doesn't require it. Contrast that against the Greek system that allows evasion to be a national sport. I believe every citizen of every country should pay as little tax as the law allows. There's the rub...Lagarde isn't required to pay tax, but the Greeks she's speaking about ARE required to pay (but don't). It may be ironic or unfair, but it's hardly a double standard.
Posted by rtmooney | Thursday, May 31 2012 at 11:58AM ET
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