An IMF Norm Tipping Point? The Emerging Fund Consensus for Progressive Taxation

• In Event: IMF, Conditionality, and Intellectual Authority

Abstract

Internal IMF debates concerning appropriate taxation policies since the 2008 global financial crisis have included the emergence of prominent minority voice within the institution that has highlighted the negative effects of high inequality on economic growth. This voice also has advocated progressive taxation and other redistributive fiscal policy as foundational to achieve the IMF’s commitment to ‘inclusive growth’. While these views had voice in internal IMF debates, actual IMF policy recommendations around taxation reform have generally championed a focus on tax efficiency and increased ‘domestic revenue mobilization’ often facilitated by regressive taxation. Recent evidence suggests, however, that the Fund is experiencing a potential norm tipping point concerning the central role of progressive taxation to achieve inclusive growth. Drawing from constructivist and institutional theory, this paper examines how the intersection of key external and internal variables, including the new leadership of Managing Director Kristlalina Georgieva, has pushed progressive taxation from the IMF fringes to an arguably new mainstream position moving forward within the institution.

Author

• Mark Hibben, Saint Joseph's College of Maine