Madam Secretary

Clinton’s pet peeve: poor countries that don’t tax their elite

Secretary Clinton said yesterday that one of her pet peeves is poor countries that don’t tax their elite and then expect the United States to come in and save their people. Clinton made the remark in a round-table discussion on the U.S. administration’s new global development policy. Her complete remark was: It’s one of my ...

Mark Wilson/Getty Images
Mark Wilson/Getty Images

Secretary Clinton said yesterday that one of her pet peeves is poor countries that don’t tax their elite and then expect the United States to come in and save their people.

Clinton made the remark in a round-table discussion on the U.S. administration’s new global development policy. Her complete remark was:

It’s one of my pet peeves: Countries that will not tax their elite, who expect us to come in and help them serve their people, are just not going to get the kind of help from us that historically they may have.

Moderator Frank Sesno of George Washington University followed up by asking, "You’re going to go to countries that are getting [aid] now and say we’re going to stop?" Clinton responded by singling out Pakistan:

There’s got to be some reciprocity here. Because one of the things that is now happening in Pakistan, and I said this when I was there last year, you cannot have a tax rate of 9 percent of GDP when big landholders and all the other elites do not pay anything or pay so little it’s laughable, and you’ve got such a rate of poverty and everybody is looking to the United States and other donors to come in and help.

Sesno pushed further, asking whether Clinton was truly prepared to tell governments of countries filled with poor people that the U.S. government would withdraw or scale back aid if they didn’t tax their elite, who are often the base of political support for those countries’ leaders. Clinton said that was one of the messages that the United States was starting to deliver and mentioned that Pakistan’s finance minister has already introduced a set of tax and economic reforms.

Treasury Secretary Timothy Geithner, another of the participants in the round-table discussion, backed Clinton up, saying:

I’ve been doing this for a long time. I have never heard a discussion like this where you have a secretary of state saying what Secretary Clinton just said, which is recognizing that unless we are tougher on how we provide assistance, unless we look at those basic simple things, like are they running their country in a way that gives us confidence that our resources will be used well, we should not be financing them at this level. That is an enormously consequential thing.

Something tells me that if Barack Obama’s administration is having such a difficult time increasing taxes on the richest Americans, then it’s going to have an even harder time getting another country’s government to do the same. And in the case of Pakistan, is that country really going to do the United States’ bidding? In the interest of national security, the United States will continue pouring billions of dollars into Pakistan; with so many Islamist extremist groups on the Pakistan-Afghanistan border, the United States isn’t going to scale back development efforts just because the Pakistani government won’t reform its tax code and crack down on tax evasion.

(For more on this topic, check out my colleague Josh Rogin’s report, "Clinton presses Pakistan to raise taxes on wealthy" over at FP‘s The Cable.)

Preeti Aroon was copy chief at Foreign Policy from 2009 to 2016 and was an FP assistant editor from 2007 to 2009. Twitter: @pjaroonFP

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