Reading the article by Shultz and Whitesell (2005), it seems like in 2003, Bolivia needed to borrow money to finance its annual budget, so they turned to the IMF. The IMF in turn wanted 8% of their national budget, roughly $250 Million. You know the world is in a large wealth inequality when 8% of Bill Gates' current wealth is roughly $6 Billion, 24 times more than 8% of Bolivia's national budget in 2003! Because of IMF asking for wealth, Bolivia had to take desperate measures meaning increased taxes.
First they tried proposing oil and gas taxes, but they also wanted to show foreign countries how well they were doing, so they disregarded that option. They then turned to income taxes, in the lowest brackets adding around $2 extra per month. In a country barely getting by, $2 could be worth a few day's worth of work, possibly the equivalent of $800 extra taxes a month in the United States. This caused riots and blood to be shed. Over 30 people were killed in the riots, and the Bolivian army had to get involved. All this stopped when the president announced it would not be taking any money from the …show more content…
That is hard in today's economy, where I believe basically every country is in debt. It's hard for an individual in the United States or any other country actually to stay debt free, when basically the countries themselves that we live in are in major debt. Most of our money today only exists because we place a value on it, but our money is tied to anything tangible. Because the Bolivian politicians planned on borrowing money from the IMF, while already being in considerable debt to begin with, they set themselves up for failure when trying to tax its citizens. That's the only way I think it could have been avoided, or maybe if they got a deal with Bill Gates to donate $250 million to them, which to him in 2015, is roughly 1/320th of his net
First they tried proposing oil and gas taxes, but they also wanted to show foreign countries how well they were doing, so they disregarded that option. They then turned to income taxes, in the lowest brackets adding around $2 extra per month. In a country barely getting by, $2 could be worth a few day's worth of work, possibly the equivalent of $800 extra taxes a month in the United States. This caused riots and blood to be shed. Over 30 people were killed in the riots, and the Bolivian army had to get involved. All this stopped when the president announced it would not be taking any money from the …show more content…
That is hard in today's economy, where I believe basically every country is in debt. It's hard for an individual in the United States or any other country actually to stay debt free, when basically the countries themselves that we live in are in major debt. Most of our money today only exists because we place a value on it, but our money is tied to anything tangible. Because the Bolivian politicians planned on borrowing money from the IMF, while already being in considerable debt to begin with, they set themselves up for failure when trying to tax its citizens. That's the only way I think it could have been avoided, or maybe if they got a deal with Bill Gates to donate $250 million to them, which to him in 2015, is roughly 1/320th of his net