Krugman, however, fails to see why. The real reason behind the subprime performance of the developed countries of the West is the heavy tax burden that debilitates the economy. See the following chart and pay attention to the most heavily taxed countries, which are France and Italy. They are not quite the paragons of a sound economy, are they?
In general, tax burden in most developed countries is much heavier when compared to the 1960's or even 1970's.
Note that the U.S. tax burden does not include state and municipal taxes. Also note that Canada has been able to alleviate the burden since the 1990's. Not without favourable consequences.
Now you may ask why the IMF economists haven't seen the size of the tax burden and changed their projections accordingly. Are they that stupid? Apparently they have assumed that a high tax burden has no adversary impact on the economy. Assumption is mother of all f*ck-ups.