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View Diary: Nobody could've predicted that slashing budgets crashes economies (151 comments)

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  •  I read the other day that 40% of (16+ / 0-)

    Greece's GDP is untaxed, part of a large and growing shadow economy.  In addition, there is no property tax in Greece.  So, people are putting all their assets into their houses, where they live cost free and then transact their daily affairs "off the books."  
    Presumably, wages are taxed, so the working class is footing the bill and getting tired of it.

    In the U.S., the shadow economy is now estimated to be equivalent to $1.4 trillion of GDP.  Our shadow economy has also been growing, even though that's supposed to be a symptom of under-development, not a place that has the rule of law.  Which might tell us something of how the rule of law is being perceived in the U.S. When the rule of law is an instrument of subjugation, justice tends to fade.

    by hannah on Fri Sep 30, 2011 at 11:35:46 AM PDT

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    •  I'd like to see that citation (3+ / 0-)

      Because officially the tax evasion rate in Greece is 25% though unofficially it's estimated that Greece is at 30%.

      There are a lot of variables though that you need to look closely at to get a true picture. For instance, Greece collects 41% of its taxes to GDP. That's very high when you compare it to the USA. The explanation would be that they ahve very high tax rates and a very high rate of evasion. This is indeed true. Greek VAT is at 23%. Unlike the USA where the poor do not pay taxes, Greece is taxing income above 4k. The picture becomes even more alarming when you realize that shipping is 15% of GDP and that shippers don't pay taxes for obvious reasons. This means you have to back out 15% of GDP (that is untaxed) and redo your calculations.

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Fri Sep 30, 2011 at 03:13:00 PM PDT

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