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For months, Republican born-again deficit hawks have been warning Americans that "we're becoming Greece."  Of course, as FactCheck.org and Paul Krugman among others rightly concluded, "Greece -- with a long history of fiscal irresponsibility, very high public debt, and a country without a currency -- doesn't bear much resemblance even to the other peripheral Europeans, let alone the United States."  But in one aspect, America would do well to follow the Greek example.  With tax fraud now costing the U.S. Treasury an estimated $400 billion in revenue a year, Washington like Athens should launch a campaign to publicly shame the tax cheats.

As GlobalPost reported this week, those Greek business and individuals evading their tax bills are about to get the same treatment as prostitutes' clients in some U.S. municipalities.  A list of 6,000 business cheats who owe Athens $41 billion has already been published.  Now, Greece's legendary upper-class tax fraudsters are about to see their names in bold print:

As Greece's colossal debt problems weigh on the global economy, its wealthy have become famous for their brazen unwillingness to pay taxes.

By some estimates, a third of Greek taxes go unpaid, amounting to $20 billion or more. At least half of the country's budget shortfall could be eliminated if only the government could collect these revenues.

So, in addition to enacting the harsh budget cuts that are triggering unrest among the working class, Greek authorities are deploying novel methods to smoke out tax dodgers...now, a public-shaming campaign is underway to collect overdue taxes and rebuild trust with ordinary Greeks resentful of sweeping austerity measures.

As it turns out, there are a host of reasons the United States and Greece bear so little resemblance to each other. One of them, as Michael Lewis explained last fall, is the sheer scope of Greek tax cheating:

But beyond a $1.2 trillion debt (roughly a quarter-million dollars for each working adult), there is a more frightening deficit. After systematically looting their own treasury, in a breathtaking binge of tax evasion, bribery, and creative accounting spurred on by Goldman Sachs, Greeks are sure of one thing: they can't trust their fellow Greeks.

That rot starts with the epidemic of tax cheating which has crippled Athens. As the New York Times reported last year in "Greek Wealth is Everyhere But Tax Forms," the "wholesale lying about assets" in that nation of 11 million people is symptomatic of the "staggering breadth of tax dodging that has long been a way of life here." With a GDP of $341 billion and a budget of $108 billion, the impact on Greece's fiscal health is grave:

Various studies, including one by the Federation of Greek Industries last year, have estimated that the government may be losing as much as $30 billion a year to tax evasion - a figure that would have gone a long way to solving its debt problems.

To put that number in perspective, U.S. GDP reached $14.25 trillion GDP in 2009, while President Obama's proposed federal budget for the next year was $3.8 trillion. So the tax cheating epidemic in Greece is roughly three to four times worse than in the United States:

Various studies have concluded that Greece's shadow economy represented 20 to 30 percent of its gross domestic product. Friedrich Schneider, the chairman of the economics department at Johannes Kepler University of Linz, studies Europe's shadow economies; he said that Greece's was at 25 percent last year and estimated that it would rise to 25.2 percent in 2010. For comparison, the United States' was put at 7.8 percent.

Sadly, Americans seem to be closing the gap (and at a time when the overall federal tax burden is at its lowest since 1950.)  The Brookings Institution recently estimated that the U.S. Treasury is losing up to $500 billion a year to tax fraud and evasion, up substantially from the IRS estimate of $345 billion in 2001.  Helping fuel that hemorrhage of red ink was the 1990's Republican jihad against the IRS, a campaign which substantially reduced the agency's enforcement capabilities - and its audits.  Only now, with the Obama administration's efforts to crack down on wealthy cheats and their offshore accounts, is the tide slowly turning.

Unsurprisingly, this spring Republicans voted to cut $600 million funding for IRS enforcement despite its almost 10 to 1 return on investment, prompting Ezra Klein to remark, "Converting dollar bills into $10 bills is an excellent way to pay off your credit card. Except, it seems, if you're a House Republican."

Of course, those same Republicans for whom the IRS is a four-letter word won't be so keen on having American tax cheaters publicly shamed and disgraced like a hooker's "john."  Then again, as David Vitter shows, the Johns of the GOP instead represent their party in the United States Senate.

* Crossposted at Perrspectives *

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Comment Preferences

  •  We tried, sort of (3+ / 0-)
    Recommended by:
    billmosby, petral, cassandracarolina

    Before he became Bush's Minister Of Love, errrr, secretary of Health and Human Services; Mike Leavitt rode around in an airplane that was registered in Wyoming to dodge Utah state taxes.

    Even a few Republicans around here tried to make a big deal out of it.

  •  To shame them, you'd first have (5+ / 0-)

    to identify them. To identify them, you'd have to massively multiply the audit probability; and to do that, as noted, you'd have to increase the IRS budget.

    30 years ago or thereabouts, the chance of an audit was some percent, I seem to remember 5 or so. More recently I thought I remember it being a half a percent. I'm sure your links have precise numbers but it's some factor like that.

    Time was when the Republicans said they were the "law and order" party. And they more or less meant it, even in tax matters. And then something happened.

    I sure hope we don't end up with tax evasion as a sport here to the extent it seems to have become elsewhere. However, a couple of anecdotes from an acquaintance of mine 10 years ago paints a different picture. She was in the resort rental business and was in the habit of transferring various useful items from her business to her personal use (linens, furnishings, etc) on the grounds that "everybody" did it. Including her accountant, who showed up in a new Mercedes he said was paid for off the books. Kind of gave her evasion legitimacy in her own mind.

    My first wife was an IRS Revenue Agent for over 30 years; back in the early days of her career they were pretty tenacious. Then after a couple of decades of seeing the tax courts give away half or more of their hard-won assessments to get agreements, they kind of became resigned to not being able to do so good a job. They still did their best, though.

    Moderation in most things.

    by billmosby on Mon Oct 03, 2011 at 05:37:53 PM PDT

  •  Heard an author who knows Greece - spent time (2+ / 0-)
    Recommended by:
    billmosby, cassandracarolina

    there - tell a BBC interviewer that tax collectors have been fired for trying to collect taxes.

    Their public wants benefits, but doesn't want to pay for them. Greece is more a pubic problem than a bank problem. I don't think it's just the very wealthy. Middle class also a problem.

    Unlike a country like Denmark that is quite egalitarian and has many cradle to grave benefits and has a tax rate is 55% to pay for it all.

    While I want to see continued public services and safety nets, if we don't pay for them, they can't be supported. Money has to come from someplace.

    That's why the Balanced Budget Amendment they are trying to pass here is so dangerous.

    Progressives will win when we convince a majority that they, too, are Progressive.

    by auapplemac on Mon Oct 03, 2011 at 06:23:44 PM PDT

    •  Agree. But can't resist this: (0+ / 0-)

      Grease is supposed to be a pubic problem, all right; water-based stuff is supposed to be better.

      I can't proofread my stuff very well either, lol.

      Moderation in most things.

      by billmosby on Mon Oct 03, 2011 at 06:31:13 PM PDT

      [ Parent ]

    •  That author doesn't know Greece very well (0+ / 0-)

      IMO. Greece first of all has no public benefits. No safety net. No welfare.

      Secondly Greece collects twice as much in tax revenues relative to GDP as the USA and even more than Germany. They have very high taxes. Don't confuse high evasion of high taxes with low evasion of low taxes. These are two different things.

      The Greek story is about corruption.

      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 Tue Oct 04, 2011 at 10:57:50 AM PDT

      [ Parent ]

  •  Keeping your money from the State (0+ / 1-)
    Recommended by:
    Hidden by:
    ManfromMiddletown

    does not constitute "cheating".  If a thief walks up to you on the street and demands "all your money", are you obliged to divulge how much you truly have?  Or are you compelled to give it all to him simply because he demands it?  Of course not.  It's the same with the thief known as the State.  Not only do you have a moral obligation to keep your money out of the greedy hands of the State, you also have natural, God-given rights that allow you to do so, regardless of what the government parasites would have you believe.

  •  Shame not needed, just fines and in extreme cases (0+ / 0-)

    prision.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Mon Oct 03, 2011 at 06:41:44 PM PDT

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