A Nation of Tax Cheats

A huge tax scandal is unfolding in Germany, and it is having political consequences.  It seems that rich Germans would rather put their money in secret bank accounts in Liechtenstein than pay the taxes they owe under German tax laws.  The scandal is affecting some of Germany's best-known managers:

It began last week with the arrest of a leading German executive on suspicion of tax evasion. Now Germany is enthralled by a tale of unbridled greed that offers as much drama as any Hollywood thriller could — but with possibly far greater political consequences. Prosecutors have said that further probes are under way into the tax affairs of hundreds of individuals suspected of funneling millions of euros into anonymous bank accounts in Liechtenstein under the radar of German tax authorities. The targets are  thought to include some of Germany's wealthiest and most prominent citizens.

Everyone is outraged: this is further evidence of the sad state of affairs in the Banana Republic of Germany. Now it appears that even representatives in the Bundestag may be involved in tax evasion; the general outrage is helping the politcal fortunes of the LEFT party.  A climate of class warfare and general animosity towards the wealthy now pervades Germany.

On the other hand, cheating on taxes is an equal opportunity activity in Germany: everybody does it:

"So wird es von drei Vierteln aller Deutschen praktiziert und empfunden. Die meisten haben ja einen offiziellen Job und arbeiten dann eben nach Feierabend oder am Wochenende schwarz. Weil sie in ihrem offiziellen Job Steuern zahlen, haben sie kein Unrechtsbewusstsein. Wenn dann noch so prominente Fälle wie Zumwinkel bekannt werden, denken sie sich: Jetzt erst recht, wenn nicht mal der Steuern zahlt."

Schwarzarbeiten - or working of the books- loses more revenue for the German government than the secret accounts of the wealthy.

Why this refusal to pay taxes in Germany? And what can be done about it?  The SPD and its allies on the left are calling for harsher punishment - with stiff prison sentences for tax evaders.  Others say the tax rates are too high and tax reform is desperately needed.  Does the widespread dishonesty reflect a legitimation crises for the German government?

Or is tax avoidance simply wired into human behavior?  It is estimated that the United States loses approx. $300 billion each year in revenues because its citizens don't pay what they owe in taxes. The Bush administration has bankrupted the nation by granting generous tax cuts to the wealthiest Americans, so that the US now has the most regressive tax system among the wealthiest nations.  But this generosity towards rich Americans is evidently not enough: wealthy Americans have also been hiding their assets in Liechtenstein banks.

Comments

[Hattie]

I was shocked at all the tax cheating I saw when I lived in Switzerland. That is until I moved back to the States and saw that it was the same here.