As author Mark Lewis pointed out in 2010, Greece is in a huge hole in large part part because no one pays taxes.
The scale of Greek tax cheating was at least as incredible as its scope: an estimated two-thirds of Greek doctors reported incomes under 12,000 euros a year—which meant, because incomes below that amount weren’t taxable, that even plastic surgeons making millions a year paid no tax at all. The problem wasn’t the law—there was a law on the books that made it a jailable offense to cheat the government out of more than 150,000 euros—but its enforcement. “If the law was enforced,” the tax collector said, “every doctor in Greece would be in jail.” I laughed, and he gave me a stare. “I am completely serious.” One reason no one is ever prosecuted—apart from the fact that prosecution would seem arbitrary, as everyone is doing it—is that the Greek courts take up to 15 years to resolve tax cases. “The one who does not want to pay, and who gets caught, just goes to court,” he says. Somewhere between 30 and 40 percent of the activity in the Greek economy that might be subject to the income tax goes officially unrecorded, he says, compared with an average of about 18 percent in the rest of Europe.
. . .
In Athens, I several times had a feeling new to me as a journalist: a complete lack of interest in what was obviously shocking material. I’d sit down with someone who knew the inner workings of the Greek government: a big-time banker, a tax collector, a deputy finance minister, a former M.P. I’d take out my notepad and start writing down the stories that spilled out of them. Scandal after scandal poured forth. Twenty minutes into it I’d lose interest. There were simply too many: they could fill libraries, never mind a magazine article.
Today comes a story from Forbes about the extremes local and state governments are willing to go to crack down on tax cheats:
All of the taxes in the world don’t mean a thing if you can’t collect on them – or so many states and localities are figuring out these days. Taxing authorities fromTennessee to New Jersey are reporting shortfalls and lags in collections activities just as cuts from federal funding are being felt.
Some taxing authorities are saying enough. Alternative, aggressive and controversial new proposals are popping up all over in an effort to fill budget holes.
. . .
A county in North Carolina is going even further: in Jackson County, North Carolina, if you don’t pay your taxes, you could lose your house. County tax collectors are using the threat of foreclosure to collect outstanding taxes, a tactic the county hadn’t used since the early 1980s. While effective – the county has collected about $1.2 million in payments from 85 individual tax delinquents – that level of aggressive collections is considered so contrary to public policy that even the Internal Revenue Service has been discouraged from the behavior.
Oliver Wendell Holmes famously said that taxes are the price we pay for a civilized society. Greeks haven’t been paying their taxes for decades and their society has begun to break down. I hope Americans have better sense.