Greek tax evasion: blame dearth of democratic heritage
"The Greek shadow economy, which is made up of unreported income, was 25.1% of gross domestic product in 2007, according to Friedrich Schneider, a professor at Johannes Kepler University in Linz, Austria. The shadow economies of Spain, Portugal and Italy were all around a fifth of GDP. That compared with just 11.8% for France and 7.2% for the U.S., he said."
No wonder Greece is in such a mess, one might argue. But what explains this surprisingly high rate of unreported income?
"Trying to explain the rampant tax evasion, Prof. Schneider says countries like Spain, Portugal and Greece have had continuous democracies only since the 1970s, and people aren't used to governments representing the public interest.
"In most of these countries, what matters is your family. … There is less of a sense of duty towards the state," says Alberto Alesina, a professor of political economy at Harvard. "Evading taxes is something you can freely talk about—and be proud of—at a dinner party in these countries."
It all goes to underline what taxation, for all its many faults and complexities, is all about - the public interest, trumping narrow family or personal interests. At the end of the day, that's a good thing.