Saturday, March 06, 2010

Greek tax evaders: freedom fighters?

An article in Britain's Daily Telegraph by Tracy Corrigan explores the urgent need for tax reform in Greece, and draws attention to the colossal scale of tax evasion, which for decades has been a national scandal and a threat to social stability.

Tax reform is vital for two reasons. First, the inefficiency of the Greek tax system is one of the main causes of the problem. Currently, tax collection is a bad joke. The self-employed systematically dodge taxes, and since they account for around 35pc of the workforce, and include many doctors and lawyers as well as a plumbers, Greece simply doesn't raise enough taxes to finance its bloated public sector.

Secondly, how can some Greeks be persuaded to accept a pay freeze or take lower pensions, if many in society don't pay their taxes? According to Michael Massourakis, chief economist at Alfa Bank: "This time around, there is an increasing awareness that you have to tackle certain issues that make the system very unfair."

At last, the government is taking on the ludicrous excesses in the public sector and the flagrant abuse by many who are self-employed. It has been accused of "soaking the rich" but it would be more accurate to say that it is soaking the honest. Most truly wealthy Greeks are bone dry. Those who will suffer are the honest doctors and entrepreneurs who now face a marginal tax rate of 45pc. There don't seem to be that many of them. Prior to recent changes, the top marginal tax rate of 40pc kicked in at €75,000 in income; according to Mr Massourakis, this was paid by only 40,000 Greek households, out of a population of 11m.

So far, so sensible.

However, if you scroll down to read the reader's comments below the article you get a feel for how the libertarian right wingers who oppose tax, the state and anything to related to the European Union advocate criminal behaviour to further their cause. Take this, for example:

Why should the Greeks pay for a corrupt government and government debt issued fraudulently with the help of Goldman Sachs? Tax evaders are freedom fighters in the face of government fraud, war, bailouts, corruption and waste.

The best the Greece can do for its economy is to leave the Euro and kick out the financial terrorists - Goldman Sachs, JPM et al - and revert to its original system of competing city-states after the Greek state goes bankrupt.

Yes, there has been a lot of corruption, not least on tax matters. Yes, Goldman Sachs' role needs careful scrutiny. But to leap from that to justify tax evasion with the ridiculous claim that Greek tax evaders are freedom fighters is astonishing, to say the least.

Let's be clear about this, tax evasion is a crime. Tax evaders are often amongst the elites in society - the wealthiest and highest paid people are often guilty of tax evasion. Very often these people are closely associated with those who hold power (Greece is not alone in this respect) and they have tailored the tax system very much to their own self-interested purposes. And a number of Greek journalists have confirmed to this blogger that there is no tradition in Greece of withholding tax to protest against war, or nuclear weapons, as is the case in some European countries. Tax evasion in Greece is just a symptom of a deep rooted malaise amongst those who never accepted the transition to a democratic state.

Tax evasion is amongst the most insidious forms of corruption since it involves theft of public property and is a direct attack on the integrity of the laws, rules and institutions which lie at the root of the social contract. Tax evasion is fundamentally anti-democratic. This is why TJN regards evasion as an affront to social justice.

Are tax evaders
freedom fighters? No. They're self-absorbed and selfish criminals.


Anonymous Anonymous said...

Tax evasion equals theft of public property?? That statement is insane!

While taxes in general might be considered a greater good and tax evasion as such could be considered a criminal act towards society as a whole, this doesn't in any way make it theft! If theft is involved at all it would be the collection of taxes in itself. How else can one define the act of taking money from other persons without their consent and under threath of force? It is a textbook definition of theft!

So withholding money from others who would like to take it from you without your consent isn't in any way equal to theft, no matter how illegal it may be.

Remember states are not a creation of nature and do not have any inherent right to tax people living within a defined area of land. They can only do this through securing a monopoly on the use of force through the use of force. A state is only a concept that the majority choose to accept either under threat of force or as the greater good for human interaction. If a majority of Greeks do not view the state and the paying of taxes as a greater good, is it then right to force them to adhere? That is generally the definition of a dictatorship..

5:23 am  
Blogger TJN said...

Anonymous (why not reveal yourself?)
If you think that money and profits can simply be just created out of thin air, without the involvement and backing of government at every step, then we suggest politely that you take a look at this. It's quite entertaining . . .
And you might look at the lead article in this publication, which notes that
"Private property is a legal convention, defined in part by the tax system; therefore, the tax system cannot be evaluated by looking at its impact on private property, conceived as something that has independent existence and validity."

10:19 am  
Blogger Physiocrat said...

Anonymous, TJN

Taxation is necessary because governments fail to collect that to which they are morally entitled - the rental value of land. Which is what, precisely?

The concept of rental value is most easily understood by considering buskers on the London Underground. A busker will collect more at Victoria than they will at South Kensington, where they will take more than at, say, West Kensington, a quiet station couple of stops away. And you would not see anyone busking at Chiswick Park, an even quieter station.

This difference in the takings is due not to the skill of the busker but to location, ie the shape of the infrastructure and the presence and action of the community, ie the "footfall". This difference is defined as rental value.

It is a public value because it arises as a result of external benefits - it is not the skill of the busker that results in them taking more at a busy location. Government is entitled to the whole of it, to use for public purposes, the more so since it is government that guarantees and protects land title ie the right to secure occupation, without which chaos would prevail and nothing could be produced.

Since it is a good general principle that people should pay for the benefits they receive, a national land rental charge, sometimes known as land value taxation, is most definitely not theft. It is the retention of this value by private landholders that constitutes theft because it is indeed public property.

Any earnings over and above this rental value are the product of individual effort and for the state to collect them through taxes is theft.

The arguments put forward by TJN and Anonymous are both partly right and both partly wrong. We really do need more refined analysis than that which regularly gives rise to the kind of exchange above.

10:55 pm  
Blogger Physiocrat said...

TJN - thanks for publishing

6:49 am  
Blogger Robin Smith said...

I'm with Physiocrat on this. What is by natural right, private property. And what is by natural right common property?

If these question have not yet been agreed on, then nothing else can proceed in terms of who keeps what.

What is the only thing that for certain is private property?

Your body.

Does it therefore follow that all things made using these bodies is also the private property of the body owner, by natural right? These things would be economic wealth. (Not money, not land values, not monopoly rights to anything for cryin' out loud!)

And then, does it follow that everything else, is common property? These things would be economic rent. ALL of it!

I'm not asking for you to agree with me on this. I'm just asking you to think about it.

To see what happens when these self evident truths are denied follow this link (I'm not religious BTW):

The Robin Smith Institute: Have I been converted?

4:04 pm  

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