(Press-News.org) UNIVERSITY OF CALIFORNIA, BERKELEY'S HAAS SCHOOL OF BUSINESS –Wide-scale tax evasion in Greece accounts for 28 billion Euros in unreported taxable income –just among the self-employed, according to a new study, "Tax Evasion Across Industries: Soft Credit Evidence from Greece," by Adair Morse, a visiting assistant professor of finance at Berkeley-Haas.
At a tax rate of 40 percent, that's a revenue loss responsible for nearly one-third of Greece's deficit in 2009 or almost 50 percent of the deficit in 2008, according to the study co-authored by Margarita Tsoutsoura, assistant professor, University of Chicago Booth School of Business, and Nikolaos Artavanis, PhD candidate, Virginia Tech Pamplin College of Business.
Using bank data on household borrowing, the paper finds that highly paid, highly educated professionals are at the forefront of tax evasion in Greece: doctors, engineers, private tutors, financial services agents, accountants, and lawyers. Morse contends the findings are troubling from a perspective of inequality in the financially struggling country.
"The goal of the paper is to use our rich bank data to provide a country-representative estimate of tax evasion in aggregate and by occupation, and to offer analysis relating to factors that allow the tax evasion to persist," says Morse. "But we were also very aware that understanding who is paying taxes and who is not is important to the people of Greece. One might ponder how it can be a good thing that the higher-income professions 'tax evade' a higher proportion of this income."
The researchers further sought to understand how such dramatic tax evasion could exist and continue, with two main conclusions. First, the tax evaders tend to work in occupations that are least likely to leave a verifiable "paper trail" for tax collectors. Second, legislation, including a 2010 bill addressing the widespread tax evasion, has been slow to win approval. Morse asserts that it may not be mere coincidence that the majority of Greek Parliament members' professions correlate with the largest tax evaders', even excluding lawyers. "Industry associations are strong," Morse suggests. "Parliament members face enormous loyalty pressure."
The data consist of credit applications for consumer credit products at one of the ten large Greek banks from 2003 to 2010. The authors study situations in which the bank determines the credit level such as refinance loans, new credit cards, and a sample of loans in which borrowers requested more money than they received. In these situations, Morse uses the bank decision on the appropriate credit level to understand how much income the bank must perceive individuals to have to back out the bank's estimate of true income. The authors term such lending "soft credit" since the information about true income is soft information. The researchers infuse this new insight with the observation that Greek banks have learned to adapt to an economy where income is often hidden to remain competitive.
Morse hopes the study's findings will encourage EU and Greek policymakers to create incentives for more accurate income reporting such as paper trial mandates or occupation licenses for tax evading industries. Already the research is having an impact on the rhetoric in Greece, encouraging the population to think about the culture of tax evasion and how tax evasion does not equally benefit all Greeks. The Greek government recently approved new regulations requiring all businesses to issue receipts for transactions so it may track business taxes due. If a business doesn't comply, the customer can reportedly walk away –without paying.
INFORMATION:
See full paper:
http://faculty.chicagobooth.edu/adair.morse/research/papers/TaxEvasionWeb.pdf
END
According to statistics compiled by the National Highway Traffic Safety Administration, 416,000 people in the United States were injured and another 3,092 killed in motor vehicle accidents involving a distracted driver in 2010, the last year for which numbers are available. Of all car accidents reported in 2010, approximately 18 percent involved driver distraction.
Though driver distraction can take many different forms, texting while driving presents a unique danger because it requires a driver's visual, manual, and cognitive attention. What is worse, the popularity ...
Motorcycling is a big hobby in South Carolina. While the state does not have quite the renown that Sturgis does, South Carolina hosts several motorcycle rallies throughout the year and bikers from across the U.S. attend these events. Unfortunately, South Carolina started the 2012 cycling season with a fatal motorcycle accident in Myrtle Beach, which is a reminder of how necessary it is for motorcyclists and the drivers with whom they share the road to practice safe driving habits.
Myrtle Beach Motorcycle Accident
Myrtle Beach police reported that a motorcyclist from ...
Many people have saved for a lifetime in order to leave their home and their savings to their family. However, today it is not enough just to have a will, a health care proxy and a power of attorney in place to protect what you own for your family. Since everyone is living longer, it is important to have a plan in place to shelter what you have so it is not lost to home health care or nursing home costs, but goes to the ones that you love.
By making important choices early, there is a road map in place during an emergency. Most people want to stay in their homes as long ...
Although filing for bankruptcy has previously carried with it a negative stigma, times now are different. With a struggling economy, it only makes sense that individuals would struggle as well and often to no fault of their own. After the decision to file for bankruptcy has been made, certain requirements are imposed by the Bankruptcy Abuse Prevention and Consumer Protection act of 2005.
Counseling Requirements
The first requirement when filing for bankruptcy is to receive pre-bankruptcy counseling. This requirement must actually be completed before bankruptcy has ...
Bankruptcy is becoming more and more of an attractive option for many Americans. With today's economy, this is no surprise. Bankruptcy no longer has the negative stigma it once had and is now looked at as an option to create a fresh start for those struggling with debt, often because of hard economic times.
Providing Relief
When in debt, a person often struggles with phone calls and harassment from debt collectors. At first, these phone calls are from the companies themselves and are typically not too invasive. After a while, however, the companies sell the debt and ...
Like most states, California follows "at-will" employment rules for non-contractual employment relationships. What this means is, absent a contract that sets rules to the contrary, either the employer or the employee can terminate the employment relationship at any time, and for nearly any reason. There does not need to be cause to terminate.
There are some exceptions to this rule. California employers may not terminate employees for discriminatory reasons or for refusing to participate in illegal activities. Employees who are fired under these circumstances ...
Many people still think of a lot of workplaces as being "Old Boys Clubs." As such, they think that lewd, harassing or chauvinistic comments are something that has to be tolerated in order to fit in.
While sexual harassment in the workplace is unfortunately all too common, no one should ever have to tolerate it. Sexual harassment is not just bad for workplace morale; it is also a serious violation of both California and federal law.
Workers who are victimized by discrimination in the workplace have a right to seek financial compensation by bringing discrimination ...
Recent changes to Florida's auto insurance laws will dramatically reduce the length of time that injured accident victims have to obtain medical care through the state's No-Fault system, as well as reduce the maximum benefit amount in most cases.
Under new provisions that will go into effect on January 1, 2013, people seeking Personal Injury Protection (PIP) benefits in Florida will be required to receive initial medical care and services within 14 days of being injured in a motor vehicle accident. Previously, Florida accident victims had two years to make PIP medical ...
Due to the worst economy since the Great Depression, more people than ever either are out of work or are being forced into lower-paying jobs. It is therefore little surprise that more Americans are finding it more difficult to pay their bills. Some of the most common financial obligations that Americans are having difficulties meeting are medical bills and other healthcare costs.
One recent study by the Commonwealth Fund says that American women, even if they are insured, are having more trouble paying for medical care than women from other countries. According to the ...
Prenuptial agreements are becoming more and more common for engaged couples. A prenuptial agreement is a legal contract that is entered between a couple prior to their marriage. The contract inventories each party's assets and debts before entering the marriage and establishes the property rights each spouse has in the event of divorce or if one spouses dies before the other.
What's in a prenuptial agreement?
A prenuptial agreement sets the couple's expectations and prevents surprises at the time of divorce. Information that may be in the prenuptial agreement includes:
...
