Eliminating tax evasion in Greece could cut deficit by a third

I just saw Adair Morse of U Chicago present a recent working paper on tax evasion in Greece that has been getting a lot of attention (e.g. Economist). She shows that banks give loans with payment amounts that exceed reported income and uses the amount banks lend people to back out how much actual income they have.

The totals are huge. They estimate a lower bound of 28 billion euros of unreported income. The foregone tax revenue from this could cut the 2008 deficit in half and the 2009 deficit by a third.

The worst offenders are the professional class: doctors, engineers, private tutors, accountants, financial service agents and lawyers. These occupations tend to have smaller paper trails and represent a substantial portion of parliament relative to the population and relative to comparable countries.

About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar. http://faculty.chicagobooth.edu/owen.zidar/index.html
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1 Response to Eliminating tax evasion in Greece could cut deficit by a third

  1. Matt Zidar says:

    Then what do you suppose would happen if we created incentives/disincentives for all of the offshore US equity that is sheltered? Have you found any studies on that?

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