Sunday, August 12, 2012

Germans and Tax Evasion

Well, there is this little thing about Germany and tax evasion.  If you can do it, and get away with it.....then why not?

My prospective is that wealthy Germans throughout the 1950s, 1960s, 1970s and 1980s.....were conducting tax evasion at a sophisticated level.  You swung deals where some part of it was involving cash.  Your associate paid the stored it in a safe in the basement....and then you or your associate made a trip to the Swiss Alps for a vacation.  You crossed the border....visited your Swiss banker, and grinned as you avoided taxes on several hundred thousand D-Marks.  It was simple.

Well....(again, my prospective), somewhere in the 1980s....the middle class guys came to figure out that they could play the cash game, and they found dozens of ways of avoiding taxes as well.

This all led to a point where the Zollamt folks (your friendly tax folks) realized how big a mess this was.  Naturally, you can't allow everyone to play this game.

So for the past two decades, there's been some pretty heavy attempts by the Zollamt, to squeeze out the tax evasion crowd....both at the wealthy level and the middle-class level.

An example....your plumber Huns.....does alot of cash-only jobs on Saturdays.  Twice a year, he has twenty thousand Euro to transport over to Luxembourg.  Huns puts the money into a coffee can within his RV trailer and intends to drive across.  Sadly....about 200 meters before the border....the customs folks are set up, and ask to look at the RV trailer.  They find the twenty thousand Euro in 500 Euro bills within the can.  Questions pop up....and Huns has to cancel his vacation while his lawyer tries to clean up the mess.

Some experts will come along and try to talk you along to a Pacific Island "hidden-asset" situation.  You buy some property....funneling your hidden assets to some third-party here in Germany....and eventually, you quietly move off to the Pacific with no one ever figuring out your hidden millions.

How many Germans play the evasion game? just don't know.  The Zollamt will give you a figure but if you really ask them how they arrived at's simply an imaginary number that they play with.  They know how many people they bust at the border.  They have a fair idea about hidden accounts in Switzerland.  To them.....there's some stats they feel good about.

A comparison between the Germans and Greeks?  I've been to Crete and spent two weeks on vacation.  I kinda know the small gimmicks they use, and I've spent a fair amount of time reading up on general Greek business operations.  My humble impression is that seventy-five percent of all Greeks will perform some type of tax evasion in their life.  No, I can't prove this via's just an opinion.  Greeks will evade taxes because they really don't think the tax rate is fair, and the tricks they use are fairly simple.   It doesn't take a Greek rocket scientist to figure out a way to hide a thousand Euro in profit over a July weekend with his little bar on the beach.

Germans?  The bulk of Germans go out and generally play fairly on taxes.....mostly because they don't fall into business areas where you can cheat.  Plumbers, roofers and carpenters?  They have the ability to work evenings and weekends.... accumulating extra cash which is under the radar of the authorities.  The small business man?  Same story.  Millioniares?  It's a bit tougher, but they can sort out 300k Euro here and there.....and move it quietly out.  Tens of millions in a year by one guy?  No, I would seriously doubt that.

The thing about tax evasion is that people do believe that they are paying too much, and they can't convince any political figure to go along with their understanding.  The politicians use the money to hand out various social programs and make people happy.  They can only make happiness....with money collected.  Lost tax revenue, denies people their's a political logic.

So Greece, and going to continue.  As smart as the Zollamt gets....the tax evader team will just shift their tactics around.  Eventually.....some Russian Mafia guy will figure out a way to run a nifty Swiss-style bank in Russia and offer to transport evasion money into Russia....creating numbered accounts there, and the Germans government will have virtually no way of getting at the Russian banks.  I'm not saying this is a smart thing.....but it's going to be the end result in twenty years.  My humble analysis.

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