Greece is like America, the rich dont pay taxes.

On July 23, 2016, we discontinued our forums. We ask our members to please join us in our new community site, The Hartmann Report. Please note that you will have to register a new account on The Hartmann Report.

7 posts / 0 new

“The scale of Greek tax cheating was at least as incredible as its scope: an estimated two-thirds of Greek doctors reported incomes under 12,000 euros a year—which meant, because incomes below that amount weren’t taxable, that even plastic surgeons making millions a year paid no tax at all. The problem wasn’t the law—there was a law on the books that made it a jailable offense to cheat the government out of more than 150,000 euros—but its enforcement. ‘If the law was enforced,’ the tax collector said, ‘every doctor in Greece would be in jail.’ I laughed, and he gave me a stare. ‘I am completely serious.’

“The structure of the Greek economy is collectivist, but the country, in spirit, is the opposite of a collective. Its real structure is every man for himself. Into this system investors had poured hundreds of billions of dollars. And the credit boom had pushed the country over the edge, into total moral collapse.”

http://www.ritholtz.com/blog/2011/05/kicking-the-can-to-the-end-of-the-road/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

Erik300's picture
Erik300
Joined:
Apr. 2, 2010 10:44 am

Comments

“The scale of Greek tax cheating was at least as incredible as its scope: an estimated two-thirds of Greek doctors reported incomes under 12,000 euros a year—which meant, because incomes below that amount weren’t taxable, that even plastic surgeons making millions a year paid no tax at all."

I seriously doubt that there are a lot of millionaire plastic surgeons in Greece.

However, what is clear is that they came up with a lot of toxic assets, helped by Goldman Sachs

From Der Spiegel (2010):

Greek Debt Crisis
How Goldman Sachs Helped Greece to Mask its True Debt
By Beat Balzli

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.

Creative accounting took priority when it came to totting up government debt.Since 1999, the Maastricht rules threaten to slap hefty fines on euro member countries that exceed the budget deficit limit of three percent of gross domestic product. Total government debt mustn't exceed 60 percent.

The Greeks have never managed to stick to the 60 percent debt limit, and they only adhered to the three percent deficit ceiling with the help of blatant balance sheet cosmetics. One time, gigantic military expenditures were left out, and another time billions in hospital debt. After recalculating the figures, the experts at Eurostat consistently came up with the same results: In truth, the deficit each year has been far greater than the three percent limit. In 2009, it exploded to over 12 percent.

Now, though, it looks like the Greek figure jugglers have been even more brazen than was previously thought. "Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future," one insider recalled, adding that Mediterranean countries had snapped up such products.

Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period -- to be exchanged back into the original currencies at a later date.

Fictional Exchange Rates

Such transactions are part of normal government refinancing. Europe's governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.

But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives. "The Maastricht rules can be circumvented quite legally through swaps," says a German derivatives dealer.

In previous years, Italy used a similar trick to mask its true debt with the help of a different US bank. In 2002 the Greek deficit amounted to 1.2 percent of GDP. After Eurostat reviewed the data in September 2004, the ratio had to be revised up to 3.7 percent. According to today's records, it stands at 5.2 percent.

At some point Greece will have to pay up for its swap transactions, and that will impact its deficit. The bond maturities range between 10 and 15 years. Goldman Sachs charged a hefty commission for the deal and sold the swaps on to a Greek bank in 2005.

The bank declined to comment on the controversial deal. The Greek Finance Ministry did not respond to a written request for comment.

MrK's picture
MrK
Joined:
Jul. 31, 2007 4:01 pm

Greece is on the road to political/economic collapse. The only way for the country to stabilize itself is to default on the debt like Iceland did....or perhaps a dictatorship to keep an increasingly impoverished population in line..

Default will cause a crises in the Euro and an EU bailout for the banksters involved in the default.

The financial meltdown marches on...propped up by continuing bailouts and governments throwing money into financial markets...

Next up , Spain, Ireland and Portugal.. Auserity programs in the U.S. wil put us in the same mix. if they are implimented.

http://www.youtube.com/watch?v=c5YOMtEMsxw&NR=1

Retired Monk - "Ideology is a disease".

polycarp2
Joined:
Jul. 31, 2007 4:01 pm

There should be NO bailouts. Let's the cards fall where they may or the pain will even be worse further down the road as the wound festers under the bandage of a bailout. Most of us here agreed with Thom back in September 2008 that there should be NO bailout period! Most of us knew that would just delay the misery. And a week later sitting at a table next to me at Starbucks I heard my congressman explain to local leaders that the bailout was due to pressure from European banks. If they were foolish enough to buy the toxic assets let them fade away. Iceland has done well handling their situation and putting the fraudsters in jail. Most of our banking execs should be carted around in a jail bus not a fancy private jet.

Solution to most of the misery on Earth: eliminate the selfish super rich.

captbebops's picture
captbebops
Joined:
Jul. 31, 2007 4:01 pm

The Greek tax rate for those making over 75,000 Euros is 40%

Those below 10,000 Euros pay 0% tax rate

On top of that there is a 19% Value add tax (VAT)

http://www.taxrates.cc/html/greece-tax-rates.html

The reason the rich dont pay taxes to Greek government is that when tax rates get too high (40% income + 19%VAT) they will move money out of Greece or create a shadow economy to bypass taxes. The wealthy in Greece have gone Galt .

As much as I hear people here trash Ayn Rand, they seem to miss the point of the story.

You could pass the highest tax you like on the rich in America and the money will vanish overnight. Your revenue would go down and the wealthy would just move money around in the GLOBAL economy to avoid your tax.

harshreality's picture
harshreality
Joined:
Jun. 17, 2011 12:21 pm

Wow! The effective tax rate on Greece's super wealthy is about the same as the tax rate of an American worker.

The tax rate on the average U.S. worker,combined with FICA and state taxes is about 40%. In return for that, he gets a new "smart bomb". The average tax rate on America's super rich is 15%...the bulk of their income being low-taxed capital gains. In return for that, they get corporate welfare and trillions in government bailouts.

No wonder Greece's super rich refuse to pay taxes.. They have to pay a tax rate equal to American workers. rather than the low rates of America's super rich.. Grossly unfair.

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 4:01 pm

Heh, I had a shouting match yesterday with a military retiree who insisted that people should be able to keep ALL their income. He had the usual BS excuses which I trumped. And a few minutes later we were discussing problems in Mexico where he mentioned the water problems and I brought up T Boon Pickens who is trying to buy up water rights for privatization. He was enraged about that so I said, "see, these are the kind of people I'm talking about and a progressive income tax could keep us from having people with that much power, wealth and tyranny". And these people vote Republican?

Often I like to characterize people who think they should be able to keep all their earn as 5 years olds throwing a tantrum saying "It's mine, mine, mine."

captbebops's picture
captbebops
Joined:
Jul. 31, 2007 4:01 pm

Is It Time To Execute Equifax?

The Equifax hacking scandal just keeps getting worse.

So should we bring back the corporate death penalty and do away with this security threat once and for all?

According to Bloomberg, the credit reporting firm:

Powered by Pressflow, an open source content management system