Cracking down on tax evasion

Germany is getting serious about it. The Swiss banking association seems to think that catching tax cheats is a Nazi policy.

It turns out that Angela Merkel, unlike, for example, our own Republican Party, has no difficulty distinguishing between support for lower taxes and support for tax evasion. And it also turns out that the German authorities are prepared to be energetic about it. They bought a list of tax-cheating clients from a rogue ex-employee of a bank in Liechtenstein, and are now both going after the tax cheats and pressuring the Liechtenstinian bankers and banking authorities to stop facilitating criminal activity.

Better yet, they want to expand the crackdown to Switzerland, Luxembourg, and Austria, all of which allow their banks to be used to hide money from the tax collector.

This is a Very Big Deal. The capacity of rich people to evade taxation puts an upper limit on the progressivity of the tax system and the size of the redistributive project. (Perhaps that’s why so many Republicans in office act as if tax evasion were an innocent pastime.)

Footnote A spokesman for the Swiss banking industry denounced the German intelligence service for using “Gestapo tactics.” Of course, back when the Gestapo actually existed, the Swiss banks happily laundered money for the Nazis. The customer is always right.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: