Sunday, February 28, 2010 0 comments ++[ CLICK TO COMMENT ]++

Sunday Spectacle XXXXIX

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The solution to the Greek fiscal problems are obvious to me. However, execution is very difficult. As far as I'm concerned, the problem is that Greek citizens don't pay their taxes. Stories of surgeons making 700k Euros per year and paying almost nothing sort of hints at the reality (here is a Time story that touches on the issue.) Countries with similar tax collection problems early in the decade, like most ex-Soviet republics, as well as Russia, overcame the problem by implementing a flat tax. However, a flat tax is a regressive system and will cause a greater discrepancy in wealth between the have and the have-nots (this is a mounting problem in Russia right now and the consequences will likely be felt in a few decades when the poor demographic trend comes into play.) A flat tax will also probably cause tax revenue to decline in Greece (in Russia and others tax revenue went up because almost no one was paying taxes after the collaspe of USSR whereas the problem in Greece appears to be partial tax-dodging.)

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