OldVet on German Tax Cheats

This post is by OldVet…

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Germany to rich tax cheats: We’ve found you.

After reading this International Herald Tribune article today, I thought: “Wouldn’t it be fun to have a real Law-and-Order President?”

After an opening phase that bore all the hallmarks of a thriller novel, with payoffs to a mysterious informant who gave German spies a computer disc with incriminating banking data, a tax evasion investigation went nationwide over the weekend. Prosecutors are now nearly certain that they can obtain convictions of hundreds of wealthy tax cheats and blow the lid off of Liechtenstein’s role in the scams.

The bombshell over the massive tax evasion investigation has outraged Germans and has amplified skepticism about business-friendly economic reforms advocated by Chancellor Angela Merkel.

Indeed, evidence that Germany’s moneyed big shots hid their cash in Liechtenstein is giving rise to a new narrative in German politics: the betrayal of the elites, who have spent much of the past decade calling for painful reform of the welfare state, even as they avoided paying their fair share.

“The political implications of this are going to be great,” said John Kornblum, a former American ambassador to Germany who is a banker here. “In the U.S., we send people off to prison and say, ‘good riddance,’ but it doesn’t actually shake people’s belief in the system. Here, it does.”

I beg to differ from the former American ambassador quoted above. The American public’s belief is already shaken.

After years of fostering a culture of pathetic cowardice among top management at the IRS, we could do with some vigorous public enforcement of our tax system, especially among the high rollers who call the shots in America. That is irrespective of what tax rates we collectively decide upon, or how simple or complex we make our tax system.

A good step in the right direction would be a three-year ban on IRS executives, attorneys, and managers from engaging in private tax defense work for law firms, accounting firms, and corporations. That would reduce the “cashing in” on special relationships and the incentive to slant tax regulations and decisions while still on the public payroll.

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This post was by OldVet.