These days, exposing tax evaders is a particularly fashionable thing to do. And in unison, all the media, the government, the trade units and other social groups – and of course your normal citizen, as well – call the offense something extremely despicable.
I often get the impression that at this particular moment in history tax evasion is judged to be the one most evil of crimes.
Those are the moments when I remember Bert Brecht and his Dreigroschenoper. In the last scene, the messenger of the King comes and turns the destiny of the convicted person through the King’s amnesty. After Mackie Messer, absurdly, has been elevated to become nobility, the choir gives the advice to the audience to
“not punish evil too much!”
I think this rule should also be applied for tax evaders. To be sure, they should have to pay the money they gained through fraud back to the state. Including interest of interest. But persons who have otherwise served the community rather well have probably not deserved to be called criminals.
Here are two (simplified) calculations on the tax situation in Germany.
Part one: Enterprises and Shareholder.
In Germany, an enterprise still pays a third part of its profit in taxes (business and income taxes) in case of a payoff. So if the payoff is 40,000 Euros, the enterprise will have to have made a profit of more than 60,000 Euros. The rest of the money remains with the state ≈ 20,000 EUROS.
If the shareholder gets 40,000 Euros, he will again have to pay tax on that money. One fourth. He gets 30,000 €
The rest remains with the state = 10,000 EUROS.f
If the shareholder uses this money to buy a BMW, he has to pay added value tax:
19 %.
The state gets another approximately 1/6 EURO ≈ 5,000 €.
An employee earning “good money” has to pay taxes and social fees to the tune of around half of his income. As I see it, the borderline is very fluctuating. For instance, taxes and old age insurance fees both serve the purpose of guaranteeing that you are provided for in old age.
If the “employee earning good money” spends his well-taxed money, he will again have to pay value added tax (19 % or 7 %).
If he employs someone else, he will again have to pay “income tax” and social security fees.
Part two:
If he makes an investment with the money he has paid taxes for, he will again have to pay tax on capital for what interest he gets. Regardless of the fact that mostly the interest is lower than the (nominal) currency devaluation
Still there is an otherwise perhaps quite reasonable party that wants to increase the tax for “those who earn much” quite significantly. And they want it without a dynamic upper limit following the inflation rate for “normal earners”! Which means that the “normal earners” can easily become “those who earn much” and then will really have to pay a lot.
Does all this really make sense? How easily could you start thinking nasty thoughts…
RMD
(Translated by EG)
P.S.Dear certified accountants, feel free to take a closer look at the numbers I mentioned. Maybe they are not correct. I just wrote them down to the best of my knowledge.
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