Greece Warns of Going Broke as Tax Proceeds Dry Up

[alp227]

Source: NYT

As European leaders grapple with how to preserve their monetary union, Greece is rapidly running out of money.

Government coffers could be empty as soon as July, shortly after this month’s pivotal elections. In the worst case, Athens might have to temporarily stop paying for salaries and pensions, along with imports of fuel, food and pharmaceuticals.

Officials, scrambling for solutions, have considered dipping into funds that are supposed to be for Greece’s troubled banks. Some are even suggesting doling out i.o.u.’s.

Greek leaders said that despite their latest bailout of 130 billion euros, or $161.7 billion, they face a shortfall of 1.7 billion euros because tax revenue and other sources of potential income are drying up. A wrenching recession and harsh budget cuts have left businesses and individuals with less and less to give for taxes — and growing incentive to avoid paying what they owe.

Read more: http://www.nytimes.com/2012/06/06/business/global/greece-warns-of-going-broke-as-taxes-dry-up.html?pagewanted=all

[JDPriestly]

2. Of course. This is why austerity without increasing the tax rates of the rich

cannot work.

Austerity for the poor who receive money from the government seems such a logical solution to an economic turndown to the simpleminded. But unless you impose the austerity on the rich and transfer the money of the rich to the poor, austerity will not work. That is because as austerity is imposed, the poor and middle class people have less and less money with which to pay taxes, less and less discretionary income beyond what they need for very basic necessities. So you have to raise your money from the rich, from those who can pay taxes.

[dixiegrrrrl]

28. I think the intention is that it is not supposed to work.

IMF and other vultures are able to force Greece to sell off anything of value, essentially taking over the country, while the citizens are pre-occupied with mere survival.
A trick the IMF has been using for years and years in So. America.

Austerity is simply another word for Shock Doctrine. Create a crisis and use it as an opportunity to loot.
And to make sure the looting goes according to plan, install your own hand picked man as head of state.

Spain is tottering even as we speak, Ireland is already screwed, Britain and France have been downgraded, and Merkel is trying to her damnest to make events turn out in her favor. Dunno who can afford to buy German exports tho..
China, still?

[JDPriestly]

31. Of course, in the US, private entities could buy public assets and then

find that those assets have been reclaimed by the government through eminent domain. I don't know how well that sort of exploitation would work in the US should the public will to circumvent or counteract it be found.

[nanabugg]

35. "Dry up?" When did they start collecting them? nt

[dipsydoodle]

3. Greeks face a choice between difficulty and catastrophe.

see :

9.26am: George Papaconstantinou, former Greek finance minister has warned today that Greeks face a choice between difficulty and catastrophe.

Interviewed by Bloomberg TV this morning, Papaconstantinou argued that it was a serious mistake to think that Greece could exit the euro in an orderly fashion.

Papaconstantinou (who negotiated the original Greek bailout in 2010 and was replaced by Evangelos Venizelos in June 2011), listed five things that need to be achieved to maintain stability in the eurozone: the fiscal pact; a new eurozone growth strategy; a common banking union; eurobonds; and closer political union.

Otherwise, he suggested, the eurozone could fall, arguing that "the whole construct will be jeopardized" if one country is allowed to fall out of the ciurrency union.

http://www.guardian.co.uk/business/2012/jun/06/eurozone-crisis-ecb-interest-rates

[boppers]

4. Stop paying absurd dole.

Start taxing for transport.

Start enforcing taxes.

This is not rocket science.

Ah, to be the unmarried adult daughter of a dead greek government worker... I would *deserve* a portion of his salary.

Legally.

[Flatulo]

5. That's just nuts. nt

[dipsydoodle]

6. Are you saying

that in the US for example a daughter can inherit a state pension ?

[Flatulo]

24. No. A widow can receive his or her deceased spouse's SS payment, if it is the larger

and depending on the city or state, a percentage of the deceased's pension.

Children can only receive a portion of SS disability payments until age 21.

I'm not aware of any localities where children can inherit a parent's state pension when they die.

My post may have been unclear. I was agreeing with Boppers that an adult daughter receiving pension benefits of a deceased parent is excessive. No wonder Greece is in so much trouble.

You need a strong government workforce, but when it is sucking the private sector dry, something has to give.

[Throckmorton]

25. Age 18, and out of high school

or 19.

[Flatulo]

26. I stand corrected. Does the age extend to 24 if enrolled in college?

[Throckmorton]

32. No, it ends regardless of status.

My two children have been receiving survivor benefits since their mother died in 2004. They will end before college starts, that is a reagan era change to the program, and yes I deliberately used lower case for his name.

[happyslug]

34. It does EXTEND for life of the child if the Child is disabled BEFORE age 22.

Prior to 1982, the cut off for non-disabled children was age 22, but was reduced to age 18 (19 if the child is still in high school) under Reagan's "Reform" of Social Security. Congress did NOT change the law as to children (which has existed since the early 1950s) who are disabled, i.e. if disabled before age 22, that child can get "Survivor's" benefits of his parent's social security accounts.

Thus till 1982 the law for both used age 22, but after 1982 Survivor's benefits ends at age 18 (19 if the child is still in high school). Today if a child is disabled before age 22, that child can get Survivor's benefits off the child's parents Social Security.

[dipsydoodle]

27. I misinterpreted what you meant.

[fasttense]

7. The only people who are avoiding taxes in Greece are the super rich.

You know like Onassis. The taxes owed to the government were posted in the NYT and Wall Street Urinal. If you divide what is owed by the number of people who owe it, it comes to about $500,000.00 each. Now tell me what working class or person on the dole rack up that kind of a tax bill?

It would take me 71 years to rack up a tax bill as large as what the average tax cheat racks up in Greece. Do you really think it's the little guy who is causing Greece so many problems?

Since you seem to think that Greece allows for salaries to be paid to dead workers and their offspring, provide some proof. Do you have a reliable link?

Talk is cheap.

[banned from Kos]

11. Not true. Citizens bypass toll roads regulary.

And barter/black market to avoid sales taxes.

It is commonplace.

[hack89]

12. Greece has one of the largest shadow economies in the world

that is economic activity designed to avoid taxes.

[Harmony Blue]

14. That is not factually true

Calling Greece a shadow economy defies all logic and reasoning by the way.

[hack89]

15. You misunderstand what a shadow economy is

is a economic activity that exists "off the books". Not the entire economy - just part of it.

[Harmony Blue]

17. Not only do you not understand what shadow economy is

but the word economy itself. Look it up.

[hack89]

20. The shadow economy makes up 27 percent of Greek GDP

According to a remarkable presentation that a member of Greece’s central bank gave last fall, he gap between what Greek taxpayers owed last year and what they paid was about a third of total tax revenue, roughly the size of the country’s budget deficit. The “shadow economy”—business that’s legal but off the books—is larger in Greece than in almost any other European country, accounting for an estimated 27.5 per cent of its G.D.P. (In the United States, by contrast, that number is closer to nine per cent.) And the culture of evasion has negative consequences beyond the current crisis. It means that the revenue burden falls too heavily on honest taxpayers. It makes the system unduly regressive, since the rich cheat more. And it’s wasteful: it forces the government to spend extra money on collection (relative to G.D.P., Greece spends four times as much collecting income taxes as the U.S. does), even as evaders are devoting plenty of time and energy to hiding their income.

Read more http://www.newyorker.com/talk/financial/2011/07/11/110711ta_talk_surowiecki#ixzz1uPEt42My

[4th law of robotics]

22. Facts confuse these people

I got in to a pretty heated argument on this before.

Essentially pointing out that Greeks aren't so good at paying their taxes (a well known fact the even the Greeks themselves don't deny) is quite offensive to some.

Either the bankers forced them not to pay their taxes or not paying taxes had nothing to do with it or it was only the rich.

Literally they cannot conceive of middle class greeks also getting around paying their taxes. I'm not sure why it's such a reviled concept, but it is one held by many people.

[boppers]

29. Sure.

http://www.thestar.com/business/article/802042--in-greece-you-get-a-bonus-for-showing-up-for-work

"Tens of thousands of unmarried or divorced daughters of civil servants collect their dead parents’ pensions, weighing on a social security system that experts say will collapse in 15 years unless it is overhauled.

About 40,000 women benefit from the allowance at an annual cost of around 550 million euros ($731.5 million Cdn.), according to economic website capital.gr."

There's a lot more in there too, like the bonus pay given to workers if they know how to use a computer, or show up to work on time.

[nineteen50]

8. Austerity economics,

keeping the poor from hoarding their money.

[sinkingfeeling]

9. This is the direction the GOP is taking America.

[nanabugg]

10. Greece gets exactly what it paid for. nt

[Harmony Blue]

13. Austerity doesn't work

not surprised.

[hack89]

16. Neither does unrestrained spending and massive debt. nt

[Harmony Blue]

18. Actually it can work

with a bit creativity.

[hack89]

21. Care to give an example? nt

[4th law of robotics]

23. How?

Where does the money come from?

[boppers]

30. Only if you're willing to devalue your currency.

That's what huge deficit spending leads to.

In greece's case, they're trying to devalue everybody else's EU currency, so they don't have to suffer.

[nineteen50]

19. When there is no demand there are no sales and less profits

and more job loss and less demand and fewer sales and less profit and more job loss and less demand and.........................

[lovuian]

33. Austere measures DON"T WORK it only makes the people

poorer and they can't pay their taxes

[unkachuck]

36. drachma, drachma, drachma....n/t