Evading Tax Evasion

Tax evasion is usually confronted with audits and harsh sanctions. But, as the rising tide of tax evasion suggests – the “black” economy has, by some estimates, reached 10% of GDP in advanced countries and can top 70% in developing countries – it is time to try new approaches.

ALESSANDRIA, ITALY – Tax evasion is a global scourge. The “black” economy has, by some estimates, reached 10% of GDP in advanced countries and can top 70% in developing countries. And it is getting worse.

Tax evasion is usually confronted in two ways: audits and harsh sanctions. But, as the rising tide of tax evasion suggests, these mechanisms amount only to a cat game of and mouse problem – and the mice, it seems, are winning.

As tax evasion becomes more pervasive, whole networks to help hide incomes have appeared, making it far less likely that those who break the law are punished. Moreover, because more people are evading taxes, tax administrations are under increasing pressure to become more lenient or to accept bribes.

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