The Greek swimming-pool story is legend by now.
In the wealthy suburbs north of Athens, 324 residents checked a box on their tax returns acknowledging they had swimming pools, which triggered a special tax on them.
Tax investigators, meanwhile, facing an edict to raise more revenue, studied satellite photos of the area and found more than 17,000 unreported, untaxed pools.
Greece is afflicted with a culture of tax evasion. Combined with a bloated bureaucracy and pension system, the country teeters on the brink of disaster.
While there is a lively debate about the parallels between the U.S. and Greek economies and deficits, there’s little doubt that when people think a tax system is unfair, they are increasingly unwilling to shoulder their share of the tax burden.
A recent article in Business Week magazine revealed how some U.S. companies are using a tax dodge that drawfs the swimming pool scandal.
The purchase of a $99 bottle of the antidepressant Lexapro in the U.S., according to the magazine, kicks off a “9,400-mile odyssey of international corporate tax avoidance. Each stop along the way — an industrial park in Dublin, a skyscraper in Amsterdam, a palm-shaded law office in Bermuda — helps the medicine’s maker, Forest Laboratories, cut its income tax bill.”
Thousands of companies, use “transfer pricing” to convert sales in the U.S. to profits in completely different countries and avoid U.S. taxes
According to one study, the practice costs the U.S. treasury $60 billion per year.
So, not only do we pay the highest drug prices in the world, but drug makers like Forest Laboratories, Eli Lilly and Pfizer move the profits offshore to avoid paying their share of taxes.
Since the Tea Party movement has correctly focused attention on high taxes and wasteful spending, perhaps it can now muster some anger over our culture of corporate tax avoidance.