Greece's Tax-Evading Professionals

Greece would be much better off if the government could collect the taxes owed by the self-employed. That's the lesson from a paper released this month that uses an innovative method of capturing tax evasion.

Estimating shadow economies is tough. Friedrich Schneider of the Johannes Kepler University of Linz in Austria, Europe's leading authority on the subject, has pointed out that none of the accepted methods is completely reliable. For example, comparing expenditure and income statistics isn't ideal because the results are distorted by omissions and errors in national accounts; and using indicators such as electricity consumption doesn't take into account shadow sector activities that don't require much energy. Still, Schneider measures Europe's shadow economies annually. Here are the 2014 estimates from a paper he published this year with two collaborators: