Then there’s Greece, where economists have struggled to even calculate a VCR. According to the International Monetary Fund, more than half of Greek households pay zero income tax. Indeed, tax evasion is practically a national sport. Take the swimming-pool trick. After the 2008 recession, the government placed a luxury tax on private pools. When only 324 residents in the ritzy suburbs of Athens admitted to having one, tax collectors knew they were being swindled—but didn’t know how badly until Google Earth photos revealed the real pool count: 16,974. It’s now common to conceal chlorinated assets with floating tiles, army nets, and pool interiors painted to mimic grass.
What separates Americans from Greeks or Italians? It’s not income-tax withholding, which the U.S. pioneered but Europe has since copied. Higher tax rates may be one factor. Illegal shadow economies, in which goods are sold off the books for cash, are