On April 17, U.S. taxpayers will grudgingly send off their checks to the dreaded Internal Revenue Service. Whatever your political persuasion, it's hard to think of a ritual more despised than the annual filling of the government's coffers. And it's not just in the United States where people complain. While the level of taxation is a topic of major political debate in nearly every country, the level of taxes that go unpaid gets far less attention.
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The World Bank estimates the size of the global "shadow economy" -- money intentionally hidden from view for the purposes of avoiding tax, including out and out tax fraud -- amounts to more than 18 percent of global gross domestic product (GDP). A report by the British NGO Tax Justice Network (TJN) calculated that this amounts to more than $3 trillion in lost tax revenue per year. "It's a crime against the people," argues Richard Murphy, the accountant and economist who prepared the report, noting that tax evasion by wealthy individuals and corporations often shifts the burden of paying for public services or debt repayments to the poorest members of society.
Here's a look at some of the most striking examples of tax evasion around the world. Unless otherwise indicated, all statistics are from TJN's 2011 report, "The Cost of Tax Abuse":
UNITED STATES
Size of shadow economy: 8.6 percent of GDP
Estimated money annually lost to tax evasion: $337,349,000,000
Though the size of its shadow economy is small by global standards (by way of comparison, rising power Brazil's is a whopping 39 percent of GDP) in absolute terms the world's largest economy is also the world's biggest loser to tax evasion. At over $300 billion, the lost tax revenue from the U.S. shadow economy exceeds the total funding allocated for Medicaid in 2010. According to Murphy, lax regulation of corporations is the main culprit in the United States.
"How the U.S. regulates corporations is a massive problem. You [the United States] are creating so many corporations, you have no idea who owns them so you have no idea who should be taxed on them," he says. "They come and go [from the country] for almost no expense. That is probably the biggest single opportunity for tax evasion in your economy but a blind eye is turned to it."
The revelation that presidential candidate Mitt Romney has as much as $8 million invested in funds based in the Cayman Islands -- a popular tax haven -- has generated some publicity for the issue of offshore financial shelters, which are legal under U.S. law but often used to facilitate illegal tax evasion.
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