When you hear an entire country has been faking its budget numbers for decades, then you know once you get into the weeds the details will be ugly. 

The Greek finance ministry just issued a disturbing new report which shows that Greece is finding rampant tax evasion and corruption, including bribery, in its own tax collection offices -- all disturbing, given U.S. tax money may be at risk in the bailout of Europe.

The IMF is funding about a third of the $952 billion Eurozone bailout. Estimates have it that the US funds about 17%, or $54 billion of the IMF collateral cushion for its lending, but it's still unclear whether any US money will end up in this bailout.

The fear is that the US taxpayer effectively will be subsidizing tax evasion and corruption in Europe. 

Greece's Finance Ministry is investigating 70 government officials who make about $62,000 on average a year, but own anywhere from $982,000 to $3.7 million in real estate. Another 234 tax workers never filed taxes for 2007 to 2008, the finance ministry says. And Greece is also investigating 50 complaints brought against tax workers in 41 government offices (31 tax offices, 10 customs agencies) across the country, alleging bribery, forgery, smuggling, negligence and corruption.

One out of seven people in Greece paid a bribe, and a quarter of all taxes owed in Greece aren't paid, versus an average 7% here in the U.S. and 12% in France, the Brookings Institution says. In fact, the Brookings Institution says bribery, patronage and other public corruption are major contributors to the country's ballooning debt.

If Greece could clamp down on tax evasion, which costs the country an estimated $27 billion annually, it could pay off a big slug of its budget deficit.

Underground economies of Spain, Portugal and Italy are estimated at around a fifth of GDP.

Greece placed last in a ranking of the 16-nation Eurozone by the World Bank on how well countries combat corruption, and dead last in the 27-nation European Union, tied with Bulgaria and Romania, on Transparency International's survey of government corruption.

Nearly one out of seven households in Greece paid a bribe, Transparency International says, an average $1,660, Transparency says.

Interesting point: Underground economies may not thrive in democracies, as Prof. Schneider has said in news reports, as countries like Spain, Portugal and Greece have had continuous democracies only since the 1970s, meaning people aren't used to governments representing the public interest.

"In most of these countries, what matters is your family. There is less of a sense of duty towards the state," Alberto Alesina, a professor of political economy at Harvard University, has been quoted as saying.

But Greece protests continue, as “Greece declares a unilateral withdrawal from reality,” one Wall Street research report notes. Fox News analyst Mark Bentley, a respected, smart researcher, pulled together stats on the size of various countries' underground economies not hit with taxes, worth taking note of as the Euro bailout (Le Tarp) moves forward. The Senate's financial reform bill would only require the US executive director of the IMF to "oppose having the IMF provide" any loans to countries who are unlikely to be able to repay because their national debt exceeds their GDP.

Which should mean about half of the countries in the Eurozone -- and just "opposing" is not an IMF night stick here, but a wet macaroni noodle:


Underground Economies:

Greece 25.1% of GDP, or $84.8 billion

Ireland 12.7%, $25 billion

Italy 22.3%, $416.3 billion 

Portugal 19.2%, $46.1 billion

Spain 19.3%, $271.4 billion

US, 7.2%, $1.1 trillion


Sources: Friedrich Schneider of Johannes Kepler University, Linz, Austria; CIA World Factbook