Historian examines trends in tax morality
The Pandora Papers cast a dubious light on a great many of the super-rich, politicians and heads of state and government. They reveal shady business dealings, non-transparent ownership structures and suspicious financial transactions. Experts speak of money laundering and tax evasion. The debate about tax morality is – once again – gaining momentum. The real extent of the issue has, however, always been difficult to determine. “As far back as around the end of the 19th Century, economists developed methods to record the scale of tax evasion. But the high number of unreported cases makes this difficult to measure. The German Federal Ministry of Finance estimates that between 2003 and 2012, 470 to 790 million euros per year were evaded in tax, while the Federal Audit Office puts the figure at tens of billions of euros,” says Professor Korinna Sch?nh?rl from Paderborn University. The researcher recently took up a Heisenberg professorship in the field of Modern and Contemporary History in Paderborn. The German Research Foundation (DFG) programme is aimed at highly qualified researchers and leads on to a regular university professorship.
Why are tax evaders in some countries more ashamed than in other countries?
In her project “International Cultural History of Tax Morality”, Sch?nh?rl examines historical trends in the norms and values of tax-paying between 1940 and 1980, with the focus on three countries with different types of tax system in terms of tax structure, tax burden and tax system characteristics: the Federal Republic of Germany, as was, Spain and the USA. The aim is a comparative, transnational analysis of the origin of and changes in different moral systems. “Why is it that today more taxpayers in Germany than in Spain believe that there is no justification for tax evasion, whereas 20 years ago, it was the complete opposite? What historical trends influence changes in tax-paying norms?” asks Sch?nh?rl.
Tax morality as the result of negotiation processes
For Sch?nh?rl, norms are the results of negotiation processes in society in which different stakeholders voice their opinion: politicians, journalists, but also representatives of the church and academics. Sch?nh?rl therefore explores the questions of who has spoken out on (honest) tax compliance in the past, and how, what interests these people were pursuing and which voices were able to make themselves heard. “Those against tightening laws and sanctions or closing tax loopholes often call instead for better communication between tax authorities and taxpayers or for a reduction in penalties for voluntary declarations – measures that do not hurt their clients or electorate,” says Sch?nh?rl, reporting on her findings to date. While such patterns can be found in many countries, there are major differences in other areas. Sch?nh?rl explains: “The US tax authorities have regularly explained in the press, at the cinema, online and in schools since the 1940s, and the Spanish tax authorities since the 1960s, why paying taxes is important and right and what tax money is spent on – approaches that are virtually unheard of in Germany.” According to the researcher, this reveals different perceptions of civil rights and duties, and it is interesting to find out what the different countries have copied from each other in this respect.
Big fish and small fry
“In scandals like that surrounding the Pandora Papers, which stir up widespread public outrage, societies find that they agree on the norms and values of tax-paying. What is prohibited and what is legal – and should it stay that way?” says Sch?nh?rl. It’s also always a question of what is legitimate and what not: “When large corporations move their huge profits to tax havens using letter-box companies (which, incidentally, have existed since the 1930s), this legal behaviour triggers far more outrage than when the snack stall on the corner breaks the law by not giving a receipt or the neighbourhood cleaning lady is paid cash in hand. In the context of what we class as major and minor tax scandals, we discuss what we should be ashamed of in our society. This often results in surprising dynamics. Our tax morality today is therefore a result of past discussions about paying taxes honestly. However, Pandora shows that many of the powerful and super-rich do not feel bound by these norms, and sometimes not even by the letter of the law. My research aims to help us better understand why we find certain tax-paying practices acceptable and others not – and thereby come to an agreement on how we want to fund the services that are important to us as a society. And also on how we wish to deal with tax evaders,” emphasises Sch?nh?rl.
Nina Reckendorf, Stabsstelle Presse, Kommunikation und Marketing
