Taxes, recession and the Shawshank solution

Remember the last scene of “The Shawshank Redemption,” when Andy Dufresne is fixing his boat on the beach in Mexico? I've always loved the resolution of that movie because our innocent hero has triumphed over evil and walked away with enough money to live the rest of his life exactly as he wants.

Remember the last scene of “The Shawshank Redemption,” when Andy Dufresne is fixing his boat on the beach in Mexico? I’ve always loved the resolution of that movie because our innocent hero has triumphed over evil and walked away with enough money to live the rest of his life exactly as he wants.
The rebel in me also delights in the fact that because Andy is officially missing, he has slipped through the bureaucracy and is finally free of the Internal Revenue Service. Goodbye withholding, goodbye taxes, goodbye paperwork.
(Of course, in the book and the movie the last scene takes place in the late 1960s in Mexico — well before credit cards and ATM machines became universal, making it much more difficult to be a cash-based tax renegade.)
Living one’s life off the books and off the government’s radar like Andy Dufresne is admittedly antisocial and criminal, but it sure sounds appealing to this dutiful Form 1040 filer. In fact, according to new research by Deutsche Bank economist Sebastian Kubsch, being a little crooked actually may be a good thing.
In a recent report that was picked up by the Financial Times Monday, Mr. Kubsch found that countries with a fairly large underground economy — such as Greece and Portugal — have coped with the worldwide economic downturn better than nations like Germany, where people are more upfront about their income. Indeed, despite its government’s much-publicized debt woes, Greece’s gross domestic product has only shrunk by 0.7% this year.
Further, Mr. Kubsch found that countries with relatively small shadow economies — such as Austria, the Netherlands and France — also have fared better than Germany, a nation in which citizens don’t engage in too much work off the books, but aren’t fanatical about keeping to the letter of the law either.
Where do you think the U.S. sits on the off-the-books continuum? I have a feeling that, like Germany, we’re somewhere in the middle.
If a plumber or a painter asks to be paid in cash, I sense that most Americans are happy to go to a nearby ATM, get a wad of bills, and not be fanatics about reporting and paying the sales tax that should be remitted. On the other hand, I doubt most of us would go to any great length to pay cash for everything to avoid sales taxes, or risk getting involved in any complex tax-avoidance scheme.
Recalling the time-consuming and idiotically complex paperwork I had to complete when my children were little and my wife and I legally hired a full-time housekeeper, let me tell you that it’s tempting and easy to slip into the underground economy.
In today’s tough times, it’s likely that some of the unemployed and underemployed are latching onto odd jobs that are off the books. Officially, like Claude Rains’ character Captain Louis Renault in “Casablanca,” I am appalled by such illegality. Unofficially, as long as the work doesn’t involve truly evil or criminal activity, I’m OK making myself not know about it.
Don’t tell anybody I said so, but Go, Andy!