Injustices everywhere: tax evaders buy impunity

Anyone who fares evaded on the subway and is caught but doesn't pay must expect to go to prison. On the other hand, those who evade large amounts of taxes can often avoid a penalty. In view of such contradictions, the Finanzwende organization complains about “the systematic unequal treatment of poverty crimes and white-collar crime” by the local judiciary.

With its analysis, the organization wants to urge Federal Finance Minister Lars Klingbeil and Justice Minister Stefanie Hubig (both SPD) to take action. Finanzwende is committed to a fair financial system.

“Equality before the law is not an abstract promise, it must be experienced in everyday law enforcement,” said Finanzwende board member Anne Brorhilker. “Precisely because trust in democratic institutions is already under pressure, the constitutional state must finally fight economic crime with the same rigor as crimes committed by people with fewer financial means.”

Finanzwende also classifies social benefit fraud as a crime of poverty - such as cases in which innocent citizens have received more basic security than the authorities estimate they are entitled to. Then, for example, there is a risk that the already meager benefit to secure one's existence will be cut. Additionally, financial penalties may be imposed.

Wealthy and rich tax evaders, on the other hand, often get away with paying the damage and repaying the evaded amounts. “The possibility of self-disclosure in this form, which exempts from punishment, only exists in the case of tax evasion, but not in the case of fraud according to Section 263 of the Criminal Code,” can be read in the report. “People who commit benefit fraud cannot therefore avoid punishment by paying back the money they wrongly received.”

This contradiction exists even though the harm caused by poor and rich wrongdoers is clearly distributed. “The police crime statistics show a damage amount of 42.6 million euros for social benefit fraud in 2024,” writes Finanzwende, “white-collar crime, on the other hand, caused 2.76 billion euros in damage.”

Brorhilker and her team are already discovering the reasons for the unequal treatment in the laws. For example, there is no “serious tax evasion” offense, which would allow for more severe penalties than today. In addition, there are often “deals” between prosecutors and tax evaders with which the latter buy immunity from prosecution - also enforced by the poor staffing of the institutions.

Finanzwende also describes how differently the administration treats both groups: “The authorities look very closely when approving basic security benefits, while they cannot keep up with the examination of applications from financial institutions and large companies based abroad for capital gains tax refunds.”

Brorhilker sees a need for action above all in the stricter investigation, prosecution and condemnation of the big fish. Among other things, she called for an “interdisciplinary investigative unit at the federal level that specializes in internationally organized money laundering and tax evasion.” Klingbeil and Hubig announced in mid-July that there would soon be such a force at customs. They also spoke of wanting to introduce the crime of “serious tax evasion” and abolish self-disclosure, which exempts from punishment. Sounds good, said Brorhilker, but so far there is “no concrete plan on the way”. Until then, she will remain skeptical.