Tax Havens: This last weekend’s release of the “Pandora Papers” has shed some light on the tax dodging methods used by the ultra-wealthy to conceal their assets. Here’s what both sides are saying. To have stories like this and more delivered directly to your inbox, be sure to sign up for our newsletter.
Top Story: Tax Havens
This past Sunday, the International Consortium of Investigative Journalists published what are referred to as the “Pandora Papers.” The report names “wealthy individuals around the globe [who] have used offshore tax havens to conceal their financial activities, creating shell companies, foundations, and trusts to purchase real estate and other luxury goods, and in many cases, avoid paying taxes,” Jennifer Calfas reports for the Wall Street Journal. As the Associated Press notes, “The tax dodges can be legal.” With that said, “Using offshore shelters is especially controversial for political figures because they can be used to keep politically unpopular or even illicit activities from public view,” according to the report. Here’s the reaction from both sides.
On The Right
Right-leaning commentators are mixed. Some point out that if wealthy residents actually paid domestic taxes, extra money could be raised to build schools and pave roads. Others point out how most of what’s outlined in the document is in fact legal — unlike the illegal act of journalists obtaining stolen documents.
“The global elite is egregiously rich and corrupt — and you’re paying for it” Carlos Roa, Spectator World: “A gentle reminder: there is nothing inherently illegal about shell companies, offshore trusts, and other structures… [But] even if only a fraction of that were to be taxed at, say, 15 percent, that would still amount to somewhere between $1.27 and $1.57 trillion that doesn’t end up in public treasuries. How many roads could be paved with that money? How many schools or healthcare programs could be funded? How many houses could be built? The answer to all of these is simply ‘a lot’ — and that should matter. … Populist movements all around the world have surged in the past few years. More and more people sense that the transnational elite class is out for itself, that the game is rigged and that opportunities for the average individual to advance are rapidly dwindling. The Pandora Papers seem to prove them right.”
“Pandora Papers Value Headlines over Fair Treatment” Elliott Abrams, National Review: “In some cases, this is important work. For example, when a leader of a corrupt dictatorial regime loots his country’s central bank and seeks to hide the money overseas, investigative journalism has an ideal target. … But that wasn’t juicy enough for these journalists. They went after former British prime minister Tony Blair, despite the fact that neither they nor anyone else has ever found a scintilla of evidence that his own wealth was not lawfully earned after leaving office. … It does seem worth mentioning that the leak of all these documents must be illegal; in what jurisdictions may financial and legal advisers send private papers to journalists? These proud journalists are trading in stolen property, and no doubt justify this to themselves by noting that the theft was from rich people and public figures. That’s an interesting moral code. … What these investigative journalists have done is to grab publicity for themselves at the cost of muddying what is corruption and what is not.”
“Offshore Finance for Beginners” Holman W. Jenkins, Jr., Wall Street Journal Opinion: “Your data is not safe whether in the hands of government agencies or private institutions. … [Take the] recent campaign by ProPublica, another nonprofit reporting outfit, to publicize apparently stolen IRS data on thousands of US taxpayers. … ProPublica at least acknowledges its stolen data might have come from a hostile foreign intelligence service.” The International Consortium of Investigative Journalists (ICIJ), which published the Pandora Papers, “ignores such questions. And yet obtaining a large volume of confidential information obviously takes skill and effort and entails personal risk. It’s a crime, after all … [Journalists] don’t work for their sources. They might even decide a more interesting story than the mostly mundane and legal transactions in the Pandora documents is the story of who stole the documents and why, though I suspect ICIJ required that its news-outlet allies refrain from pursuing such questions.”
On The Left
Left-leaning commentators point out that these matters continue to persist since the first major leak eight years ago. Ultimately, they believe the elite play by a different set of rules, and the rich will always find a way to shield assets.
“Pandora Papers Show the Rich Will Find a Way” David Fickling, Bloomberg Opinion: “For all the remarkable revelations about the shadow global financial system for wealthy individuals and businesses since the ICIJ’s first revelations in 2013 it’s striking how little has changed. … Why have all these worthy efforts achieved so little? … One explanation … is simply that the people in charge of writing the laws and treaties that underpin international capital flows have much to gain from the current set-up. … In the US there’s a revolving door between senior roles in major legal and accounting firms and government jobs … There’s a deeper issue, however. Those tax laws and treaties are, by their nature, long and complex. … Any attempts to restrain them are like a game of Whac-A-Mole. … While capital can move across borders without restraint, a small portion of that money will always be available to those who want to keep their wealth out of the hands of legal or tax authorities.”
“Pandora Papers put South Dakota in unsavory company. Here’s why.” Suzanne Garment, NBC: “But the reasons this state is now alleged to be a haven for (sometimes) nefarious global cash are fairly straightforward. For starters, South Dakota is a classic low-tax state. It has no income tax, no inheritance tax, no capital gains tax. The fees paid by trusts accrue to the state’s treasury. So as far as South Dakota is concerned, the more trusts the better. … It is much too late to reverse South Dakota’s tax haven policies, because other states have imitated its model. We would also have to undo the laws of Alaska, Delaware, Nevada, and all the other states that have followed South Dakota’s approach to trusts. People who want to change the impact of South Dakota’s trust system will have to adjust their expectations. It’s going to be a long haul.”
“Pandora papers prove that the rich live by different rules” Robert Palmer, The Guardian: “The Guardian’s Pandora papers exposé … will probably add to voters’ already simmering resentment at the ability of the rich and powerful to live by a different set of rules from the rest of us. In truth, lots has been done in recent years to clamp down on these activities. However, it is well past time that politicians acted decisively to end these tax loopholes. … The [UK] prime minister could instruct his officials to go after the lawyers, accountants, and others who enable these schemes. He could properly fund HM Revenue and Customs to chase the tax dodgers. It is in his power to act.”
Flag This: Tax Havens
According toPew Research Center polling from April, “Majorities of Americans say they are bothered a lot by the feeling that some corporations and wealthy people don’t pay their fair share in taxes (59% each),” Amina Dunn and Ted Van Green report. “Democrats and Democratic-leaning independents are far more likely than Republicans and GOP leaners to say they are bothered ‘a lot’ by the feeling that some corporations don’t pay their fair share in taxes (76% vs. 38%).” There is pushback from others like Jerry Haar, a professor of international business at Florida International University, who states, “American business pays 93 percent of the nation’s taxes, and the top 1 percent pay over one-third of income taxes.”
Flag Poll: Tax Havens
What do you think? Do wealthy Americans and businesses pay their fair share of taxes? Comment below to share your thoughts.