By: Nate Sikora – Staff Writer
A leak of over 13 million documents, collectively coined the Paradise Papers, were released last week that provide a clearer sense of how the wealthiest elite of the world store and hide their profits from taxation. The heap of files were given from an unknown source to major news outlets that spent almost a year secretly researching and analyzing the millions of documents before publishing collective stories on Nov. 5th.
The origin of the leak comes from a Bermuda-based law firm Appleby, an offshore “legal services provider”–one of the hundreds of other tax havens nestled within untaxed jurisdictions around the world. The files contain official bank documents, memos, reports, and other communication records that reveal the numerous amount of people and businesses that possess offshore bank accounts and investment in the tens of billions of dollars with the sole purpose of tax evasion.
Notable figures tied to the leak include Jared Kushner, U.S. Treasury Secretary Wilbur Ross, U.S. Secretary of State Rex Tillerson, the Koch Brothers, Queen Elizabeth, among dozens of others both in business and government. Additionally, top companies including Apple and Nike were also revealed to have stashes of investments offshore in what are called “shell” companies designed to make assets intangible to taxation. In spite of the notable people and corporations that have holdings overseas, the larger and more abstract issue at hand with these revelations is our societal beliefs of fairness and ethics–both as a nation and as a globalized world.
There are three main conclusions from the Paradise Papers:
Degree Of Inequality
The leaks confirm without question the stark inequality that exists in our society today. But what is more fascinating is that the degree of inequality is more grotesque than previously thought. With the amount of capital tallying in the tens of billions, these tax evaders are consciously aware that their offshore wealth, a portion of which would normally be taxed to provide for critical services for their country and communities, could easily aid in resolving the literal life and death issues facing the nation.
Taxes pay for schools, hospitals, infrastructure, police, firefighters, libraries, and colleges, and could now be used to fight things like the opioid epidemic. These wealthy billionaires are actively avoiding having to pay for these public services that represent the foundation of a civilized society, yet expect to reap all the benefits the society provides. Sorry, but you cannot have it both ways.
If the wealthy expect to reap insane profits from an economy, they should expect to pay their fair share of the cost to keep the economy running. This means that they should, and be prohibited from avoiding, fully paying taxes just like every other American citizen. No citizen or entity is above the law, regardless of economic status.
Paradoxical Formulation And Application Of The Law Towards The Wealthy
Under current tax laws in many countries, the sleazy maneuvers of these wealthy few are often completely legal with most of the help coming from utilizing exploitive tax loopholes existent in the tax code.
How do they find these loopholes? All one needs is a ton of cash on hand to pay top tax lawyers to find them, and that is exactly what these financiers do.
With that being said, normal hardworking Americans have neither the time nor money to pay for tax preparers to find loopholes of this magnitude let alone the actual net worth.
Consequently, current tax law allows the wealthiest of our society to cop-out of the system because their financial status gives them the opportunity to do so. Everyone else, on the other hand, has to pay in full.
This violates the most basic criterion for a law’s legitimacy: equal application. Additionally, from a moral standpoint, if someone making $35,000 a year, for example, attempts to evade their taxes, they’ll end up behind bars with no questions asked.
If, however, you’re a multibillionaire and attempt the same act, you get placed in the president’s cabinet. This blatant contrast should not need an explanation. From a basic moral, logical, and legal standpoint, these types of financial schemes should be made illegal.
Managing Social Programs
The immense amount of untaxed cash overturns any argument that the U.S. cannot afford the cost of social programs today. For example, Gabrial Zucman, and economist and professor at U.C. Bekley, estimates that the U.S. misses out on roughly $70 billion in tax revenue each year due to offshore tax havens–and this is just based on the financial information we know as of now. With the full estimate of over $21 trillion of wealth hidden offshore, odds are that fairly taxing the elite could bring in hundreds of billions in tax revenue a year.
The currently usurped tax revenue of $70 billion could pay the estimated cost for Senator Sander’s College for All act, making a huge step toward ending childhood poverty and creating a better skilled workforce. Or use this revenue to end homelessness in the United States altogether, which is estimated to take $22.5 billion by providing all needy families with rental assistance. Even further, if the U.S. acts fairly and forces those doing business in the U.S. to pay their taxes just like everyone else, the revenue generated could begin to address the national deficit and debt crisis.
The release of the Paradise Papers comes at an ironic time as the GOP in Congress works to slash taxes for the same wealthy folks who have these offshore accounts. Both tax bills currently in Congress embody the same draconian ideology that incentivized these tax havens to come to fruition in the first place. Here is the bottom line: tax avoidance and exemption by the top .01 percent means that the middle class absorbs the majority of the tax burden. Kicking back billions to the wealthiest Americans starves the government of tax revenue, inflates the deficit, and shifts the tax burden onto the middle and lower classes. When Republicans say tax “relief,” they are talking about themselves. You, however, are fronting their bill. This finalizes what normally occurs in Washington: the wealthy politicians and businessmen flourish while everyone else suffers.
In all, the Paradise Papers shine another spotlight on how the rich and powerful rig the system to benefit themselves at the expense of hardworking Americans, another example of what is becoming a normality of the Trump administration and our current political affairs.
Photo Taken from time.com