The rich keep getting richer
Paradise Papers reveals the way the wealthy use tax shelters all over the world.
December 5, 2017
In addition to sunny beaches, crystal-clear ocean water and unique cuisine, paradise islands can now add “tax evasion” to their repertoire of amenities for the rich.
The Panama Papers and recently released Paradise Papers are collections of millions of files examined by over 100 media outlets around the world. Their efforts revealed hundreds of individuals and organizations involved with offshore tax havens. These complicated networks of businesses set up offshore accounts designed to avoid taxes.
From Russian billionaires such as Yuri Milner to the United Kingdom’s Queen Elizabeth II, business people and global monarchs all have one thing in common: loads of wealth. Most of the individuals linked to the Paradise Papers are at the top of the top: the 0.001 percent. With big companies like Nike and universities such as Stanford also avoiding taxes and saving billions of dollars in the process, it becomes increasingly obvious that offshore accounts are primarily being used to further grow already large bank accounts.
It is very difficult to determine the legality of these tax havens due to the complex and muddled nature of international financial laws. This makes it painfully easy for participants to claim no wrongdoing, even though activity in the papers suggests otherwise. The havens, combined with tax cuts for the wealthy, result in the middle class paying more taxes than those at the top of the economic ladder.
Funds that could be going to healthcare, infrastructure and public services are instead heading right back into the accounts of the wealthy. Boston Consulting Group estimates $10 trillion is being held in these offshore financial centres, yet there is little public outcry.
Yes, there are efforts being made against tax havens: blacklisting, changing rules and following up on names listed in the papers. However, the response is not nearly as staggering as the response to the Panama Papers from a year ago. There was massive outrage on social media, a successful petition to eject Iceland’s prime minister and the restriction of internet coverage of the Panama Papers in China.
Reforms need to be enacted to prevent gaming the system. However, there is reason for the White House to be reluctant to fully address the issue, due to the hypocrisy of its members. Donald Trump’s Commerce Secretary Wilbur Ross has a large stake in a shipping firm, Navigator, that receives millions of dollars every year from Sibur, a Moscow-based gas and petrochemicals company. Key owners of the company include Russian President Vladimir Putin’s son-in-law and a Russian tycoon sanctioned by the U.S. Treasury Department. Gary Cohn, director of President Donald Trump’s National Economic Council, is mentioned many times in the papers as well.
Those with less money available for paying taxes end up paying more and more due to efforts by the rich to pay less and less. Instead of allowing the elite to continue avoiding taxes and utilizing tax loopholes, people need to pressure the government to crack down on these issues while they’re out in the open.
