An article in The Guardian has touched on the barely audible outrage over the release of the Paradise Papers.
The street-level response to the Paradise Papers, the mighty follow-up punch to last year’s Panama Papers, has been curiously tepid. This is probably not what many activists, and the 100 media organizations involved in the leak, expected to happen.
In striking contrast to the bombshell release of the Panama Papers in mid-2016 that immediately triggered a 10,000-person-strong protest in Iceland leading to the resignation of Prime Minister Sigmundur Davíð Gunnlaugsson, the Paradise Papers have thus far made many headlines but no uprisings.
The world was different – arguably better – 18 months ago when commentators widely believed, as Rana Foroohar put it at the time in Time magazine: “the Panama Papers could lead to capitalism’s greatest crisis.”
Many activists justifiably, and optimistically, anticipated that the largest leak in human history would provide the evidence necessary to spark an ongoing series of protests worldwide that would yield concrete, lasting change.
It should be unsurprising that apathy seems to be the main reaction from the public; the rich have been exploiting the tax advantages afforded by offshore trusts, foundations, and corporations for a long time.
The term “tax haven” is simply a pejorative that is used to label offshore jurisdictions that have very low tax rates and legal provisions that allow for the minimization of taxes paid by both individuals and corporations.
In the same way that affluent individuals can afford better cars, homes, clothes, and schools than those in the middle class, they also can afford the resources and expertise to arrange their financial affairs in such a way as to pay little or no tax.
It’s interesting that most of the rage of the over the “tax cheats” comes from the left.
While it’s obvious that those who espouse left-wing ideologies would be vehemently opposed to the loopholes that the rich avail themselves of to greatly reduce their tax burden, it’s inconsistent with their pro-immigration and pro-free trade views, as well as their alliance with the neoliberals.
If leftists and neoliberals are zealous believers in immigration and free trade, they should also hold favorable views of tax havens.
One of supposedly positive characteristics of free trade is that increased competition from foreign goods helps to drive down the price of goods, which is beneficial to the middle class and poor.
One of the supposedly positive characteristics of immigration, and relatively porous borders, is that labour can go to where it is needed the most. The availability of cheap labour is, undoubtedly, one of the prominent aspects of neoliberal ideology. The contention is that cheap labour helps to make the economy more efficient and aid industries that suffer from labour shortages.
But if competition in goods and labour is deemed to be a net positive, why can’t there also be competition in tax policies?
After all, free trade necessitates the free movement of capital (which is a scare resource), which means that ultimately it will flow to where it can be best utilized for investment purposes, unencumbered by draconian tax laws.
The government regulation of industry is a similar concept. Regulations vary from country to country. It’s no secret that firms would prefer to operate in countries that have lax regulations. The less money they have to allocate for compliance with labour, environmental, financial reporting, and other regulations, the better.
But nobody is calling for industry regulations to be harmonized under some mega, global regulatory framework. Why then should tax regimes, which vary across the world, be treated the same way?
The line between what is considered tax evasion and what is considered legal tax avoidance is blurry. We can spend years bickering about the nuances of tax legislation and not agree on what is fair and proper.
Another major reason the Paradise Papers have elicited such a tepid response from the public is that issues related to the tax code are not one of the main areas of concern for the average individual.
The preeminent concern for people today is culture, and more importantly, identity politics.
The author in the Guardian piece writes:
We now know without a doubt – thanks to the incontrovertible evidence provided by the Panama and Paradise Papers – that there is a global plutocracy who employ the same handful of companies to hide their money and share more in common with each other than with the citizens of their countries. This sets the stage for a global social movement.
What matters in the multicultural West is culture and identity, not taxes, not regulations, not tariffs, not the intricacies of some obscure legislation that few people care for or comprehend.
People are increasingly segregating themselves along racial, ethnic, and religious lines (simply think about how these divisions are coming to fruition under the Trump presidency), which decreases social cohesion and trust. In extreme situations, civil war or secession can result.
We can’t even begin to discuss how to devise the optimal tax code if animosity along these lines stands in the way – there must be solidarity among the people to enact any major change.
The plutocracy is well aware of this, hence their enthusiasm for free trade and open borders. They know that diversity is weakness: if the people are self-segregating and clashing over identity, how can they unite to fight them?