Paradise papers highlight economic injustice
Tax fairness and economic inequality in the spotlight in Canada
The Toronto Star, the CBC, and other media organizations across the world have shone a bright light on tax fairness with the release of the so-called Paradise Papers on Sunday. Millions of leaked documents were acquired by the U.S.-based International Consortium of Investigative Journalists.
Following upon last year’s release of the Panama Papers, the new documents show that the world’s richest individuals and corporations are using legal and possibly illegal methods to avert paying their fair share of taxes. The federal government’s current tax proposals do not address these patently unfair strategies.
Several key federal Liberals are again on the Front pages with their involvement in these tax schemes. Major fundraiser Peter Bronfman and former Senator Leo Kolber are two of the key players. And, although there isn’t any clear evidence that their actions were illegal, they clearly don’t pass the fairness sniff test. As Linda McQuaig has written Kolber was at the heart of a 1992 scheme to transfer a $2 Billion Canadian family trust out of Canada without the payment of $700 Million in taxes. It was suspected at the time that that the money belonged to the Bronfman family.
McQuaig also reports that Kolber convinced then Prime Minister Chretien to appoint him to the chair of the Senate Finance Committee. The Committee recommended changes to capital gains taxation which were included in a subsequent budget. These amendments to the tax code reduced taxes of the top 1% by nearly $8 Billion from 2000 to 2010.
Canadians tend to be more deferential to elites than those in other countries. Perhaps it’s our relatively small population but it appears that Canada’s rich have little shame about their blatant tax avoidance strategies. Canada is also one of the few wealthy countries which doesn’t measure the “tax gap” – a measure of the difference between the taxes due and the amount collected.
Precarious work and precarious pensions
In the meantime, support to reduce economic unfairness is coming from unusual quarters. The Sears bankruptcy and the loss of the workers’ pensions continues to be a hot button issue. Arch conservative, Financial Post comment editor Terrence Corcoran asserts that Pensioners are not lenders. He notes that pensioners should be first in line to be paid when a company goes bankrupt. Astutely he notes, “Lenders and other corporate service providers are sophisticated operators who can make decisions and choices about whether to do business with a company. Corporate finances can or should be structured to accommodate pension liabilities. Employees with pension plans are in no position to make such choices.”
William Robson, President of the right-of-centre CD Howe Institute also decries the Sears “disaster” claiming we must fund pensions properly. He asserts, “Employers who make pension promises – public or private sector – should fund them. Not just on the basis of convenient assumptions, but on the ability to pay out even when things go wrong. If they won’t do it on their own, regulators and voters should force the issue.”
Finally, while some have been perplexed that inflation in Canada and other countries remains stubbornly low, Left-of-centre economist Andrew Jackson asserts that the large numbers of precariously employed workers mean that the lion’s share of the benefits of economic growth go to the rich. Giving money to workers means it is spent quickly and locally. But giving it to the rich means it is too often stashed in tax havens. As John Maynard Keynes noted our economy is made by human law not natural law. Just as we used public policy to enhance equality after the Second World War and to promote inequality since 1980, we can make a more equal world now.