Just to lighten the mood.....
Kevin Libin: Panama Papers ‘bombshell’ another sensationalized attack on the wealthy
Republish
Reprint
Kevin Libin | April 4, 2016 3:23 PM ET
More from Kevin Libin | @kevinlibin
Buildings in the financial centre of Panama City on April 4, 2016. A massive leak - coming from Mossack Fonseca - of 11.5 million tax documents on Sunday exposed the secret offshore dealings of aides to Russian president Vladimir Putin, world leaders and celebrities including Barcelona forward Lionel Messi.
Rodrigo Arangua/AFP/Getty ImagesBuildings in the financial centre of Panama City on April 4, 2016. A massive leak - coming from Mossack Fonseca - of 11.5 million tax documents on Sunday exposed the secret offshore dealings of aides to Russian president Vladimir Putin, world leaders and celebrities including Barcelona forward Lionel Messi.
Twitter Google+ LinkedIn Email Typo? More
Did you just feel the earth move? Maybe you’re not paying attention, because the “Panama Papers” have already been rated the bombshell of the decade. A “huge news story” about international “greed and corruption” involving offshore tax havens, one Canadian media professor tweeted Monday morning. Why, this could be more earth-shaking than LuxLeaks. Or perhaps you don’t remember LuxLeaks, which was the 2014 bombshell that was supposed to blow the lid off the sneaky ways the rich and powerful evade taxes. If not, don’t worry. Soon enough you probably won’t remember the Panama Papers either.
What LuxLeaks found was that some multinational corporations took perfectly legal advantage of the ability to park profits in Luxembourg at lower tax rates. A year before that, in 2013, the CBC wallpapered its TV news broadcasts, radio programming and websites for days with its “Secrecy for Sale” exposé using “an unprecedented leak of data… that involves more than 100,000 people from around the world.” Nearly 500 of them, the CBC claimed, were in Canada. They named just one — Regina lawyer Tony Merchant, who would later file a libel suit against the CBC’s reporting on his alleged “tax haven.” But, as the CBC itself admitted, “the reality (is) that holding an offshore account is not evidence of wrongdoing and may not be controversial.” And, not surprisingly, nothing more controversial came of the sensationalized story.
Once again, the Panama Papers have all the juicy ingredients to get journalists in a lather: An avalanche of secret documents leaked from a white-shoe Panamanian law firm, Mossack Fonseca, that specializes in helping clients shelter money in Caribbean tax havens; talk of “billions” of dollars being secreted away; mentions of enough prominent names — Lionel Messi, Jackie Chan, Vladimir Putin — that hint that there really is a great greedy capital conspiracy being kept secret by the Bilderberg Illuminati that’s screwing the rest of us hardworking, taxpaying suckers. The Toronto Star naturally devoted not just the entirety of its front page, but several more inside, to the revelations Monday, highlighting in supersized type the breathtaking scope of the numbers: “11.5 million” documents, “2.6 terabytes” of data, “29” Forbes-listed billionaires named in the data, “12” political leaders.
Related
Royal Bank of Canada defends practices after being named in Panama Papers leak
The Panama Papers: Here's how offshore accounts used to hide wealth and avoid taxes work
Putin associates stashed billions in offshore accounts, leaked records from Panamanian law firm reveal
And the number of actual scandals so far? One. And not even a particularly exciting one at that. The Icelandic prime minister allegedly used the law firm to register a company that lost a bundle on bonds in the same failed Icelandic banks that he later helped claimants’ reach a deal with. It certainly doesn’t look good for Sigmundur Davíð Gunnlaugsson, but it’s a pretty sure sign that your globe-rocking scoop is off to a weak start when its big opener is a conflict-of-interest allegation against an Icelandic prime minister at the shaky end of a coalition government. Even Putin appears to go unmentioned by name in any of the documents, despite his network of cronies busily salting away billions secured from his corrupt state.
Advertisement
As for the 350 Canadians apparently mentioned in this mountain of misconduct, the details appear to promise several news cycles of disappointment. The Star (it and the CBC were the only Canadian media organizations allowed access to the documents), says it will deliver the story of a “Canadian art maven” with a “hidden corporate network”; a Toronto-based firm “fighting to lift the corporate veil that masks the ownership of a Modigliani masterpiece” allegedly looted by the Nazis; and a “Dubai-based Canadian lawyer” who helps global clients shelter money. The Star also lists several Canadians whose passport photos appear in the Mossack Fonseca files. Not a single person here has been found to have done anything dirty.
But that’s the beauty of these routine exposés, which are all about convincing us the rich still aren’t being soaked hard enough. Every media organization is careful to note that “much of this is perfectly legal,” as the Star put it, and “offshore accounts are not in themselves illegal” as the CBC eventually mentions. But the mere idea that anyone could arrange finances using foreign holdings to minimize their taxes — even when it is all perfectly legitimate, as will be the case in nearly all these leaked documents — is enough to justify unseemly snooping into anyone’s private affairs. “The rich get to play by different rules than the rest of us,” whine the Star’s editors, in their front-page justification for their sensationalism. “That’s unfair — and everyone should know about it.”
No. The rules are exactly the same. Unlawful activity is illegal no matter what your income bracket. But tax avoidance isn’t just legal and available to anyone, it is often a policy goal, as governments seek to give special breaks for certain behaviours, and reshape their economies into low-tax magnets for foreign investors. Canada even earns a mention in the Mossack Fonseca documents as one option for clients to shelter their cash, perhaps due to the comparatively low business taxes that have attracted multinational businesses like Burger King to relocate here through tax inversions.
“Money goes wherever it wants and guess what? It wants to go where there is no tax,” commented Allison Christians, McGill University’s chair in tax law, in response to the Panama Papers report. And it’s clear that the agenda behind these routine exposés is to inspire more rules and regulations to stop it, more barriers to the capital mobility that lubricates the efficiency of our global economy. The same group, the Center for Public Integrity, is behind all of them, and it’s driven by the conviction of its founder, journalist Charles Lewis, that our political system is corrupted by a secret society of wealth. In kleptocracies like Russia, that is plainly true, everyone knows it, and these leaks will change nothing about it. But the idea seems almost laughable for Iceland. Or Canada (where the two biggest gotchas from the LuxLeaks revelations involved tax avoidance by the Public Sector Pension Investment Board and subsidy-dependent Bombardier). The wealthy aren’t the problem. The corrupt are.
When people and companies use legal means to minimize their tax bills, that’s not corrupt or greedy or unfair, it’s playing by the rules. If we want to keep cash here, it won’t happen by trying to lock it in but by keeping our taxes competitive and saving everyone the cost and trouble of resorting to Panamanian lawyers and Caribbean accountants. In the meantime, what legal things people do with their estate planning are entirely none of our business.
http://business.financialpost.com/fp-comment/kevin-libin-panama-papers-bombshell-another-sensationalized-attack-on-the-wealthy
