Paradise Lost

“We don't pay taxes. Only the little people pay taxes.”
-Leona Helmsley

"It is easier for a camel to go through the eye of a needle than for a rich person to enter the kingdom of God.”
- Mark 10:25



This morning's Star gives comprehensive and very comprehensible coverage of the latest peak behind the tax curtain controlled by the ultra wealthy, and it is not a pretty picture, unless you think that greed and tax evasion make for a pleasing tableau.

Distilled to its essence, if I understand the situation correctly, the Bronfman family, through trusted consigliere Leon Kolber, established an offshore trust in the Cayman Islands in Kolber's name. All monies sent were deemed to be 'loans' by the Bronfmans, thereby allowing them to invest in Israeli interests tax free. Kolber's son Charles, now a citizen of Israel, handled things from that end and was rewarded lavishly for those efforts through trust disbursements.

Some will insist, as do the Bronfman lawyers, that there was nothing illegal about this but merely an astute use of extant tax loopholes. However, that explanation doesn't wash because the decisions about the trust (i.e., investment decisions) were made in Canada, not the Caymans, and thus should have been taxed as a Canadian trust.

Why should any of this matter to us? Well, the obvious reason is that our federal coffers were denied much-needed tax revenue, but unfortunately the implications of this scheme, no doubt practised by many of Canada's elite, go well beyond lost tax revenue. What the Paradise Papers essentially show is that the days of the Family Compact are far from over, and that the real levers of power are still being exercised behind closed doors.

To get a sense of that power, one has to go back to the nineties, when Edgar Bronfman was allowed to take $2 billion out of Canada tax free:

...a controversial tax ruling by Revenue Canada in 1991 ... allowed the Bronfmans to move more than $2 billion worth of Seagram Co. stock, held in two family trusts, to the United States without paying capital gains tax. The decision allowed the family to avoid as much as $700 million in taxes.

If you go to the 39-minute mark on last night's National, the disturbing mechanics behind this scandalous ruling are revealed, as Revenue Canada's efforts to block the deal gave way to pressure from the Bronfmans, who threatened to "go over their heads." The stench of political interference and corruption by the Mulroney government of the day is hard to ignore:



The revelations now in the public arena thanks to the collective efforts of hardworking journalists reinforce a perception that many, many people have held for a long time: the tax system is gamed, and talk of tax fairness is simply convenient posturing that ultimately means nothing. This perception/reality is very damaging to public morale; those who believe in paying their taxes are now being shown that they are, in fact, the patsies for their betters.

Nothing could be worse for those who believe in a society where all of us pay to maintain a social safety net, programs to help the disadvantaged, and a public medical system where no one is turned away because their wallet is too thin. Just more fodder for the rabid right wing, and governments have no one but themselves to blame.

I began this post with two quotes. The one by Leona Helmsley encapsulates something far too common amongst the monied: an abject contempt for the larger society within which they prosper, and a complete absence of any sense of obligation toward that society. They really believe that they are our betters.

The second quote, from The Bible, is reflective of the distance that great wealth can create from "the kingdom of God," that kingdom, in my interpretation, being a state of spiritual attunement with our fellow human beings. If we are not aligned with other people and have a sense of shared humanity, we cannot hope to have access to transcendent reality, whatever it ultimately is.

The ultra rich may have great wealth, but in other ways they are deeply and fatally impoverished.