I often think of the famous line from the New Testament in which Jesus says "It is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God." Some say the reference is to a gate in Jerusalem called the Needle''s Eye through which a camel could enter only by getting on its knees. Many progressive biblical scholars regard the term 'kingdom of heaven' as the inner peace and happiness that arises when we are in harmony with the will of God, treating our fellow humans with compassion and justice.
Whatever the precise intended meaning, the analogy proclaims a truth that is hard to deny: the more affluent one becomes, the more difficult it is to resist the impulse to expand that wealth at the expense of others. This is, of course, a truth that the Occupy Movement recognized, and it is a truth that is getting widespread exposure thanks to recent news stories. For example, prominent Canadian lawyer Tony Merchant and his wife, Liberal Senator Pana Merchant, have been discovered to have set up an offshore account with $1.7-million in the Cook Islands.
According to documents obtained by the Washington, D.C.-based International Consortium of Investigative Journalists, the Merchants were among 130,000 people from around the world to have stashed money in accounts in the Cook Islands, a self-governing New Zealand territory in the South Pacific.
While there is nothing illegal in such set-ups, they are often used as mechanisms of tax avoidance, usually through the illegal failure to report income accruing from those assets. According to the Consortium of Investigative Journalists,
A recent report by the Tax Justice Network found that the equivalent to the total combined GDP of U.S. and Japan is being hidden away by those rich enough to use offshore accounts.
As revealed in today's Star editorial,
The Tax Justice Network, based in London, estimates that some $21 trillion to $31 trillion is stashed away worldwide in unreported income. That’s a potential tax loss of $190 billion to $280 billion, based on a 3-per-cent return and assuming a 30-per-cent tax rate, the network reckons. The “black hole” of unreported wealth is vast and it has a major impact on public finances, political influence, the distribution of the tax burden and inequality.
Will these crimes of tax avoidance soon be addressed? While the editorial acknowledges that Jim Flaherty has recently declared his intention of going after these tax cheats, the fact is that the Canada Revenue Agency is expected to be substantially downsized over the next three years, calling into question the Finance Minister's sincerity. And the editorial makes clear how serious a problem this is for our country:
Canadians for Tax Fairness, a group that campaigns for sharing the burden equitably, estimates affluent Canadians have stashed $160 billion into offshore havens, costing us nearly $8 billion a year in foregone tax revenues. That’s many times what Ottawa hopes to recapture. And even that may understate the problem.
All of which brings to mind something Leona Helmsley once said: “We don’t pay taxes. Only the little people pay taxes.” Her view, I suspect, epitomizes the kind of disdainful and contemptuous thinking that many of the rich in their splendid isolation fall prey to. We should be equally wary of their enablers.
So I think we are right to be very suspicious and cynical about Ottawa's intentions. Recovering billions in tax avoidance dollars might not only disrupt its very cozy relationship with the corporate world, but also derail the Harper regime's relentless drive to reduce government's presence by starving it of the tax revenue needed to fund the many programs that help to define the Canadian quality of life, a quality of life that may not resemble that of the rich and famous but does frequently offer surprising and profound moments of grace.
H/t Alex Himelfarb
UPDATE: Click here for Linda McQuaigs lacerating assessment of the Harper regime's 'efforts' at recovering the aforementioned lost monies.
