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.

Spectacular!

This is what real journalism looks like:

Have you ever seen Wolf Blitzer do this? Brian Williams? pic.twitter.com/qqBxg3EDir

— Jay Rosen (@jayrosen_nyu) October 29, 2017

The Paradise Papers

The prospect of real tax reform in Canada just got a lot dimmer. Today's release of the Paradise Papers suggests why.

CBC News is reporting this about Justin Trudeau's chief fundraiser, Stephen Bronfman:

In the early summer of 2015, Justin Trudeau was the star attraction at a private fundraiser in Montreal hosted by philanthropist and financier Stephen Bronfman.

Bronfman, an heir to the Seagram family fortune and a close Trudeau family friend, was revenue chair of the Liberal Party. That day, according to news reports, the two men raised $250,000 in under two hours.

Within weeks, the Liberals would launch their federal election campaign, sweeping to power on a "Real Change" platform that focused on the middle class and a promise to tax the rich.

"Our government has long known — indeed, we got elected — on a promise to make sure that people were paying their fair share of taxes," Trudeau said shortly after his election victory. "Tax avoidance, tax evasion is something we take very seriously."

But an investigation by the CBC, Radio-Canada and the Toronto Star has found that Bronfman and his Montreal-based investment company, Claridge Inc., were key players linked to a $60-million US offshore trust in the Cayman Islands that may have cost Canadians millions in unpaid taxes.

It's a 24-year paper trail of confidential memos and private records involving two prominent families with Liberal Party ties that experts say appear to show exploitation of legal tax loopholes, disguised payments and possible "sham" transactions.

You can read much more at the above links.

A Governor General To Be Proud Of

While the traditional role of the Governor General is to play the mute on any issues that may upset some, smile engagingly at state functions and mouth sanctimonious platitudes upon demand, Julie Payette has a different take on her function. I applaud her for it.

It is difficult to understand how, in the 21st century, we are supposed to acknowledge the importance of science, yet refrain from any scientific references that may offend those who are doctrinally obstinate, adhere to junk science, or demand that religious tenets be taken literally. Truths may be unpalatable to some, but they are still truths.

For that reason I am having a hard time understanding the outrage that Julie Payette's comments in the above video have provoked.

In a CBC essay, opinion columnist Robyn Urback, while agreeing with the truths Payette uttered, finds them wholly inappropriate:

This is a column, rather, on whether the Queen's representative in Canada — someone who is supposed to be uncontroversial and apolitical in her role as steward of the functioning of the government of Canada — should be deriding people for their beliefs on issues like climate change, religion and alternative medicine.

Urback's justification for polite silence goes beyond the impartial role the Governor General has historically played:

The role of the Governor General is apolitical by design; as a representative of the Crown, she is expected to use her executive powers in the interest of Canada, and not a single party, or group or administration. The integrity of the role falls apart if the governor general is perceived to be of one camp or another.

For that reason, some will argue that the Governor General should never weigh in on topics that are even remotely political. They argue that while some people have decided that, for example, the science is settled on climate change, the very fact that debate still exists on the topic should preclude the Governor General from inserting herself in the conversation, lest she appear to be of a certain allegiance.

The fact that Payette's comments can in any way be construed as political says perhaps more than we would like to admit about the state of discourse today. Have we now descended to being influenced by the lowest denominator, the schoolboy bully or the one who threatens to inform on us to the teacher? Those afflicted with benighted thinking may be offended; but that possibility must surely not be the determinant of what is considered fit for public consumption.

A race to the bottom is an easy one to win. Coming in last takes real effort, courage and integrity.

The Sickness Unto Death

Cognitive dissonance might be one way to describe how we conduct our lives in the face of climate change and environmental degradation. Willful ignorance might be another. Or, perhaps most damning of all, willful self-indulgence, in which we exult our passion for convenience and comfort over their cost to the larger society, and the world, around us.

Any way you define it, the picture is grim.

It is clear why our governments make only token gestures to mitigate the damage we are doing to the world. Real action would require sacrifice, a virtue that seems to have largely disappeared from our modern age. Any politician who tries to do what must be done would pay a very heavy price indeed. And despite new reports about the dire health impacts already underway due to climate change, dealt with in today's Star and in a post by The Mound the other day, I think we all know that there will be no restorative measures pursued by our 'leaders.'

That inaction provides for all of us a convenient shield from an inconvenient and very unpalatable truth: our collective refusal to act as individuals (I hope that's not an oxymoron) to slow the pace of our rapidly deteriorating world. I know that sounds like a massive over generalization, and that in fact many individuals and groups are dedicated to doing what they can in the face of the existential crisis we have created. But their efforts, as noble as they are, seem to fork little lightning among the general populace, who seem hellbent on continuing their wasteful and destructive ways.

If you want an illustration of this, you need look no further than the massive popularity that coffee pods, and to a lesser extent, tea pods, enjoy. An extremely wasteful and expensive technology unless you live on your own and drink one cup a day, the majority of these pods are not even compostable, something Ontario PC MPP Norm Miller is trying to do something about via a private member's bill:

He’s pushing for all parties at Queens’ Park to support a law requiring every single-use coffee pods sold in Ontario to be compostable within four years so they can be tossed into the green bin as soon as the cup of Joe is brewed.

The goal is to keep more of the 1.5 billion pods used annually in Canada out of garbage dumps.

“Ontario has a waste problem,” said Miller (Parry Sound-Muskoka) Wednesday before presenting his private members’ bill. He cited a recent warning from the province’s environmental commissioner.

While some companies, including Loblaw, McDonald’s and Muskoka Roastery Coffee Co., sell java in compostable Keurig-style pods, the majority of pods sold in Ontario are made elsewhere and are not recyclable or compostable, Miller said.

However, there is that pesky problem of the consumer's addiction to convenience, which limits even recycling of the pods:

Recyclable pods are “finicky” to deal with because the cap must be torn off and the coffee grounds rinsed out and the plastic cup thrown in the blue bin, Miller said.

Precisely the reason I suspect that Miller's initiative is doomed to failure. Imagine the 'extra' effort putting compostable pods into a green bin would entail for the harried and selfish consumer.

What is my point here? Clearly, non-compostable coffee pods are not the worst environmental problem we face today. Their massive popularity, however, is a symptom of the larger problem fueling our increasingly debased planet. As Walt Kelly in his famous comic strip Pogo wrote:

“WE HAVE MET THE ENEMY AND HE IS US.”

Dear Justin

Stand.earth, formerly Forest Ethics, has this message for Justin Trudeau. You can help spread the message by clicking here.

Guest Post: A Response To Flying Blind

Yesterday's post dealt with the announcement that a degree of self-regulation is to be conferred on the airline industry by the Trudeau government. Given the fraught history of self-regulation in this country, it is alarming news. BM, a frequent commentator, offered an analysis of the situation as well as an interesting perspective on what is driving that change. I am taking the liberty of featuring his insights as a guest post:

Well, it would certainly argue against flying Air Canada to San Fran, where the existing pilots seem to be having a tough job as it is. That second incident where the pilot ignored 6 request/orders to go around and couldn't see the flashing red light either was a doozy. The short interview I heard with the pilot, equipped with a plummy British accent, was revealing. Radio trouble. Oh yes? With at least three radios available, according to other pilots in various pilots' online forums. Not mentioned - blindness to flashing red lights from the control tower.

In a proper quality assurance system, amply documented and thus verifiable to process under an outside audit, where procedures are detailed to a very fine degree, letting the industry "run" itself is just fine. Electricity and Gas meters are inspected under this regime in Canada - I was involved in setting such a system up. In the 1990s, not now. It does require that company executives be part of the system as well, and part of the audit. Everyone has procedures they must know inside out, no excuses. There are avenues for considering improvements, and documentation of everyone's training and ability to follow the system. In other words, some shop foreman in a lousy mood cannot come in one morning and change what everyone does, just because HE/SHE feels like it, or there is a recorded miscompliance report which anyone can make without fear of retribution. Keeps 'em all sane.

When it comes to meatcutting or piloting, you are dealing with situations that are not boringly standard, like instrument testing. Turnover of personnel is highly likely in the meat business, and low wages with perhaps poor English skills only exacerbate problems with written procedures. Oversight is necessary. And pilots, well they all believe they know what's best and which SOPs they can disregard. You just have to go to the TSB's website and read accident analyses to see that.

The driving force for self-regulation in industry is no doubt driven by the same Public Service pointy-heads who cannot see the difference between an ordered industrial process and situations where the humans require continual oversight. The politicians are merely attracted by the promise of saving money given them by their public service advisers, so I cannot blame either Liberals or Conservatives myself. Politicians sometimes have trouble tieing their own shoelaces, let alone understanding anything complicated. And the average person hasn't a clue about the difference between quality inspection and quality assurance, the latter being the self-regulation system, the first where outsiders check every bit. You don't need to inspect every single widget if the process is under control. That's the way cars are made these days, with the possible exception of FCA.

Lack of commonsense is the problem. One process is not the same as another and may not be amenable to auditable self-regulation.