There are multiple, dozens of sides to the Panama Papers scandal. What activity was tax evasion (not legal), and what was tax avoidance? (Legal) How much of this money was gained via crony means? (Likely quite a lot looking at some of the people on the “list.”) Why do people feel compelled to avoid taxes in general? Are people justified in trying to keep money they legally made? (Assuming that they earned it via honest and non-crony means.)
Many nations in Western Europe can no longer afford their big welfare states. Countries such as Greece, Spain, and Italy already have needed bailouts, while it’s just a matter of time before several other European nations face a fiscal day of reckoning. But the problem isn’t confined to Europe. Countries such as the United States and Japan also have serious long-run problems because of changing demographics and poorly designed entitlement programs.
Unfortunately, rather than fix their own fiscal problems, many of these nations are working through international bureaucracies such as the G-20 and the Organization for Economic Cooperation and Development to rewrite the rules and traditions of global commerce in an attempt to extract more tax revenue.
This is why there’s been a major attack against so-called tax havens as part of a coordinated campaign to undermine fiscal sovereignty and restrict the human right of financial privacy. Apparently small jurisdictions are not allowed to follow the same strategy of low taxes and small government that enabled nations such as the United States to become rich.
And it does disturb me that the lead story on NPR this morning highlighted France’s president Hollande crowing about how the Panama Papers story was going to make it easier for the French state to increase revenue for the massive and nearly all pervasive French government. That certainly isn’t human progress in my book. This only compounds a crony problem. It’s not like the governments are the good guys here folks.
Indeed there may be very few good guys in this whole giant equation. There is likely lots of crony money flowing through these entities.
But there is likely some of legitimate money too. That governments are slobbering over “lost” tax revenue just indicates how governments think of wealth in general. They fundamentally think your money is theirs.
If one makes money honestly, in a non-crony way, tax avoidance (which again is legal) is a good thing. No one should pay more in taxes than they have to.