Tackling inequality begins with cracking down on tax havens
TheStar.com – Opinion/Editorials – Tackling inequality, at home and around the world, must begin with collecting the taxes owed and closing the loopholes that compound disparities and erode trust.
Jan. 16, 2017. Editorial
The notion that extreme inequality is corrosive for a society is an ancient one. In the 4th century B.C., Plato wrote that no man should be more than four times wealthier than any other, lest the divide lead to laziness among the rich and stifle opportunity among the poor.
Some two thousand years later, at the height of the Enlightenment, Jean-Jacques Rousseau more or less saw the Brexiteers and Trumpism coming: he wrote that vast wealth disparity leads to “everything that can inspire mistrust and mutual hatred in the different estates by setting their rights and interests at odds, and so strengthen the power that contains them all.”
Over the last quarter-century, we have, not for the first time, seen aspects of the philosophers’ warnings bear out.
While experts may disagree on the causes, the impacts of rapidly growing inequality are becoming increasingly clear: the decline of trust and social cohesion, the threats to democracy, the impact on economic growth of shrunken demand. Little wonder global inequality and the rise of populism seem to be dominating the conversation as world leaders descend on Davos.
And yet, despite a broadening awareness of the problem and a fledgling cross-partisan consensus about the dangers it poses, we have done too little to address it. A new report from Oxfam International shows that wealth has continued to become more and more concentrated in the hands of fewer and fewer people.
The numbers are shocking. The eight richest men in the world now own as much wealth as the 3.6 billion poorest people. In Canada, the wealthiest two citizens, Galen Weston Sr. and David Thomson, are together as rich as the poorest 30 per cent combined. It’s through no fault of their own that these men have become symbols of stark inequality. The ratios would knock Plato out.
If there is good news, it is that, increasingly, the debate is not about whether extreme inequality is a problem but rather about how to solve it. While there is inevitable disagreement about what can and should be done, there’s no shortage of ideas.
For instance, pioneering British economist Anthony B. Atkinson, who died on New Year’s Day, left behind a set of practical policy tools he argued would allow governments to mitigate inequality’s consequences, as well as to curb the problem itself. These range from the relatively commonplace (for instance, more progressive taxes) to the bold (a job guarantee).
Many of these ideas would no doubt be tough sells in the current political context. But one concrete proposal, endorsed by the authors of the Oxfam report < https://www.oxfam.ca/our-work/publications/an-economy-for-the-99-percent >, is likely politically saleable and has the potential to provide some the resources needed to tackle inequality: a global crack-down on tax havens and tax cheats.
Oxfam challenges governments and corporations to address the problem of tax havens, “which is fuelling economic inequality and preventing hundreds of millions of people lifting themselves out of poverty.” It estimates that some $7.6 trillion of individuals’ wealth currently sits offshore, allowing the richest few to dodge about $190 billion in taxes per year.
The Panama Papers’ chronicling of lost revenue may have done more to erode trust than anything since the 2008 financial meltdown. Canada’s record here leaves much to be desired. Making matters worse, our sprawling tax code has grown in recent years to include a diverse array of tax loopholes that benefit the richest few with no evident contribution to the public good. The costs to Canada of tax avoidance and evasion are estimated to be in the many tens of billions of dollars every year.
The day after the U.S. election, Prime Minister Justin Trudeau said Donald Trump won in part because too many citizens were not sharing in the country’s prosperity and that this problem is one Ottawa must also address. The Liberal government has taken some hopeful steps to that end: expanding the national child benefit and, if modestly, the Canada Pension Plan. But a comprehensive approach to tackling inequality and poverty, at home and around the world, must begin with collecting the taxes owed and closing the loopholes that compound disparities and erode trust.
< https://www.thestar.com/opinion/editorials/2017/01/16/tackling-inequality-begins-with-cracking-down-on-tax-havens-editorial.html >
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