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In response to the Panama Papers leak, Canada’s pushy suit salesman Kevin O’Leary argued that if taxes weren’t so high, wealthy people wouldn’t be forced to hide their money offshore. Exactly, and if you want to stop burglars from breaking your door locks, stop locking your doors. And we could end murder tomorrow if we all took some initiative and stabbed ourselves.
O’Leary is selling the fable that anything that increases the freedom of capital is “efficient.” Because money is like water, and should be free to flow wherever it wants without being dammed up with taxes, to maximize the wealth that trickles down to the masses. But as the Panama Papers illustrate, capital doesn’t trickle down, it gushes offshore in big greedy hoses rented out by lawyers and accountants.
That’s not efficient, that’s freeloading. That capital needs to move out of its parents’ Caribbean basement, pay some taxes and get a job like a responsible adult.
If you think the only solution to tax avoidance is lower taxes, you’re effectively saying our governments are so powerless that we should be thankful the wealthy pay any taxes at all, and embrace the libertarian utopia of Indigogo-funded schools and Uber for ambulances.
But governments could crack down on tax havens if they wanted to. Panama and the Caymens aren’t North Korea. And neither is KPMG. The abuse of tax shelters isn’t inevitable, it’s a choice by governments to allow it. And now those governments have a choice to use their power to fight it, or lose it.
This video originally appeared in the Toronto Star.
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