xmlns:og='http://ogp.me/ns#' The Font of Noelage: The rich are not like the rest of us.

Thursday, 14 April 2016

The rich are not like the rest of us.



The recently revealed Panama Papers provide incredible details about how the very rich salt their wealth out of the sight of everyone, including national tax offices. It is the largest leak of data in the history of the world, far larger than anything from Julian Assange's Wikileaks  or Edward Snowden’s leaked US Government papers.

 Just over a year ago someone gave a Munich newspaper, Suddendeutsche Zeitang, about 11.5 million data files, the equivalent of 2.5 tetrabyes of data. The data was from the archives of a Panamanian law firm, Mossack-Fonseca. This company specialises in establishing off-shore tax havens and shelf companies that assist very rich people and corporations in "managing" their wealth. Essentially, it enables the very rich to hide their wealth from other interested parties, such as a country's Income Tax Ã’ffice or an Internal Revenue organisation. The Panama Papers go back over forty years.

The Munich newspaper soon released the data to the International Consortium of Investigative Journalists. Subsequently, the data was provided to selected world news media outlets such as The Guardian, The BBC and Le Monde in Paris.

It turns out that over the years Mossack Fonseca had established 214 000 sham companies with sham directors and sham boards of directors. They were set up for the sole purpose of hiding the true owners of the wealth.

Mossack Fonseca has issued a statement that it is not illegal to own an off shore company and that it is unaware of any of its clients being involved in any illegal activities. Well, as Mandy Rice Davies almost once said, “They would say that wouldn’t they?”  You remember Mandy. She and her friend, Christine Keeler, were involved in the Profumo Affair. In an ironic reversal, these two ladies well and truly screwed the rich and famous.

Of course the Panama Papers are just the tip of the iceberg. Mossack Fonseca is just one of many organisations that assist the very rich to hide their money. However, as The Guardian and President Barak Obama have both pointed out, in agreement with Mossack Fonseca, it is not illegal to own an off shore shelf company. However, it is illegal to make your money apparently disappear so that you do not have to pay tax on it. President Obama says it is only possible for the rich to hide their wealth in this way because there are many, many loopholes in the legislation.

We could ask, why are there loopholes? Who makes the laws? Whose interests do these laws/loopholes protect? Does the system operate in a fair and open way for everyone or is it deliberately designed to be devious? Does it delude the ordinary PAYE Joe Blow taxpayer into thinking everyone is paying their fair share, while at the same time enabling the very rich and powerful to control world finances.?

F. Scott Fitzgerald, in 1926 wrote a short story, The Rich Boy. In it he observed that “Rich people are not like us.” There is an apocryphal story that he once made those very same remarks to his drinking pal in Paris, Ernest Hemingway, who replied, “Yes, Scott, they have a lot more money.”

Some time ago a wise old uncle once told me that if you want to be successful in business then you have to be, at least, a little bit crooked. It now seems that some of the very rich are more than just a little bit crooked, they are totally bent.

I wrote a blog in November, 2014, entitled "It's the poor wot gets the blame." It was about the billionaires and millionaires and very rich corporations in Australia that pay very little or no income tax at all, while, at the same time Rupert Murdoch’s media rails against the very small number of welfare cheats who cost us comparative chicken feed. You can read about it by clicking on this link http://noelswriting.blogspot.com/2014/11/its-poor-wot-gets-blame.html

At least when Ned Kelly robbed anyone they knew they were being robbed. Mossack-Fonseca data now reveals that we are being robbed blind by the rich and famous  and none of us were aware of the magnitude of their avarice. Noted United States commentator, Andrew O’Hehir, writing in the online magazine, Salon, on April 7, 2016, says that eighty years after Hemingway we could answer F. Scott Fitzgerald’s question slightly differently. “Yes, the rich are different because they have more money, and because they stole it from us and keep hoping that we won’t notice. They stole it from you and from me, and even more from billions of other, poorer people around the world.

“Wealth and poverty have always been with us, and probably always will be, but the disparity we see around us, far greater than anything Fitzgerald’s rich and innocent Jay Gatsby could have imagined, is an enormous historical crime and on some level everybody knows it. The Panama Papers are just a hint at the scale of the crime and the scale of the cover up."

O’Hehir concludes that, “Perhaps the rich still believe that they deserve to be rich, and too many non-rich people believe it too. But, their desperate attempts to hide their wealth beneath armies of lawyers and nests of imaginary companies and mailing addresses suggest otherwise. They are afraid that the illusion may be crumbling. They are afraid that one of these days we will all figure out how they got their money and decide to take it back.”

O’Hehir may well be right. Convinced that the very rich have been cheating on us for over forty years we may try to uncover their hidey holes and use the hidden wealth to improve our schools, our health care, our pension schemes, our universities and our public transport. Our quality of life overall.

However, what we do learn from history is that events of world shattering importance run their life in the news cycle to eventually be replaced by more recent earth shattering news about something else entirely. I wonder if the Panama Papers will cause a lot of talk but little real action. After all, we all know that when all is said and done a lot more is said than is done.

At the last G20 summit, held in Australia over a year ago, all of the twenty participating countries resolved that they would frame laws to ensure that money would be taxed in the country it was made in and not in some shelf company to which it had been transferred where low or no taxes applied. Well. we are still waiting for the governments of those countries to close those income tax loopholes. The fact is, despite the Panama Papers, nothing will really change until those loopholes are closed.

I wonder why the politicians are so reluctant to close those legal loopholes? Well, I don't wonder really. They don't close the loopholes because they and their corporate friends are the ones who are using the system. Some of those rich, non-tax paying companies make huge donations to political parties. Some CEOs of those companies are even on record thanking governments for their assistance in structuring their companies so as to avoid paying taxes.

Oh, yes, the rich are very different.


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