Lessons from the Panama Papers
By now, most have heard about the documents known as the Panama Papers. Leaked from the law firm Mossack Fonseca, the documents expose the ways in which numerous rich or politically powerful individuals have avoided paying taxes by hiding their capital in offshore accounts. As essentially sleazy as that sounds, it is not really all that surprising. Even countries with leaders implicated in the papers have been speaking out against tax avoidance schemes for years. It’s a practice that is universally accepted as bad, but does not seem to encourage much practical response. But these papers have the potential to change that.
The names of political leaders involved in avoidance schemes, including several on the national level, have caused the most outrage. With the global wealth gap continuing to increase and little perceived action to fix it, there has already been a fair amount of distrust of the political establishment. Taxes are an essential part of many countries’ social services. When government leaders avoid paying in, it perfectly illustrates the people’s concerns that those in power and those with money get to play by different rules than the rest.
But these papers have the potential to change that.
The scale of these abuses of power is hard to comprehend, particularly when you call to attention the fact that these leaks were only from one law firm, and there are thousands involved in these schemes. On top of that, most of the actions illuminated in the papers were not illegal, but merely underhanded. The only response that can have any impact in stopping these practices is for influential governments to unite and agree on practical steps toward limiting tax avoidance.
Thanks to the Panama Papers, the public has the ability to move this conversation along. The transparency that now exists about exactly who is involved in these schemes, and how they are being enacted, prevents any resistance against calls for regulation. Governments are responsible for what their systems allow the rich to get away with. With the information in the Panama Papers, they are now also accountable for answering to it.