Many of those objecting to the message that the wealthy should pay their fair share in taxes have been involved in schemes to allow large corporations or the wealthy to avoid taxes.
Ottawa (04 Feb. 2019) —This week a Dutch historian and the head of Oxfam International told billionaires gathered at the World Social Forum in Davos that if they really wanted to fix problems like poverty, climate change and income inequality, the first step should be paying their taxes.
During a panel at the World Economic Forum in Davos, Rutger Bregman, a Dutch historian, and Winnie Byanyima, the Executive Director of Oxfam International, both pointed out that when the wealthy don’t pay their fair share in taxes, governments don’t have the money to protect the environment and meet human needs.
Members of the World Economic Forum represent some of the largest corporations in the world. So even though problems discussed at the World Economic Forum can only be fixed if governments have the money to fix them, the role large corporations and the wealthy at the World Economic Forum play in funding these meetings ensures that issues like tax avoidance by the wealthy don’t get a lot of attention.
As Rutger Bregman said, “It feels like I’m at a firefighters' conference and no one’s allowed to speak about water.”
Message that they have to pay their share not popular with tax haven users
Many of those objecting to the message that the wealthy should pay their fair share in taxes have been involved in schemes to allow large corporations or the wealthy to avoid taxes. A former CFO of Yahoo, Kenneth Goldman, complained the panelists were being one-sided. What he didn’t mention was that Yahoo has used tax havens to avoid paying its share in taxes – including when he was CFO.
In 2013 it was revealed that Yahoo was using a subsidiary in the Netherlands to avoid paying taxes on hundreds of millions in profits. The fact the subsidiary headquarters was in the home office of a Yahoo accountant makes it clear that it was intended to be used for tax avoidance.
Another person defending tax avoidance by corporations and the wealthy was Michael Dell, CEO of Dell Technologies. Like Yahoo — and many other large corporations — Dell has used tax havens to avoid paying its fair share. Michael Dell also has a long history of getting generous property tax breaks from municipal governments where he or his company have property — so that low- and middle-income residents of those municipalities are picking up the bill for the municipal services he and the company use.
Defenders of tax avoidance ignore facts
The attempts by wealthy individuals, or the think tanks they fund, to defend tax avoidance ignore the facts. In the 1950s, the United States experienced rapid economic growth and the jobs being created paid enough for families to live comfortably. One reason for that rapid growth was governments in the United States had the funds to afford the kind of public services economies rely on. And what helped make that possible was that the top tax rate for the wealthy in the United States was 91%.
Those trying to use low unemployment rates to justify tax avoidance by corporations and the wealthy are also ignoring the facts. Many new jobs today pay so little that people are working full-time and still living in poverty.
Public services, not charity needed to solve major problems
As Winnie Byanyima pointed out in an opinion piece in Time magazine, large corporations and the wealthy are pushing a myth that private charity will be enough to fix social problems. That myth is dangerous and self-serving. It is intended to allow the wealthy to continue to dodge taxes, while governments are left without the funds they need to provide the public services that can deal with problems like poverty and climate change.
In 1920, Clement Attlee, a future British prime minister who oversaw the creation of Britain's social safety net, wrote, “Charity is a cold grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim.”
That’s still true 99 years later.
Private charity comes nowhere close to repairing the damage done by government austerity measures that are a direct result of large corporations and the wealthy not paying their share. What's needed are properly funded public services.