Sunday November 12, 2017

Michael's essay — What is it about the rich that makes us crazy?

"Millions of words are being written about the millions of pieces of paper exposing the depravity of the rich in avoiding paying taxes."

"Millions of words are being written about the millions of pieces of paper exposing the depravity of the rich in avoiding paying taxes." (Wael Khalill alfu/Shutterstock)

Listen 3:51

It has been a frosty few days for the wealthiest among us. The super-rich are seemingly under siege around the world.

There are those 11 Saudi princes being held in durance vile in the Ritz-Carlton luxury Hotel in Riyadh. Included in their number is Billionaire Prince Alwaleed bin Talal, known to his friends as "the Warren Buffet" of the Middle East. They are charged with corruption, which in Saudi Arabia is like being charged with double-parking.

Saudi Arabia

Saudi billionaire Prince Alwaleed bin Talal al-Saud, seen here in 2010, was among those detained last weekend. (Hassan Ammar/Associated Press)

Then there is the continuing tsunami of documents and reports about offshore tax havens which allow the richest to avoid paying huge taxes. 

Media have had a collective coronary over this story. Millions of words are being written about the millions of pieces of paper exposing the depravity of the rich in avoiding paying taxes.

The key word here is avoiding, not evading. Avoiding is entirely legal under our tax code.

Which leads to the hilarious scenario of huge numbers of Canadians, many of them prominent, denying they had done something legal.

My favourite capitalist National Post columnist Terence Corcoran fulminates that the release of the so-called Paradise Papers is one more free-fire zone in the ongoing war on the rich.

Which is as whimsical as the War on Christmas or the War on Cars.

Paradise Papers 20171105

The Canada Revenue Agency says it won't hesitate to investigate new evidence of offshore tax evasion in the wake of the leak of some 13.4 million records, dubbed the Paradise Papers. (Sean Kilpatrick/Canadian Press)

Why do we hate the rich? I'm not sure it's because of their money. Nobody can resist the story of the penniless immigrant who starts small and winds up with an empire worth tens of millions.

It's their sense of entitlement, I think.

The rich, as Fitzgerald correctly wrote, are different from you and me. They populate a different planetary system than the rest of us.

Money is merely their gateway drug. It leads to all kinds of power, privilege and influence.

The Bronfmans and the Kolbers of Paradise Papers infamy can manipulate the isotopes of power in ways the rest of us can barely comprehend — which can be a very dangerous thing in a liberal democracy.

Tax avoidance may cry out for justice and retribution. It may stink to the heavens; it may even be a sin, if such things still exist. But it is not against the law.

There is nothing illegal about ordering your financial affairs so that the taxing statutes don't apply.

You and I engage in tax avoidance every time we contribute to an RRSP; tax deferral is tax avoidance. If we are earning less at withdrawal time, we pay less tax.

Governments, including ours, have the power to plug the loopholes, make the whole thing illegal. Which is not a bad idea.

Every dollar earned, no matter how or where, by any Canadian, should be taxed at the proper and same rate as everybody else.

Liberals Caucus 20130828

Links between Stephen Bronfman, the Liberal party's chief fundraiser, and a Cayman Islands tax scheme were revealed in the Paradise Papers leak. (Andrew Vaughan/Canadian Press)

What the tax avoiders are doing may be legal, but is it fair? A lot of things are not fair — life isn't fair, neither is the Electoral College. And Mother Patrick Joseph in Grade Four certainly wasn't fair.

I once asked a very wealthy businessman if it would kill him to give me a million dollars. "No," he said, "It wouldn't at all. But it would change the nature of our friendship."

That's fair, I thought, as I walked away from lunch empty-handed.

Click 'listen' above to hear Michael's essay.