There’s a dirty little secret many ultra-rich people would never want revealed: most of them pay lower percentages in actual taxes relative to their overall wealth than average middle class Americans. No, this is not a call for socialism nor is it a rant about how unfair the system is. Frankly, I don’t blame people for wanting to keep more of the money they earn. However, I do take offense at the lack of transparency they embrace as their efforts to save money also shield their dealings and motivations.
When Joe Blow Billionaire uses a tax haven, it’s smart money. That’s not to say it’s right that they can keep large percentages of their money hidden from the government in ways that middle class Americans cannot, but it’s not their fault the system is broken. We shouldn’t expect them to willingly pay more when they’re given legal avenues to avoid it. Those who complain from a socialistic perspective about the use of tax havens are the same people who would use those havens if they had the money. Ultra-liberal semi-socialist Justin Trudeau, Canada’s Prime Minister, would probably side with anyone who complained about how unfair it was unless they were aware that he took advantage of it himself.
The real problem isn’t that money can be protected for the rich. Where we get into real trouble is when politicians do it. Again, they have the right to protect their money, but they should not be allowed to shield their motivations. When a public official has secret investments, it’s impossible to know if their decisions aren’t being influenced by personal gain or loss.
Public disclosure of investments allows us to know if Senator X has ulterior motives for their actions. Let’s say Senator X has investments in an American sugar company. Americans should know this in case he’s voting on a bill to save sugar subsidies. Conflict of interests are easier to see when all of their money is in public view. When they hide their money offshore, their investments (and therefore their interests) are kept from the people they’re supposed to represent.
An example of this may be coming to light with the recent Paradise Papers release. U.S. Department of Commerce Secretary Wilbur Ross was listed in the Paradise Papers as having a stake in a company that does business with a gas producer partly-owned by Vladimir Putin’s son-in-law. As you can see, it’s already a distant but not completely indirect connection, though one can easily argue that it’s not a close enough connection to get Robert Mueller’s interests piqued. Nevertheless, this is an investment that was previously unknown because it was done through secretive offshore accounts.
We must have a reasonable expectation that the people we elect as well as the people who are put into bureaucratic offices are untainted. Ross has direct influence over trade and manufacturing policy. He should be the last person in DC to be heavily invested in foreign interests hidden from the people. Again, let’s not jump to conclusions or call for President Trump to get rid of Ross, but the fact that questions now have to be asked is a black eye for the Trump administration.
Tax havens are unfair, but that’s not as big of a problem as most believe. The real issue is transparency. Anyone in public office who utilizes offshore accounts or investments to hide their money should be put under the microscope. If we don’t know their private motivations, we can’t trust their public actions.
Ross, a billionaire and close friend of Trump, retained holdings in Navigator after taking office this year. The relationship means he stands to benefit from the operations of a Russian company run by Putin’s family and close allies, some of whom are under US sanctions.
Corporate records show Navigator ramped up its relationship with Sibur from 2014, as the US and EU imposed sanctions on Russians. The measures followed Putin’s aggression in eastern Ukraine and annexation of Crimea. Navigator has collected $68m in revenue from its Sibur partnership since 2014.