Tax-haven-island-with-gold-coins-3008-x-1949-px.

Well, the word is out, according to the leaked documents known as the Panama Papers, the rich and famous and powerful hide their income so they don’t have to pay taxes. Oh, you knew that already? Yeah, so did I. But these documents are naming names and describing in some detail the means (some illegal) that these folks have used to avoid paying their “fair share”—they’ve been outed en masse.

Even though we have tacitly accepted, even approved of the practice of tax havens for many decades, the revelations in the Papers are likely to have serious repercussions for the prominent clients of Mossack Fonseca, the law firm from which the documents were taken. It’s noteworthy that Iceland’s Prime Minister, Sigmundur David Gunnlaugsson, has already been forced to resign because the Papers revealed that he sold his interest in an offshore company to his wife for $1 to avoid having to disclose a conflict of interest.

Now, no one really likes paying taxes and many of us do whatever we can to maximize our deductions in order to minimize our tax liability. But to me, that is different from hiding huge chunks of income in offshore tax havens so that it is not subject to the rules that govern taxation in the first place. If nothing else, the sheer scale of the hidden money is breathtaking—estimated by Gabriel Zucman in a 2014 paper in the Journal of Economic Perspectives to be $7.6 trillion of individual wealth – more than the gross domestic product of Germany and the UK combined.

Add to this, a taxation structure that favors rich people by taxing capital gains at a lower rate than earned income and you end up with the situation where low and middle-income people are paying a disproportionate share of the taxes that are used for shared infrastructure and services that are part of a civilized society (public schools, safe highways and bridges, and healthcare, for example.) As Warren Buffett famously said, his tax rate is lower than that of his secretary!

 

Fewer and fewer people have most of the money

The term, “the 1%”, is now ingrained in our psyche, but did you know that the richest 1% on the planet have more wealth than the rest of the world combined. An even more shocking statistic can be found in Oxfam’s 2016 report, “An Economy for the 1%”. In 2015, just 62 individuals (you can see who they are here) had the same wealth as 3.6 billion people in the bottom half of the economy. 62 people or 0.00000008384% of the population have wealth as much as the bottom 50% of earth’s inhabitants. That is shocking and appalling, but it hasn’t really spurred us to take meaningful action.

Oxfam 1% report stats 600 x 400 px
Screen shot of graphic from Oxfam’s 2016 report, “An Economy for the 1%”

 

Words matter

Of course, there are many reasons for our complacency about this enormous social injustice we call inequality. But in this post, I want to explore the role words play in lulling us into inaction.

Let’s start with how we describe the people getting the short end of the stick. We call them poor. They are the “lower” or “bottom” half of the population. These are all words with negative connotations in a global society that strives to be upwardly mobile, wealthy, or at least middle-class. Being in the bottom of anything (your class standing, your income, your IQ, your pool) is usually a bad thing. When we categorize people as poor, we dehumanize them and it makes it easier to shut your eyes to their plight.

On the other hand, being rich is good whether it refers to wealth, a chocolate cake or a good joke. Who doesn’t want to be rich? Perhaps that is why, according to the Oxfam report,

“Apologists for the status quo claim that concern about inequality is driven by ‘politics of envy.'”

Then there are the words we use to justify the shenanigans wealthy folks use to avoid contributing to the common good. Take the term tax haven. The word haven means a place of safety or refuge, as in a haven for wildlife. Hiding your money offshore is keeping it safe, protecting it like a mother would do for her child even though it is actually fraud. Per Oxfam,

“Tax avoidance has been described by the International Bar Association as an abuse of human rights and by the President of the World Bank as ‘a form of corruption that hurts the poor.'”

The report goes on to say,

“There will be no end to the inequality crisis until world leaders end the era of tax havens once and for all.”

Finally, let’s talk about how we have named the problem: inequality. Inequality means things being compared are different in size, degree, or circumstance. Things are unequal. But no one really expects everything to be equal do they? People are different in terms of capability, opportunity, intellect, health, and a whole host of different traits. Inequality is a relatively soft word for the harsh reality of people trying to scrape by on a pittance at the bottom of our grossly skewed society.

What if we were to call things like they are—call a spade a spade, so to speak? Would we think and act differently if we said, for example, “greedy, dishonest, obscenely rich people defraud governments and hurt millions of hard-working people when they illegally (or at least stealthily) hide their money from the authorities?” Perhaps. We have, after all, learned from the Real Donald Trump that names do matter (think “Little Marco” or “Lyin’ Ted”).

But we have to remember that for every voice calling out the crime, there are powerful people on the other side saying, “it just ain’t so.” For every Bernie, there is a Ted or a Mitt, a George or a Ronald, and they, my friends, have honed their story for years.

9 COMMENTS

  1. I, for one, find this piece very gratifying. Most of us are not unidimensional beings. And to see this other side of Pat Salber is wonderful because it shows me things she cares about and makes me relate. And I would further propose that what she writes about does have bearing on healthcare- and quite directly. We use words also for the least resourced and most-burdened patients. They often are quite complex and yet with some change in how we regard them and provide for them, they can also recover and fight back. And lastly- perpetual inequality does lead to the states of rich and poor; so, its interesting that Chris repeats the same tone-deaf response we have heard from the 1% about this issue.

  2. It was billionaire H. Ross Perot back in 1992 that warned about NAFTA, the “giant sucking sound.” I felt queasy back then when my CEO talked about the coming globalization.

    It’s the world we now live in.

    It simply is that this world has become too consumed with the hard science of economies and less so with the mushy topics of equality and fairness which are much more about us humans. We need to change the narratives.

    I watched the video but I fail to see where an uncivil public display will do much to fix the dilemma.

      • Yes! Absolutely unforgettable protests over many years by hundreds of thousands worldwide where people were killed, injured and/or arrested. A far cry from one individual with an apparent grudge, accosting a sitting Governor.

        Dr. Salber, thank you very much for entertaining this exchange.

        I bid you adieu and wish you the very best in your endeavors.

        Regards,

        Chris

  3. When I first became aware of TDWI, I was expecting thoughtful and elevating discourse.

    Dr. Salber’s piece is a disappointment. The article fails to relate how the words that matter (to her) have anything at all to do with healthcare or policy. The solutions seem to only be to use Mr. Trump’s prescription of name calling.

    It’s a mistake to equate inequality with being either rich or poor. This does nothing to fix the problem as the doctor describes it.

      • Dr. Salber,

        Thank you for your rapid reply.

        To begin, can you and I (and others that wish to contribute here) discuss and agree on how we define a “meaningful difference.”

        What precisely is everyone’s “fair share?”

        Further, can a plan be crafted that would eliminate world poverty and assure an acceptable level of economic and egalitarian freedom for one and all?

        I favor these outcomes.

        • To me, meaningful difference would be a significant (e.g., 25 -50%) decrease in disparities in multiple measures of well-being (e.g, income, access to healthcare, health outcomes, access to quality education (your teacher doesn’t have to buy your books), and so forth. This would probably require some sort of consensus process to develop. Fair share similarly would have to be defined, but we can start by noting that what is happening now is NOT fair. Really rich people have the resources to hide huge amounts of their income from taxation. The rest of us may reduce our tax burden around the margin, but we pay more than the wealthy (thus, the quote from Warren Buffet).

          Can we eliminate world poverty – not sure, maybe not – but I am positive that we can do a whole lot better than we are doing now. At the risk of showing my age (I have already exposed my politics), I can tell you that public schools were great in my state when I was growing up – even wealthy people felt comfortable sending their kids there…student loans for college had low-interest rates and great payback programs – that meant people could work hard and rise up (you know, the American dream). I think we need to start by telling it like it is…here is an example of what I mean: http://bit.ly/1UJswnL (watch the video). We need to quit accepting myths like “trickle down” economics or cut taxes on the job creators (as far as I can tell these “job creators” are the same people (e.g., CEOS of big companies) who sign off on sending jobs overseas. I could go on and on, but won’t but feel free to weigh in….

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.