…a canal Panama!
Gots to love them palindromes, am I right?
So today saw the release of the Panama Papers – millions of documents from a Panamanian law firm that specializes in helping firms avoid paying taxes. They do other, shadier stuff, too, and so far folks are focused on the implications of corruption for Putin and an unfolding Icelandic banking scandal, but the main thing is the mostly legal activity of taking advantage of the legal system to avoid paying taxes, so to accumulate profits more efficiently.
Kevin Drum at Mother Jones pretty much nails the situation:
Everyone is now making vague noises about offshore tax havens and how they should be shut down, or regulated, or something. But the plain truth is that no one really wants to do it. Britain, obviously, could shut down the ones under their control pretty easily, but they never have. The United States could effectively shut them all down by refusing to allow offshore shell companies in designated tax havens access to US banks. But we haven’t done that either. Too many rich people like things just the way they are.
I think most folks have long since assumed that rich people stacked their cash in offshore accounts – hence, the revelations of the Panama Papers aren’t really revelations. Its more like, “Okay, yeah, so what?” In the meantime, DC is on the verge of watching it’s storied light rail system become obsolete for lack of investment. It seems strange, but this is part of the normal state of affairs. We can’t make people pay their taxes, we can’t invest in public infrastructure. People are comfortable with the government not doing anything. If big cities suddenly got a bunch of Federal aid, people in the suburbs would be apoplectic over the injustice of it all. And it would be understandable – if you purchased an expensive house in the suburbs on the assumption that all the best people lived there, and then suddenly they all move to the city to take advantage of newly built infrastructure, that leaves you with an underwater mortgage and hurt pride. Hence, it is better to let the trains fall apart, since at least then already existing investments in housing will be preserved.
Expectations matter. More than are generally acknowledged.