Tax Havens Don't Have to Be Considered RespectableS

Certain nations in this world prosper by becoming "tax havens"— by pulling in money from people and entities seeking to avoid taxes in their home countries. They profit as the treasuries of other nations suffer. Now, even some non-utopians are predicting their end.

Following last month's leak of information about secret offshore accounts of the rich and famous, and this week's big ol' Congressional report on Apple's (typical, common) global tax avoidance scheme, it seems that the wild notion that companies and people should pay fair taxes is having a bit of a moment. The EU's top tax official tells the New York Times that "Bank secrecy is a relic of the past." A former top economic official in Luxembourg (a tax haven) says, “In five years, there will be no tax havens left on earth." (Corporations themselves, always ahead of the curve, have been disclosing less and less information about their offshore subsidiaries for several years now, to avoid scrutiny.) In Europe, nations are pledging to work together more closely and share more information in order to try to make it harder for companies to play various national tax laws off against one another. In the UK, they're calling companies out by name:

“I can’t be the only person here who feels disappointed that such a great company as Google, with such great founding principles, will be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds of revenue in Britain, it is fair that it should pay just a fraction of 1 percent of that in tax,” [Labor Party leader Ed] Miliband said, criticizing by name Google’s executive chairman, who was not in attendance. “It’s a shame Eric Schmidt isn’t here to hear me say this direct. When Google goes to extraordinary lengths to avoid paying its taxes, I say it’s wrong.”

It is remarkable that a sentiment that appeals so plainly to the public's sense of fairness is even up for debate. The fact that making companies pay taxes is difficult does not change the fact that huge corporations— which spend millions of dollars each year on PR and advertising designed to burnish their own reputations as good, solid, trustworthy operations— should pay their fair share of taxes. You, the consumer, do not have the power to make Apple or Google pay more taxes, but collectively you do have the power to ensure that the practice of systematically avoiding paying taxes damages their well-tended reputations. All of us little people pay taxes. The average working person pays more than his fair share of taxes. Companies (including Gawker Media) can pay their taxes, too.

It doubtful that tax havens will ever truly disappear. But the use of tax havens can certainly be made disreputable.

[Photo: AP]