Xinxin Fang ‘24
The Pandora Papers are a recent leak of nearly 12 million documents. These documents detail around twenty-nine thousand concealed offshore accounts of current and former world leaders, celebrities, and billionaires. By transferring their money to “tax havens”, these people avoided paying taxes that allow state and federal governments to continue running effectively. The EA community has a variety of opinions on the issue; some commend the release and recognize the problems offshore accounts pose while others believe the Pandora Papers won’t have any effect on the institutions in play.
Photo courtesy of themoscowtimes.com
According to The Washington Post, which collaborated with the International Consortium of Investigative Journalists (ICIJ) to publish the documents, nobody “has challenged the authenticity of the documents.” But how reporters extracted this information is currently unknown.
Similar files have been leaked in the past. For example, the Panama Papers were released in 2016, which revealed the industry of offshore finance and the use of tax havens to increase wealth by politicians and other significant figures.
While tax havens themselves are legal, they become illegal if used for illegal purposes such as tax evasion. The GOV.UK website describes it as an “artificial transaction(s) that serve no purpose other than to produce this (tax) advantage. It involves operating within the letter, but not the spirit, of the law.” Due to this loophole, Connor Shanahan ‘24 feels that “tax havens are immoral, unethical, and hurt the people around them.” Riley Thibodeau ‘23 agrees, saying, “Avoiding taxes through tax havens is completely wrong because other people have to pay the same taxes and that inequity isn’t fair.”
With roughly 5.6-32 trillion dollars hidden offshore according to the ICIJ, the International Monetary Fund estimates that “tax havens collectively cost governments between $500 billion and $600 billion a year,” from both legal and illegal uses.
According to an extensive tax study on the public by Harvard economist Stefanie Stantcheva, 83% of respondents said they would either evade taxes or move to a lower tax bracket, confirming the view that the public is already committed to minimizing tax payments. Examples include opting for a Roth Individual Retirement Account (IRA) instead of a conventional IRA or traveling to a store in Delaware to avoid the sales tax in Pennsylvania. Thibodeau sees this as a human flaw, observing, “People are inherently greedy with money, and if there is an opportunity for people to avoid giving their money up, they will take it.”
The objective of publishing the Pandora Papers is unknown as previous leaks had more political effects than economical ones. Conor Gaul ‘24 says, “Nothing is going to happen. There’s so much more they don’t know about, and how can they stop it?” Daniel Demessie ‘24 also comments, “It’s inherently corrupt, but I also don’t think anything will change.”