Immoral accumulation of wealth

Itoshima, Fukuoka

In his Dec. 2 letter, “What’s wrong with avoidance?” (which was a reply to Hugh Cortazzi’s Nov. 28 article, “Failures in market economies“), Joseph Jaworski misses the point.

Taxation systems in modern democratic economies are surely complex and may also appear opaque to the nonprofessional, but they are necessary to maintain a stable, peaceful and fair society. I worked at one of the biggest accounting firms in the world and have never heard of double, triple or even quadruple taxation in the way it is used in his letter. Bilateral and multilateral tax agreements are in place to avoid this.

The main reason Jaworski is on the wrong path concerns the discussion on the morality of tax avoidance. Multinationals take full advantage of advanced systems in some of the richest countries, yet channel almost all of their generated income in those countries to low-tax jurisdictions.

The moral point has to be made: It is immoral to be a “parasite” on an economy by accepting incentives to set up business, tax incentives to hire people, etc., and then, instead of giving income back to society, channeling it into a tax haven from where it is paid out to shareholder accounts in other tax havens.

Wealth may accumulate to such a point that some owners don’t even know what to do with it. Instead of investing it in the real economy, they may “gamble” it away on Wall Street, thus further destabilizing the economy and the lives of Joe Public.

If one looks at the history of financial crashes, they tend to happen during times of the largest capital concentrations. Look only at the examples of the South Sea Bubble or the Tulip Bubble — both of which are relevant to today’s problems.

So, yes, Cortazzi is right to say that such tax avoidance is immoral. I would dare to say that soon it will be illegal. For too long, the burden has been put on low- and middle-income families and on singles while multinationals got ever-greater tax breaks and subsidies. This cannot be accepted by a modern democracy as it will endanger our democratic system (just look at Greece — shipping companies never pay taxes there).

Jaworski should not be fooled into believing in the “trickle down effect.” The world is in a financial mess with rising unemployment even as mind-boggling value-added taxes break the necks of common people. Multinationals must be forced to book profit in the country where they make it and to pay all relevant taxes there, to increase tax income for the government, which then can reduce the burden on the most vulnerable.

The opinions expressed in this letter to the editor are the writer’s own and do not necessarily reflect the policies of The Japan Times.

franz pichler