The Queen, the Comedian and an Angry Citizen (that would be me)

CNN International had a short article on the British Queen’s property earnings. For the first time the value of Queen’s estate reached £8bn, “an increase of 11% on 2011.” During Britain’s double dip recession and almost two years with no economic growth, the Queen’s “rural holdings experienced strong growth during the year, generating total returns of 19.5 per cent, comprised of 13.3 per cent uplift in value, to £1.2bn, and revenues of £25.9m.” 

I linked the CNN article on Facebook with the words: “Boy, did I get born into the wrong family.” A good friend commented: “If you were born into that family, would you give it all away?” To which I replied: “Goodness no. I would be entitled to it.” She then rightfully asked: “So if you wouldn't give it away and they are entitled to it, why does it make you so angry? Confused.” And finally my inadequate response: “It makes me angry, short version of course, because there is not an infinite amount of money and resources to go around, that most of the people on the planet are living in brutalizing poverty, that as a species we actually do have the intelligence and resource to better balance things out. Poverty is not naturally inevitable.[1] It is the result of a lack of will.” Now for a longer version.

First, when I said that I would be “entitled” to my wealth, what I meant was that if I had been born and raised in wealth, luxury and power it would be only natural for me to feel “entitled” to all three. I’m not sure anyone is actually “entitled” to great wealth for simply being born, however, I suspect my sense of entitlement would have been reinforced when I realized that the laws of the land entitled me to increase and protect my wealth in ways more common people could not.[2] None of this is to say that I would be necessarily insensitive to the situation of others, but people rarely give away wealth due to sensitivities. When a young man can take a military helicopter, land it on one of his family’s front lawns, pick up his brother and then fly off to a stag party without suffering any significant consequences, there’s a good chance he might feel “entitled.”[3]

Second, the point isn’t whether or not the wealthy “give it all away” for two obvious reasons. One, they won’t, any more than I am about to give away all my resources. Two, depending on the gifts of the wealthy is not a sound foundation on which to build and sustain a fair and just society.[4]

One of the requirements of justice is the fair distribution of opportunities, services and resources (particularly money.) Societies, if they choose, can legislate to assure a reasonably balanced distribution of all three and can do so without denying the obvious benefits of capitalism. To argue for a regulated capitalism is not to advocate for communism. To deny this possibility is to ignore the existence of societies that are in varying degrees of success legislating for fairness.[5]

Those who govern on our behalf write and pass laws that demand we pay taxes to the state. The taxes are then used to provide opportunities and services. This is obvious. However, those same lawmakers pass legislation that enables some individuals and companies to reduce their tax obligations or avoid them all together. The inherent unfairness in such laws highlight the difference between what is legal and what is understood as moral. It is not enough that something is simply legal. It must also be seen as moral and ethical. When a millionaire pays a lower tax rate from that of his or her secretary, most in society see that as unfair.[6] If a corporation works within a society, uses its resources and makes millions or billions of $’s, £’s or €’s, etc. through its people and pays no taxes at all, it can be judged as unfair.[7]

Last week a little known tax avoidance scheme for the wealthy was revealed in the British press. Over 1000 people were involved in this particular K2 scheme, but a leading comedian, Jimmy Carr, took most of the public heat. While the K2 scheme is perfectly legal, David Cameron announced that Carr’s tax avoidance was “morally wrong.” Most would agree, but while the PM was morally offended by the scheme, he made no suggestion that such tax avoidance programmes should be made illegal. If a tax law is deemed immoral, is it not reasonable to for such a law to be revoked. As Simon Jenkins said in his article “What’s morally Repugnant is that these tax scams are legal”: 

We are left with a moral quagmire. The rich are "entitled" to arrange their money according to the law, and we can merely condemn them as immoral. Wealthy executives claim the money they have filched from their shareholders and stashed offshore is "small in the totality of things". Yet revelations in the Times this week suggest that over £5bn a year may be lost to the exchequer…

Taxation has been damned for decades, however, it is tax revenue that supports our civilized societies. It is through taxation that we distributes social, political and economic resources throughout our society. It is, therefore, in the area of taxation that the notion of fairness for all is so vividly played out.

It is not only that the legal cover for the very wealthy is morally offensive, it also has huge practical implication. For example, “The US Senate calculated in 2008 that as much as $7tn of American bank deposits were located in British "crown colonies", dodging some $40bn in revenues.” There are literally trillions of $’s, £’s or €’s, etc., hidden away by companies and individuals in offshore banks. For example, there are 457,000 companies in the  British Virgin Islands which has a population of approximately 30,000 people. After the 2008 crash, which we are still living with, politicians of all stripes said it was time to tackle the offshore accounts that make it legally  possible for people and companies to avoid contributing to the very societies they exploit for resources and profits. Of course, nothing of any impact has been done. The amount of money controlled by and protected for a relatively small percentage of people is staggering.[8] If I pay my fair share of taxes that are needed for the running of society, why should others be exempt? And why do my elected officials protect them?

You don’t have to be a John Rawls to understand that a just society would do its best to approximate equality of opportunity, service and resources without stifling entrepreneurship. The evidence also show that social and economic inequality impacts public health, reduces educational opportunity, breeds corruption, warps politics and even harms the economy. You cannot legally protect the very wealthy and provide fairness in society. You cannot pretend society is fair when the majority of people experience a reduction in standard of living while millionaires “go on spending.”[9] Don’t kid yourself. We are not in this together.

So why am I angry? I am angry because many, though not all, of the very wealthy benefit from society but do not pay their fair share for societies. And I’m angry because my elected officials, while using the law to make me pay my fair share, also use the law to enable the wealthy to avoid paying their fair share. Before 2008 I would have said the following statement was overly cynical: “When we elect millionaires who take office and then protect billionaires, we can’t expect much change.” Now I’m not so sure.

Copyright © 2012 Dale Rominger

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[1] Many equate success and failure market and in life in general as akin to natural law, thus to regulate the winners and to try and save the losers is against nature and for many God’s wishes. See for example: Frank, Thomas. Pity the Billionaire. London: Harvill Secker, 2012, pp. 66-70.

[2] It not only takes money to make money, it takes money to save money.

[3] See: “Prince William flies multi-million pound RAF Chinook helicopter to cousin's Isle of Wight stag do... and picks up Harry on the way”

[4] I almost said for Two: It wouldn’t make a difference if they did give it all away. That actually is not true. The Queen’s property holdings are worth £8bn. That does not include her vast arts collection (one of the largest and most valuable private collections in the world, her financial investments nor her annual income. If were to “give it all away” and ring fenced the funds to say eliminating child poverty in Britain, it would make a difference.

[5] Denmark, for example, is making good progress in eliminating child poverty and provides a relatively high standard of living for the vast majority of its people.

[6] The Huffington Report on UK tax avoidance: “figures released for the first time underlined the need for action to prevent the super-rich exploiting the system of reliefs to reduce their tax bill below that of low-paid workers.” And according to ABC News an IRS report indicated that “…1,500 of America's 230,000 millionaires avoided paying any federal income tax in 2009.”

[7] For example, Amazon’s UK operation over the past three years “generated sales of more than £7.6bn in the UK without attracting any corporation tax on the profits from those sales.” See: “Amazon: £7bn sales, no UK corporation tax”.

[8] A global population of 11 million have assets of approximately $42 trillion (£27tn).

[9] Also see: “World’s super rich almost unaffected by debt crisis”.