Occasional reflections on Life, the World, and Mathematics


One felicitous phrase that has long stuck in my mind, and even substantively affected my thinking, came at the end of an essay by Garrison Keillor, on the social value of hypocrisy. He told of a small town that lost multiple upstanding citizens, including the minister, to serial revelations of adultery. “Sinners are more important to a town’s economy than saintly people are, and they are better citizens. A gnawing sense of guilt makes them more willing to serve on committees.” He concludes with a paean to the communities built by

people with enough holes in their underwear to make them careful crossing streets.

I wonder if EU Commission president Jean-Claude Juncker may be just such a person. The Commission is under pressure to take action against tax avoidance schemes. He is being attacked by some for his role in making tax fraud the driving engine of the Luxembourg economy during his many years as prime minister. His embarrassment has become particularly acute since investigative journalists recently published secret Luxembourg government files on corporate tax affairs. But maybe this makes him just the person to oversee the cleanup. It’s not just the “takes a thief to catch a thief”, knowing-where-the-bodies-are-buried qualification. It’s that he’s sufficiently embarrassed by his past misdeeds to be seeking redemption through honourable work, and he knows that whatever he does will receive an extra measure of scrutiny.

While I’m on the topic, I just want to mention again how irritating I find the disclaimers that always appear in articles on this topic, that “These arrangements… are perfectly legal.” This is wrong for two reasons:
1. Often the laws pertaining to international tax arrangements allow certain transfers to be made for valid business reasons, but not for the purpose of avoiding taxes. Now, they are structured in such a way as to make it impossible to prove that tax avoidance was the purpose, so they can’t be convicted in court, but that’s different from “legal”. As I commented before, it’s like pushing someone off a cliff when no one else is around. No one can prove that it was murder, but that’s different from it being legal.
2. These arrangements are extremely complicated. Their legality depends upon the precise details of how they are structured. This means that only a very careful analysis of the details can determine whether they are indeed legal. What the journalists have found out is that Luxembourg basically rubber-stamped the reports, suggesting that the details have not been authoritatively vetted by anyone. If someone is making good-faith attempts to comply with the law, then it seems fair to treat the result as presumptively valid. If, on the other hand, he is making every effort to evade the intention of the law through technical compliance, then it seems fair to judge only the technical accomplishment of the task, and hammer him for any technical error, even it’s just a misplaced comma.
Live by the technicality, die by the technicality.

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