Jump to Comments

When it comes to not paying taxes there are two options: tax evasion, the illegal method, and tax avoidance, the legal method. Both are prevalent throughout the world but condemnation is growing and pressure on governments to prevent tax-abuse is mounting.

In May the British charity Christian Aid published a report entitled Death and Taxes: the True Toll of Tax-dodging. The report reasons that poor countries, their governments and their people are losing out to the tune of $160bn (£82bn) in taxes and that tax-abuse has become the “new slavery”. Consequently, they estimate that “illegal, trade-related tax evasion alone will be responsible for some 5.6 million deaths of young children in the developing world between 2000 and 2015. That is almost 1,000 a day”.

Tax avoidance, the legal option, usually conducted via one of the globe’s many tax havens is also criticised in the report. A firmly entrenched and widely accepted practice in the modern world, Christian Aid comments on the “moral ambivalence” that the toleration of tax avoidance promulgates. It is within this grey area of tax-havens and offshore accounts that “a full 50 per cent of world trade is reported to take place”.

With this in mind let’s have a look at a few recent examples of some famous types who’ve followed the path of so many transnational corporations and done their best to hand over as little of their hard-earned fortunes to the taxman as possible; and in doing so perhaps legitimised and promoted the practices of tax avoidance and tax evasion in the eyes of their adoring fans…

Lewis Hamilton: Quick off the Grid
In August 2007 Lewis Hamilton, the 22-year-old British F1 superstar (who is briefly mentioned in the Christian Aid report), told the media that he was planning to move from the UK in a bid to reclaim his privacy from the obsessively intrusive tabloid press. However, after the predictable announcement of his ensuing move to Switzerland, tax-haven of numerous racing drivers, Hamilton was forced to reveal his true motivation: with estimated earnings of around £10m ($19.8m) for this year Hamilton will now avoid the UK’s 40% tax and pay a mere £180,000 ($350,000) in his new Swiss hometown – saving a tidy sum of around £3.82m ($7.5m). Hopefully he’ll be able to spend his fortune in seclusion far away from prying eyes.

The Rolling Stones: Sell out, Cash in and Rock on (and on and on)
The world-famous sexagenarian rock group made their mark in the 1960s with classic tunes such as (I Can’t Get No) Satisfaction and Jumpin’ Jack Flash. As pioneers of prostituting their art in the name of big money (they were early advocates and life-long exponents of commercially-sponsored tours) Jagger & Co made an early shrewd decision to base the holding company managing their music rights in The Netherlands rather than in their native UK back in 1972. Two years ago figures were released revealing that despite earning a colossal £240m ($476m) in royalties over a twenty year period they have paid a mere £3.9m ($7.7m) in tax, just 1.6% – an advantage of the lenient Dutch tax laws for musicians.

U2: Pro-Bono Tax
Perhaps the most unscrupulous tax-dodger in recent years is the self-styled Saviour of the Universe™ – Bono (and his band members from U2). In one of the most galling displays of hypocrisy in the history of mankind the Nobel Peace Prize nominee and his band moved their music publishing company from Ireland to The Netherlands in 2006. Impelled by a change in Irish taxation by which the previous artists’ tax exemption was to be capped at around £170,000 ($330,000), Time Magazine’s Person of the Year 2005 decided on a swift move to the musician’s tax-haven of The Netherlands to make the most of the country’s enticing 1.5% royalty tax.

All in a days work for one of the world’s most lucrative bands and a widely celebrated champion of the poor and downtrodden. You may remember Bono pleading for the people of the rich world to donate money to help the poor and for the governments to donate more of their taxpayers’ money in the name of global aid – obviously Bono and his band are exempt from such matters.

Wesley Snipes: From Daywalker to Tax-dodger
In a more interesting recent case the Hollywood star, originally charged and acquitted of federal tax-fraud and conspiracy in February of this year, was subsequently sentenced to three years in prison in April for the lesser crime of failing to file tax returns. The prosecution alleged that Snipes had failed to file a tax return since 1998 and had not paid any tax since that time on an estimated income of around $38m (£19.2m).

Reports state that the Blade star was accused of using offshore accounts and other tax-avoiding methods, but many do not mention the fact that Snipes refused to pay on the grounds of the “861 argument”, a tax protest theory which claims that US income tax is illegal and not backed by the Constitution (as propounded by his fellow defendants, and staunch supporters of the cause, Douglas Rosile and Eddie Ray Kahn). Currently on bail and involved in negotiations with the IRS, it will be interesting to see whether Snipes’s star power can keep him out of prison.

None of these examples are exceptional by any means, the rich and famous have been avoiding taxes since taxation began because, unlike the poor, they have the necessary means and motive – i.e. lots of money and the desire to keep it. The list above is only a small sample of some of the more high-profile and recent cases of tax-abuse; however, it is the huge transnational corporations and major business organisations, the behind-the-scenes operators who account for the vast majority of these insidious financial practices. And as the rich get richer and the poor get poorer, reports such as Death and Taxes… are of great importance in drawing the attention of governments and the public to the distorted taxation systems around the world which only serve to further line the pockets of the world’s wealthiest.