Sunday, March 08, 2009

Inequality and the spirit level

The Economist magazine, while having published many interesting articles on various topics, has for years been a defender of tax havens and a brazen supporter of inequality ("the politics of envy" is one way they typically demonise those seeking politics of greater social equality.) We are pleased to note, however, that they review a new and thoroughly researched book by Richard Wilkinson and Kate Pickett on the subject of inequality. As the review notes:

"Within the rich world, where destitution is rare, countries where incomes are more evenly distributed have longer-lived citizens and lower rates of obesity, delinquency, depression and teenage pregnancy than richer countries where wealth is more concentrated."

and it adds:

"the evidence, here painstakingly marshalled, is hard to dispute."

The book's publicity adds more, noting that it is based on more than thirty years' worth of research.

"The remarkable data the book lays out and the measures it uses are like a spirit level which we can hold up to compare the conditions of different societies.

. . .
Almost every modern social and environmental problem - ill-health, lack of community life, violence, drugs, obesity, mental illness, long working hours, big prison populations - is more likely to occur in a less equal society. The book goes to the heart of the apparent contrast between the material success and social failings of many modern societies."

And The Economist adds this:

"What to do about this sickness caused by other people’s wealth? Swingeing taxes on the rich, or smaller differences in pay in the first place, say the authors, citing Sweden and Japan as instances of the two alternatives. A decade ago even left-wing politicians were “intensely relaxed about people getting filthy rich”. Now, as it becomes clearer that some of the rich got that way by theft, the idea that they have also caused injury more subtly will gain a readier hearing."

The Economist then veers off to question this conclusion, saying that the price of greater equality could be slower growth, which stimulates innovation. Given the spirit of the times, that could be taken with a large pitcher of salt. And the graph on the right, from Jeffrey Owens of the OECD, might give some pause for thought (we're not making a point here about correlation vs. causation; just noting in a different way that higher taxes clearly don't have to be harmful as many people seem to think.) For those interested in investigating further, this December 2006 report comparing social outcomes between high-tax Scandinavian countries and low-tax Anglo-American ones might be of interest.

We should add one more thing. How does one measure the justice of tax systems? Well, nobody has yet done so in any meaningful or useful way. But hope is now at hand. A new TJN project overseen by Professor Edmund Valpy Fitzgerald, director of Queen Elizabeth House at Oxford University and a Senior Adviser to TJN, is now working on this. It is going to produce a new way to measure tax justice via a revolutionary new tool - The Plato Index.


Anonymous Anonymous said...

Quid pro quo, KPMG, tax shelters, audits of DOJ and unemployment. U-6 unemployment is 15% yet KPMG remains employed by many of its clients including the DOJ. Word on the street is KPMG’s revenues are down at least $300 million which seems low given the number of failed financial institutions KPMG audits whose financial statements were riddled with tax fraud (at least according to Mike Hamersley) and accounting fraud (which apparently only the markets could figure out, right Citi). When are the massive layoffs at KPMG going to start as apparently accounting fraud is out of vogue? Word on the street is KPMG not only audits a disproportionate amount of Insurance companies engaging in accounting fraud and tax fraud but KPMG’s own purported Bermudian fraudulent Captive insurance company, Park, was engaging in accounting and massive tax fraud. How can this be? KPMG as part of its deferred prosecution agreement with the DOJ was given the audit of the DOJ, perhaps, a quid pro quo for KPMG agreeing to throw several of its tax partners under the bus and destroying theirs’ and their families lives, pay a large fine, be monitored by a fellow who used to work for the government as head of the SEC, Breeden (millions in fees earned by a former government official (more quid pro quo)); a deal struck by Flynn, Loonan, Bennett, Taft and Holmes. Which partners will KPMG throw under the bus next to help in avoiding indictment by the DOJ for the massive $100s of Billions in accounting fraud KPMG assisted their financial clients in purveying against the public and the markets. Is it possible the KPMG partners believe that since KPMG audits the DOJ the massive accounting fraud they purveyed will be allowed? Are the DOJ accounting statements riddled with fraud like most of KPMG’s clients? If I were a KPMG partner I would not count on it judging by what the U.S. Government did to Sadam once a good friend of the U.S., is the same type of devastation and destruction coming to KPMG? Word on the street is KPMG through its captive insurance company, Park, not only defrauded its partners (and the KPMG Board of Directors) by kiting current legal claims into insurance liabilities with the help of none other than AIG but committed massive tax fraud itself with the approval of KPMG’s internal legal counsel Loonan and Taft . In fact, the world renowned whistleblower Mike Hamersley testified to the Senate and DOJ, that the type of “tax structuring” KPMG’s captive insurance company entered into (and many of KPMG’s clients) was in fact, tax fraud. And believe me, Hamersley claims he knows tax fraud when he sees it since while at KPMG he purveyed much of this type of tax fraud for his clients, the very same tax fraud he decried to the Senate and DOJ about while destroying the lives of many families, the emails are there for the world to see yet no one looks, why? Does KPMG believe it and its partners are immune from prosecution for continued and massive accounting and tax fraud because of the “deal” it struck to audit the DOJ? If the U.S. government’s behavior in the past towards its presumed friends, KPMG should not count on it and if you are a partner at KPMG that purveyed accounting and tax fraud (at least according to Hamersley), you can only expect to be thrown under the bus for a life of ass raping just like KPMG, Flynn, Loonan, Bennett, Taft and Holmes did to its tax partners (over rather trivial sums compared to the massive financial fraud presently destroying this country). Of course there may be hope since Hamersley a tax fraudster by his own definition has a high level government job destroying lives over the very same type of tax fraud he used to commit not withstanding the fact the government knows he committed tax fraud (based on Hamersley’s own emails), Quid pro quo?

8:37 am  
Anonymous Anonymous said...

Thoureau, please help me out here. I am a bit confused by your statements about Hamersely. I read Travails in Tax and personally observed Hamersley's testimony before the Senate Finance Committee. He seems like an exceedingly honest guy to me. Didn't KPMG say Hamersely had absolutely no involvement or knowledge of tax shelters in its press release to the Senate Finace Committee after Hamersley testified in October 2003? I read that KPMG press release on the PBS Frontline website. By the way, you seem to be the same blogger going by the name "whistelwhat" on other blogs. Am I mistaken?

11:38 am  
Anonymous Anonymous said...

Whistlewhat (Thoreau, Angry Citi Invetor/Shareholder–I have to admit it is difficult to keep track of all the aliases you are using to post identical comments while appearing to be different bloggers.)

Surely your comments about Hamersely are an April Fools joke, right? Otherwise, they just don’t make any sense at all. I am also highly skeptical that your bold statements about Hamersley could be based on any reliable evidence at all. I also read Travails in Tax and personally observed Hamersley’s testimony before the Senate Finance Committee. He seems like an exceedingly honest guy to me too. What about it, didn’t KPMG say Hamersely had absolutely no involvement or knowledge of tax shelters in its press release to the Senate Finace Committee after Hamersley testified in October 2003? I read that KPMG press release on the PBS Frontline website.
See also Hamersley Senate Finance Committee Testimony 003 TNT 204-35 online at

Are you suggesting Hamersley and KPMG are in cahoots? Wow, that would be a bold strategy seeing as Hamersley sued the crap out of them. Case No. BC 297209, Los Angeles Superior Court (June 23, 2003.), also reported in Tax Notes Today full copy of complaint 2003 TNT 124-5

7:47 am  
Anonymous I Concur With Tax Partner said...


I see from other blogs that your identity has finally been revealed as the infamous David Greenberg, the indicted former KPMG tax shelter promoter. I also see that another blogger found your use of multiple blogger aliases (whistlewhat, Angry Citi shareholder, Angry Citi investor, THE LIST GOES ON AND ON) both amusing and incredibly transparent. I liked his comparison of this blogger alias technique to your notorious three diffent pen color techique to perpetrate a forgery technique that was cited in your federal indictment. YOU ARE A JOKER!

7:08 am  

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