Mo Ibrahim Quotes
Transfer pricing is causing huge problems in Africa.
Two decades later, in 2011, the fact that the very wealthy often paid tax at a much lower rate than the middle class and even some working poor became a major political issue.
Romney, a very wealthy businessman running for President as a Republican, had owned and controlled companies that had outsourced jobs abroad. In addition, he personally maintained large bank accounts in Switzerland and Caribbean tax havens and kept his tax returns secret to minimize his exposure. Ironically, there was nothing illegal in his maintaining such accounts, and most very wealthy people did. However, Romney, never secure in his own skin, didn’t want his opponents to focus on the fact that he did what rich people did and what most middle class and poor people rarely did and considered somewhat unpatriotic. So this insult was very effective as most people thought that when the American banks were in danger of collapsing in the Meltdown of 2008, and had to be bailed out by the taxpayers, he would not keep much of his money in the American banking system—easy to understand for a wealthy investor, but not so good for a politician claiming to have the nation’s interest as a first priority. Many conservatives argued that it was patriotic for a citizen to maximize his personal wealth and economic security and Romney should have defended his actions so Romney was caught in the middle, hence a good target for his opponents.
The tax rates on income from working is much higher than on income generated from money which is invested. The reason for this is that the government wants economic growth and lowering the tax rate on investment profits will produce more investment which theoretically creates more jobs and strengthens the economy. However, most workers have no choice about whether they have to work. Lowering their tax rate will not induce them to work more. This not only produces a patently unfair burden on the worker compared to people who have capital to invest—usually among the wealthiest Americans. Another problem is that there are many forms of investment that does not produce any benefit for the United States. Many people invest in overseas banks, non American companies. These we tax at a low rate and all the benefits of the investment go to the foreign country.
Tax Evasion is a felony. Tax avoidance is using legal loopholes to avoid paying taxes. However, as Hightower points out, every time a wealthy individual or corporation legally avoids a tax, the burden to make up for the lost revenue falls on the Middle Class for whom there are few tax loopholes. Also, they cannot afford the high-priced lawyers and accountants to find the schemes to use.
Mohammed "Mo" Ibrahim is a Sudanese-British billionaire businessman. He worked for several telecommunications companies, before founding Celtel, which when sold had over 24 million mobile phone subscribers in 14 African countries. After selling Celtel in 2005 for $3.4 billion, he set up the Mo Ibrahim Foundation to encourage better governance in Africa, as well as creating the Ibrahim Index of African Governance, to evaluate nations' performance. He is also a member of the Africa regional advisory board of London Business School.
