Hexbyte Glen Cove The Pandora Papers: How punishing tax cheats can serve as a deterrent

Hexbyte Glen Cove

Enforcing punishments on proven tax cheats could provide benefits beyond improving compliance to tax laws. Once offenders pay up, billions lost to offshore scandals could be recouped and the tax burden more fairly shared among taxpayers. Credit: Shutterstock

Law-abiding taxpayers look on with disappointment and disdain as details about the illicit financial arrangements of the ultra-wealthy surface —again. The latest leak of nearly 12 million offshore financial records—the so-called Pandora Papers—provides clues as to how the rich avoid paying their fair share of taxes.

Sports stars Jacques Villeneuve, a former Formula One racer, and figure skating legend Elvis Stojko are among the Canadians who have been named in the Pandora Papers.

This is not the first time the public has learned about how the wealthy evade taxes and shield their riches. The Panama Papers, Paradise Papers and Luxembourg Leaks uncovered aggressive tax planning and tax evasion undertaken by the global elite.

When the rich, famous and infamous don’t pay their fair share of taxes, the public looks to authorities to enforce tax laws and punish the offenders. Punishment creates a sense of retributive justice and serves as a reminder that tax compliance laws should be obeyed for the collective good of society. However, authorities often fail to deliver, perpetuating the cycle of injustice.

Does punishment deter tax evasion?

What we don’t know for sure is whether punishing the offenders involved in global tax scandals benefits the reported income compliance of observers and deters tax cheats. My preliminary research suggests that the answer is “yes,” but only if observers perceive that the tax is fully blameworthy or responsible.

If the of blameworthy offenders can improve compliance, it would seem logical for tax authorities to actively prosecute all suspected offenders. But this is hardly the case.

With limited resources and the risk of losing costly legal battles, not everyone who evades taxes and shields wealth gets punished. Even worse, if prosecutors’ cases don’t stand up in court, it can encourage aggressive tax planning or tax evasion because a precedent is set that undermines tax authorities.

Why does compliance increase when tax cheats are punished? My research findings reveal that compliance improves when wrongdoers appear more deserving of prosecution and are ultimately punished. Observers experience satisfaction when authorities uphold justice, especially for the wealthy.

When justice is applied equally, authorities reinforce their requirement to be obeyed, which signals both their competence and that tax evaders will be found and held accountable.

Pointing the finger at advisers

Being perceived as guilty increases perceptions of an offender deserving a punishment. As such, a strategic course of action for those exposed in global tax scandals is to deny responsibility. Ultra-wealthy individuals named in the Pandora Papers and other tax scandals often blame lawyers or advisers.

Stojko has denied responsibility and said he trusted his lawyer to manage his financial details.

Similarly, the wealthy Cooper family of British Columbia—named in the Panama Papers—denied responsibility. Marshall Cooper, who grew up in South Africa, stated that he was unaware of Canadian tax laws and simply hired the best advisers to manage the family’s finances.

With blame being tossed back and forth, perhaps authorities should pursue the lawyers and advisers of the wealthy rather than simply punishing tax evaders.

The media may shame the wealthy, but lawyers, accountants and other advisers act as enablers who facilitate aggressive tax planning, and likely in some cases . If enablers share responsibility, they too should be punished. It’s possible that punishing enablers could also compel taxpayers to comply with tax laws.

Billions recouped?

Enforcing punishments on proven tax cheats could provide added benefits beyond improving compliance to tax laws. Once offenders pay up, billions lost to offshore scandals could be recouped and the tax burden more fairly shared among taxpayers.

Still, in the aftermath of the Pandora Papers, taxpayers are likely wondering what the authorities will do this time and whether tax offenders will get the punishments they deserve. Global tax transparency efforts are ratcheting up, possibly offering a glimmer of hope that justice will prevail. But even with this silver lining, some remain pessimistic.

With evidence that punishment can re-establish a sense of justice, authorities should use their resources to ensure culpable offenders are held accountable. Upholding justice, especially for the wealthy and privileged, serves the collective good of society.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Pandora Papers: How punishing tax cheats can serve as a deterrent (2021, November 3)
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Hexbyte Glen Cove Chandra observations reveal extraordinary magnetar thumbnail

Hexbyte Glen Cove Chandra observations reveal extraordinary magnetar

Hexbyte Glen Cove

This image contains an exceptional magnetar, a type of neutron star with very powerfulmagnetic fields. Astronomers have found evidence that this object may be the youngest knownmagnetar (about 500 years old in Earth’s timeframe). It is also the fastest rotating one yet discovered(spinning about 1.4 times per second). This image shows the magnetar in X-rays from Chandra (purple)at the center of the image in combination with Spitzer and WISE infrared data showing the wider field ofview. Magnetars form when a massive star runs out of nuclear fuel and its core collapses onto itself. Credit: X-ray: NASA/CXC/Univ. of West Virginia/H. Blumer; Infrared (Spitzer and Wise): NASA/JPLCalTech/Spitzer

In 2020, astronomers added a new member to an exclusive family of exotic objects with the discovery of a magnetar. New observations from NASA’s Chandra X-ray Observatory help support the idea that it is also a pulsar, meaning it emits regular pulses of light.

Magnetars are a type of star, an incredibly dense object mainly made up of tightly packed neutron, which forms from the collapsed core of a massive star during a supernova.

What sets magnetars apart from other neutron is that they also have the most powerful known magnetic fields in the universe. For context, the strength of our planet’s has a value of about one Gauss, while a refrigerator magnet measures about 100 Gauss. Magnetars, on the other hand, have magnetic fields of about a million billion Gauss. If a was located a sixth of the way to the Moon (about 40,000 miles), it would wipe the data from all of the credit cards on Earth.

On March 12, 2020, astronomers detected a new magnetar with NASA’s Neil Gehrels Swift Telescope. This is only the 31st known magnetar, out of the approximately 3,000 known neutron stars.

After follow-up observations, researchers determined that this object, dubbed J1818.0-1607, was special for other reasons. First, it may be the youngest known magnetar, with an age estimated to be about 500 years old. This is based on how quickly the is slowing and the assumption that it was born spinning much faster. Secondly, it also spins faster than any previously discovered magnetar, rotating once around every 1.4 seconds.

Chandra’s observations of J1818.0-1607 obtained less than a month after the discovery with Swift gave astronomers the first high-resolution view of this object in X-rays. The Chandra data revealed a point source where the magnetar was located, which is surrounded by diffuse X-ray emission, likely caused by X-rays reflecting off dust located in its vicinity. (Some of this diffuse X-ray emission may also be from winds blowing away from the neutron star.)

Harsha Blumer of West Virginia University and Samar Safi-Harb of the University of Manitoba in Canada recently published results from the Chandra observations of J1818.0-1607 in The Astrophysical Journal Letters.

This composite image contains a wide field of view in the infrared from two NASA missions, the Spitzer Space Telescope and the Wide-Field Infrared Survey Explorer (WISE), taken before the magnetar’s discovery. X-rays from Chandra show the magnetar in purple. The magnetar is located close to the plane of the Milky Way galaxy at a distance of about 21,000 light-years from Earth.

Other astronomers have also observed J1818.0-1607 with radio telescopes, such as the NSF’s Karl Jansky Very Large Array (VLA), and determined that it gives off radio waves. This implies that it also has properties similar to that of a typical “rotation-powered pulsar,” a type of neutron star that gives off beams of radiation that are detected as repeating pulses of emission as it rotates and slows down. Only five magnetars including this one have been recorded to also act like pulsars, constituting less than 0.2% of the known neutron star population.

The Chandra observations may also provide support for this general idea. Safi-Harb and Blumer studied how efficiently J1818.0-1607 is converting energy from its decreasing rate of spin into X-rays. They concluded this efficiency is lower than that typically found for magnetars, and likely within the range found for other rotation-powered pulsars.

The explosion that created a magnetar of this age would be expected to have left behind a detectable debris field. To search for this supernova remnant, Safi-Harb and Blumer looked at the X-rays from Chandra, infrared data from Spitzer, and the radio data from the VLA. Based on the Spitzer and VLA data they found possible evidence for a remnant, but at a relatively large distance away from the magnetar. In order to cover this distance the magnetar would need to have traveled at speeds far exceeding those of the fastest known neutron stars, even assuming it is much older than expected, which would allow more travel time.

More information:
Harsha Blumer et al. Chandra Observations of the Newly Discovered Magnetar Swift J1818.0–1607, The Astrophysical Journal (2020). DOI: 10.3847/2041-8213/abc6a2

Chandra observations reveal extraordinary magnetar (2021, January 8)
retrieved 9 January 2021
from https://phys.org/news/2021-01-chandra-reveal-extraordinary-magnetar.html

This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no
part may be reproduced without the written permission. The content is provided for information purposes only.