Irish Examiner view: Tax leeway undermines all societies

Bill and Melinda Gates recognise the value of philanthropy and that the concentration of wealth needs to be rebalanced. Picture: AP Photo/Elaine Thompson

That Bill and Melinda Gates will end their 27-year marriage because they “no longer believe we can grow together as a couple” is, like most divorces, sad.

They may, however, have the resources to cushion the blow, unlike many, many others at that impasse. The Microsoft co-founder turned philanthropist and his wife have built up a fortune of just over €100bn, making them among the five richest couples in the world.

Their announcement will draw comparisons with a recent divorce that also involved billionaires.

It’s almost two years since the world’s biggest divorce settlement was agreed when Amazon founder Jeff Bezos gave just 4% of his online giant to his ex-wife MacKenzie Bezos.

That worked out at something over €30bn, a figure that dwarfs the HSE’s annual budget of around €20bn but is just around a tenth of Jeff Bezos’ personal wealth.

Like Bill and Melinda Gates, MacKenzie, who married Bezos before he started Amazon, recognises the value of philanthropy.

Two years ago she said she had “a disproportionate amount of money to share” and promised to work at giving it away “until the safe is empty”. That shedding is under way and last December it was reported she had donated around €5bn to charities.

A lot done, but much more to do as it were.

These figures may be beyond the practical comprehension of even the 17 or so Irish people in the billionaires’ club. They are certainly beyond the ken of the vast majority of people living in a place like Cork where the city council has a budget of €226m this year.

One of the conventions of a more deferential time, long before Amazon eviscerated traditional retailing, was that it was impolite to discuss money.

That shield of secrecy dressed as etiquette can hardly stand in the face of the tremendous — by any scale, in any historical context — revenues of today’s data empires.

Amazon delivered a record performance last year. The pandemic helped push revenue up 38% to $386bn, more than a billion dollars every day. This represented a yearly increase of over $100bn. Net profit was up 84%.

These figures deal with only one wing of the empire, one adept at legally minimising tax bills.

The behemoth’s latest corporate filings in Luxembourg — population 600,000 — revealed the company collected record sales income of €44bn in Europe last year but did not pay any corporation tax to the Grand Duchy.

Amazon EU Sarl made a €1.2bn loss and therefore paid no tax. The unit was granted €56m in credits to offset tax bills. The company has €2.7bn worth of carried forward losses stored up, which can be used against any tax payable on future profits.

No one, unless they are an Amazon shareholder or a wilfully imperceptive capitalist, can regard this or many other conglomerate’s tax affairs as a social success.

President Joe Biden has recognised this and has promised change to rebalance the accelerating concentration of wealth. This will have an impact in Ireland but what’s the alternative? 

Allow Bezos, Zuckerberg or someone else to become the first private trillionaire while social services and protections stutter and fade away?

Hard choices loom but deferring the inevitable will only make a necessary resolution even more difficult.