- - Tuesday, April 5, 2016


Hiding data — what used to be called “facts and figures” — on the Internet, combined with the inability of most of us to distinguish computer hackers from whistleblowers, keeps dealing blow after blow to the concept of personal privacy, business and legitimate government secrets.

For a while, the revelations of Edward Snowden made him the most prolific leaker anywhere, and because most of the secrets he pilfered were from the U.S. government, he had to flee the country and find refuge in Russia, lest he spend the rest of his life buried in a maximum-security prison. Nobody who has done time recommends it.

The Snowden record for data theft, however, was broken last week by an anonymous (so far) leaker of facts and figures from the files of the world’s fourth-largest offshore law firm. The so-called Panama Papers consist of 11.5 million files, revealing the efforts to which the rich and powerful will go to reduce their taxes, guard their privacy and sometimes hide the fact that they are pilfering money from the companies and nations they run.

The revelations have spawned international outrage. Some of it is justified. The problem, says President Obama, is that “a lot of this stuff is legal, not illegal.” Promising to root out the illegal ways in which some hide income or otherwise avoid taxes, Mr. Obama has dispatched investigators from the Justice and Treasury Departments to examine the leaked documents and pursue criminal charges against any persons or corporations determined to have broken the law.

That’s all to the good, but to punish the lawbreakers and maximize the tax revenue required to feed the growing and constantly hungry federal bureaucracy the president should go further. He suggests what he calls “international tax reform,” to pursue those who have managed to protect some of their wealth and income without breaking the law. Criminalizing the careful husbanding of personal income, even if the gains are not ill-gotten, is what the president thinks is “tax reform.”

A true reformer would start at home by reforming the tax laws that drive business and jobs to other countries because making things here to sell abroad is difficult under a tax and regulatory regime that puts manufacturers — job creators, you might call them — at a distinct and often fatal competitive disadvantage. Instead of supporting meaningful reform here, Mr. Obama is content to watch a system that simply traps Americans in an unworkable contrivance. He blames them for its unworkability and finds more and more ways to pick their pockets. Some citizens, more in thrall to their wealth than to their native land, foolishly renounce their citizenship and flee to places where they can keep more of what they earn.

The U.S. tax system, which Jimmy Carter once called “a disgrace to the human race,” together with a regulatory regime that punishes rather than rewards innovation, has punctured the dream of Americans who are eager to climb the economic ladder to economic success and a better life for themselves and their families. Mr. Obama should look to why Americans citizens are fleeing government policies designed to kill that dream. Fix the system and the symptoms will disappear. That’s not rocket science.

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