Why We Should Care To Cover The Panama Papers

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The media response to the Panama Papers barely scratches the surface. Highlights of drama and political hearsay consume readers, instead of coverage on the destructive details that allow for billions to be swept from public eye.

It may seem reasonable to blame the entertainment slant of American outlets for this superficial gleaming, but the reasoning is more disappointing than that.

The international secret came to surface thanks to the work of almost 400 journalists in more than 50 countries. Hidden bank accounts of prime ministers, billions of dollars changing hands between Vladimir Putin’s closest friends, and FIFA officials concealing their ownership of huge yachts—all revealed the myriad ways in which the rich can exploit secretive offshore tax regimes.

The Panama Papers leaked 11.5 million files from the database of the world’s fourth biggest offshore law firm, Mossack Fonseca. The records were obtained from an anonymous source by a German newspaper that then handed it off to the International Consortium of Investigative Journalists (ICIJ).

American media failed to titillate audiences outside of dropping the names of the famous personas that got caught. The reason isn’t that American business are squeaky clean, but because loose tax havens already exist domestically in this country. Very few American companies were even on the list as our system regularly allows wealthy individuals and businesses to get away with legal tax evasion.

The true dilemma is that mainstream media outlets refuse to address this systemic corruption here at home in favor of safely distant, more digestible, international gossip.

From Miley’s twerking to Trump’s, well, everything, we love celebrity gossip. Any story involving even moderately famous people doing the most mundane of activities is bound to garner a respectable wad of attention.

So what happens when a story breaks that implicates hundreds of public officials and well-known personalities? We all sit back as news cycle after news cycle brings tidbits of slightly nuanced–-though effectively interchangeable–analysis to the scandal.

It’s a perfect leak for a culture that worships celebrity breakdowns and political scandals. Countless heads of state were caught in various shades of gray tax crime, including the Icelandic Prime Minister who was later forced to resign amid massive public outcry. Beloved celebrities like Argentinian football star Lionel Messi were slapped with massive charges of tax evasion.

Despite being full of juicy bits on public figures like our favorite shirtless, horseback-riding Russian president, this leak was not a fountain of ammunition for the American media machine.

Dr. Clay Shirky, of NYU’s Interactive Telecommunications Program and the Arthur L. Carter Journalism Institute, spoke with BTRtoday about the paucity of American presence on the list that has generated a more tabloid focus into the papers.

According to Dr. Shirky, if the database contained all or mostly Americans, the American press would be tipped toward covering companies versus people, to avoid United States libel lawsuits. Once it’s an international story, however, the American media can “traffic in more of a gossipy angle” and ask out “who are the famous people involved?”

Perhaps the larger reasoning for the lack of in-depth coverage is the fact that tax evasion in the United States is simply old news. We need not go further than Delaware which champions the status as a leading tax evasion sanctuary in America.

The Institute on Tax and Economic Policy estimates that Delaware draws roughly 85 percent of Fortune 500 corporate subsidiaries or 19,000 companies to open up in the small state. Additionally, roughly 65 percent of Fortune 500 parent companies incorporate there. About 1.1 million businesses incorporate there, comically overshadowing the state’s population of 935,000.

Conveniently its legal system and tax code are both tailored well for avoiding corporate income tax.

The Delaware Loophole allows shell subsidiaries from out-of-state corporations to receive untaxed “trademark fees” from the sole shareholder (the parent company). Fees funnel income to the Delaware subsidiary and avoid the parent state’s income tax. They can also write off the fees in the parent state, resulting in obscene losses in state revenue.

Further facilitating this corporate money laundering is that corporations registering in Delaware are not burdened with proving who the corporate beneficiaries are or what substantial activity takes place at the location. Very little identification is required at all. It is far easier to set up a shell corporation for a terrorist cell at a firm in the United States than at offshore sites like Mossack Fonesca.

Delaware is not alone. Wyoming, Nevada, and South Dakota have zero corporate income tax and require little to no proof of a clean legal record. These states are known tax havens for tax evasion, Delaware simply has a much larger market.

The Panama Papers did not tell us anything new: the ultra-wealthy can hide enormous wads of cash with ease. Yet the leak did not result in a flurry of exposés on domestic cash hideouts, nor a public outcry for a massive overhaul on our tax system. The biggest response relating to domestic tax havens has been more political gossip about the Delaware holdings of Trump and Clinton. And let’s all be honest, those stories are mostly hearsay that detract from the issue at hand.

Dr. Seth Ashley, a professor of media theory and journalism at Boise State University, speaks to BTRtoday about the mass media’s tendency to avoid the intricacies of domestic economic loopholes.

“Anything related to the financial system is generally thought to be uninteresting to mass media audiences,” explains Ashley.

Could there be a degree of condescension on the part of media outlets expecting such topics to be “too complex” for their audiences?

He suggests to BTRtoday that the internet economy of clicks encourages commercial media outlets to expend less of their limited resources to investigating such serious issues.

It’s not necessarily a concerted effort on the part of the minions of corporate media giants to conceal their overlords’ misdeeds but rather a systemic bias towards sensational gossip journalism over the “boring” tax stuff. That boring stuff that also conveniently lets powerful corporate tax evaders largely off the hook.

It’s not shocking that these tax havens exist in the United States, but it is likely that nothing will change until mainstream media takes its readership seriously and hold them to a higher standard.