Panama Papers and income inequality as your economics research topic

Details are still trickling out about the leaked documents from Mossack Fonseca. Known as the Panama Papers, the 2.6 terabytes of data reveal a trove of information about tax havens and money laundering perpetrated by some of the world’s wealthiest citizens.

Find out more about the leaked Panama Papers here. (Credit: BBC)

Find out more about the leaked Panama Papers here. (Credit: BBC)

Not only does this recent event provide multiple research paper topics in terms of tax evasion and other economic issues, it also shines a light on income inequality.

Why are the leaked Panama Papers so important?

Not familiar with what is involved in money laundering and tax havens? The leaked documents from Mossack Fonseca, known as the Panama Papers, offered the biggest look into these practices that the world has ever seen. The Economist Explains blog offered, “What are the Panama papers and why do they matter?” on April 4, 2016, with some details. For instance, the blog wrote, “The 2.6 terabytes of data are thought to contain information about 214,500 companies in 21 offshore jurisdictions and name over 14,000 middlemen (such as banks and law firms) with whom the law firm has allegedly worked.”

Although it would be easy to jump to the conclusion that all of this activity was illegal, it is in fact not. A research paper could compare and contrast the legal and illegal practices involved in tax havens for an economics class.

Who was working with Mossack Fonseca?

In addition to the enormous amount of information in the leaked documents, the Panama Papers revealed an interesting list of world leaders who use tax havens for hiding their wealth. But is this money laundering illegal? Many of those implicated say it is not.

Liam Stack wrote “The Panama Papers: Here’s What We Know” for The New York Times on April 4, 2016, and highlighted many of the well-known world leaders mentioned, from prime minister of Great Britain David Cameron to President Xi Jinping of China. The prime minister of Iceland has resigned after being mentioned in the Panama Papers, and more investigations are sure to come. Very few Americans have been implicated because “it is fairly easy to form shell companies in the United States,” Stack explained. Another research paper idea could address how tax reform could limit money laundering or other ways to stop people and corporations from using tax havens.

What’s the link between money laundering and income inequality?

While the details are still coming out from the Mossack Fonseca leaked documents, are there other issues to consider, besides the obvious of money laundering and tax havens? Mark Trumbull believes there are and wrote about the issue of income inequality as it pertains to the Panama Papers in “What Do Panama Papers Have to Do with Inequality? A Lot, Actually” for The Christian Science Monitor on April 5, 2016.

Trumbull wrote, “But the news, arriving at a time income inequality is an issue of high worldwide concern, also suggests that global tolerance of tax havens is one of the important roots of the rich-poor gap.” A research paper could discuss the broader topic of income inequality and the role that tax havens play in it. And while the basic idea of a tax haven isn’t illegal, for many, this tax avoidance only exacerbates the income inequality around the world, whether it is by causing a tax shortfall, so healthcare programs can’t be fully funded, or simply by allowing the already wealthy to become even wealthier.

Want to learn more about tax evasion or tax reform? Check out Questia—particularly the section on the income inequality

Do you think that tax havens should be legal, and if not will the leaked documents of the Panama Papers help stop this form of money laundering? Let us know in the comments.

1 reply
  1. Larry (Lorenzo Bernardotto - It.) says:

    A “thief” is NEVER “legal” and “havens” should not exist. Also, leaked document should not exist. MORALITY IS GONE, by now! I wonder: “How these “thieves”, can go to bed, being aware they are starving out thousands of families and people? Have they a conscience? Or … are they simply “animals”? Worst, animals “have” a conscience! I think, if the Hell exists, it is for these “beasts”. I wonder: How can they cheat 70-80-years honest old people who have worked their entire life, stealing their pension (recent Italian scandal about banks)? How can they live with 20,000,000 of Euros or Dollars when a normal man can hardly live with 700-1000 Euros or Dollars per month? We must change this world. How? I don’t know. Surely when ONE of these “beasts” die, we must celebrate the event, because ONE DIED = LESS PROBLEMS IN THIS WORLD.


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