Who Owns the Wealth in Tax Havens?

September 14, 2017 3:11 AM

The ultrawealthy have 10% of global GDP stashed in tax havens — and it's making inequality worse than it appears
Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman offer a new working paper about the composition of wealth held in offshore tax havens. Quick summary: "10% of world GDP is held in tax havens. The top 0.1% own 80% of that. The top 0.01% own 50%."

meanwhile...
-The GOP Wants to Crack Down on Tax Evasion — Among the Working Poor (via @gabriel_zucman)
-Lords of Misrule: How the legal profession became Wall Street's helpmeet

also btw...

• The cost of dodging the tax man: "about the use of tax havens and the effect tax evasion has on inequality and other macroeconomic measurements."
• Tax Havens: International Tax Avoidance and Evasion (via)
• Henry Farrell on tax havens
• Gabriel Zucman on tax havens (via) [1,2,3]
• Farrell interviews Zucman on (how to measure) the scale of tax evasion
• 'The Hidden Wealth Of Nations' Author Explores World Of Offshore Tax Havens: "there's about 8 percent of the world's financial wealth [around $95.5 trillion] that is held in tax havens globally. So that's about $7.6 trillion today, a huge amount of wealth... about 20 percent of this wealth is duly reported on tax returns so does not correspond to illegal behavior. But 80 percent is not reported, and that's criminal tax evasion."
• The Panama Papers Expose the Hidden Wealth of the World's Super-Rich: "the use of tax havens has grown 25 percent from 2009 to 2015. Zucman estimates that US citizens have at least $1.2 trillion stashed offshore, costing [$35-100 billion] a year worldwide in lost tax revenue from wealthy individuals. US multinational corporations underpay their taxes worldwide by $130 billion by engaging in corporate tax avoidance."
• After the Panama Papers: How Should Authorities React?: "As for a solution, Zucman recommends a global financial registry in which international assets can be tracked by tax authorities in different countries, as well as sanctions against financial institutions and countries that don't comply. (This is also one of the proposals to come out of the U.K. after the release of the Panama Papers.)"
• Parking the Big Money: "With the register, tax authorities could tell, essentially immediately, if their citizens are using tax havens. Zucman notes that a global register of this kind could have other benefits, helping to combat the financing of terrorism, bribery, and money laundering; public and private corruption might be added to this list. He notes too (and here he will immediately lose some readers) that such a register could facilitate the imposition of a global wealth tax, of the sort proposed, very controversially, by Thomas Piketty."

posted by kliuless (29 comments total)

Ok, you've overwhelmed me, and sent me straight into depression. The world is fucked, and I feel powerless to change it.
posted by MikeWarot at 4:36 AM on September 14, 2017 [3 favorites]

This is a great post. Thank you for putting it together.

I appreciated the Economist's efforts to go with an upbeat ending in that second link:

Globalisation has disproportionately benefited the rich in part by rewarding capital more handsomely than labour. But globalisation has also made it easier for the well-heeled to hide their wealth. In that sense, maybe the data should cause even more surprise: despite the best efforts of a lucrative global tax-evasion industry, Scandinavia’s ultra-rich are paying 70% of their taxes.

posted by Catseye at 4:47 AM on September 14, 2017 [4 favorites]

It's the same bullshit ratchet that I've been talking about since high school. People with money and power use those things to accumulate more money and power, at the expense of everyone else. The more they have, the more successful they are at defending it and acquiring more. Since people are people, they will keep doing this until the system crumbles completely. I see no mechanism that could halt or reverse this process.

It's happening. It's been happening all my life, and it's going to continue to get worse and worse.
posted by Anticipation Of A New Lover's Arrival, The at 5:24 AM on September 14, 2017 [9 favorites]

I'm not saying that I'm the first person to see this, of course. But it was obvious even to me, even back then. Nothing I've seen since has done anything at all to convince me that I was mistaken.
posted by Anticipation Of A New Lover's Arrival, The at 5:30 AM on September 14, 2017

I see no mechanism that could halt or reverse this process.

Mechanisms exist, but it's hard to imagine how they could ever be implemented, since the super-rich whom they are meant to regulate control everything.

Slightly off topic: I don't really understand why do the super-rich want so much money? At some point, what could you even do with it?
posted by Vispa Teresa at 5:36 AM on September 14, 2017 [4 favorites]

what could you even do with it?

The point is not to do things with it. The point is to have more than that jumped-up little toad in the next castle.
posted by flabdablet at 5:42 AM on September 14, 2017 [7 favorites]

I am challenged to reconcile the facts of the FPP with metrics like those used by Hans Rosling (e.g.,life expectancy and income per person) that are encouraging.
posted by lazycomputerkids at 5:48 AM on September 14, 2017 [4 favorites]

flabdablet is right. Beyond a certain point it's all just scorekeeping.
posted by elizilla at 6:06 AM on September 14, 2017

There's no need for any practical motivation, Vispa. Humans have an inherent drive to accumulate resources, and there's no internal brake. It used to be that our small numbers and relative powerlessness meant we could never acquire so much that there wasn't still plenty left over for everyone else. The world was a big enough place, and humans were puny enough, that restraint just wasn't necessary. That is no longer the case, so now we are killing ourselves and taking the whole world down with us.

It's like the salvinia a few threads down; normally, environmental factors keep it in check. When those are removed, it turns into a thick mat that chokes out all other life. But the salvinia isn't doing anything different. It's just fulfilling the same basic directive as always, which is: grow.
posted by Anticipation Of A New Lover's Arrival, The at 6:12 AM on September 14, 2017 [2 favorites]

They won. Can we start a new game now?
posted by Beholder at 6:43 AM on September 14, 2017 [3 favorites]

Scorekeeping hell, its pathological and related to hoarding.

If a person has a can of chili in their pantry they like chili. If they have a few cans of chili they really like chili. If they have 1,000 cans of chili they have a hoarding problem and need help.

If a person has a cat, they like cats. If they have two cats maybe they don't want their cat to be lonely. If they have three or four cats, well, maybe they just **really** like cats. If they have 15 or 20 cats, they have a hoarding problem and need help.

If a person has a million dollars, they're just doing well financially. If a person has 10 million dollars they're a bit obsessed with money. If a person has 100 million dollars they have a hoarding problem and need help. A person with even a single billion dollars is clearly deeply pathological and in desperate need of help, multiple billions of dollars are signs of a truly dangerous mental problem.

Unfortunately our society has decided that while hoarding cats or chili is clearly a problem, we've also decided that the same pathological hoarding behavior about money is not merely ok, but laudable and praiseworthy. Rather than being pitied as victims of mental illness, they're held up as ideals we should aspire to.
posted by sotonohito at 6:46 AM on September 14, 2017 [36 favorites]

I'm not in favor of forced hospitalization for such people, but we clearly need to break the vicious cycle with a combination of very high estate taxes, income and capital gains taxes of 80% or 90% on all income (including stock and other unearned income damnit) over a million, and so forth.
posted by sotonohito at 6:48 AM on September 14, 2017 [3 favorites]

Humans have an inherent drive to accumulate resources, and there's no internal brake.

I agree with your point to an extent. I have no such drive, and neither do most of the people I know personally. And the people who live today in the way that the ancestors you reference did (in small hunter-gatherer groups) do no such thing either. On the contrary, they know that over-hunting and over-fishing damages their resources and they scrupulously avoid harvesting more than they need.

Scorekeeping hell, its pathological and related to hoarding.

This may be it. Not sure, honestly.
posted by Vispa Teresa at 6:57 AM on September 14, 2017 [1 favorite]

I see no mechanism that could halt or reverse this process.

Oh, there are mechanisms. But, we aren't allowed to talk about such, um, permanent actions.
posted by Thorzdad at 6:58 AM on September 14, 2017 [4 favorites]

Zucman's been doing very important work.
posted by doctornemo at 7:12 AM on September 14, 2017

I think Thorzdad was thinking, as I was, of the relevant mechanisms created by Browning and Kalashnikov.
posted by ROU_Xenophobe at 7:52 AM on September 14, 2017

but we clearly need to break the vicious cycle with a combination of very high estate taxes, income and capital gains taxes of 80% or 90% on all income (including stock and other unearned income damnit) over a million, and so forth.

I'm not sure how that's possible without a global tax structure. Individual countries can tax all they want but there will always be another Cayman Islands, Switzerland, or Ireland willing to hide wealth in the interesting of bulking up their banking industries.
posted by FakeFreyja at 7:54 AM on September 14, 2017 [1 favorite]

In David Brin's book 'Earth', there was a global war between most of the world and Switzerland, demanding that the Swiss give up banking secrecy and release all the ill-gotten gains they were (or, IRL, are) hoarding, from the uber rich tax evaders, from drug cartels, from thieving despots.
The war ends with a the Swiss bankers setting off a nuclear bomb that leaves a big radioactive crater in the Alps and a worldwide taboo against secrecy, especially as relates to banking.
posted by signal at 7:56 AM on September 14, 2017 [4 favorites]

The rich get richer, the poor get the picture...
posted by billder at 8:56 AM on September 14, 2017 [2 favorites]

I think we could fix the tax haven problem. Make it a crime. You want to have your money kept tax free in some haven, either surrender your citizenship, or bring it back to the USA and pay taxes to keep the country going. Failure to disclose is a felony, punishable by the confiscation of 100% of non-disclosed items and 50% of your personal wealth.
posted by sotonohito at 9:56 AM on September 14, 2017 [3 favorites]

Making rules is not an effective way to solve the problem of rich people using tax havens because they are the ones who make the rules.
posted by ragtag at 10:49 AM on September 14, 2017 [6 favorites]

If we can't make rules to solve the problem then the only solution is violence and revolution.

Let's try rules first.
posted by sotonohito at 11:20 AM on September 14, 2017 [4 favorites]

No, I don't think anyone is particularly surprised, but it's good to have it all laid out in black and white in some kind of scientific manner. It makes it easier to look for a solution, if one is possible.

I also disagree that it's an inherent behavior in all humans to accumulate wealth for it's own sake. I can see it as a response to fear of scarcity, and also as an attitude that gets passed down in certain families or segments of society. But I just can't buy it as essential human nature; I've known too many people who just don't seem to have it at all.
posted by The Underpants Monster at 11:48 AM on September 14, 2017 [3 favorites]

sotonohito: "Let's try rules first.
"

Rules are codified violence.
Let's make rules, and when the 0.01% flout them, apply violence. Lots of violence.
posted by signal at 12:11 PM on September 14, 2017 [3 favorites]

so, how about we just invade these countries like pirates, overthrow the governments and raise the crap out of taxes?
posted by pyramid termite at 12:23 PM on September 14, 2017 [2 favorites]

Sotonohito, I think it goes beyond hoarding. Hoarders are sick and unhappy people with problems they can't realize, but beyond that, they have some empathy, and they are usually functional as part of society in some way or another.

The 1% are sociopaths. They know what they're doing is harming society and causing crushing poverty for some people, and they don't give a fluck.

Eat the rich.
posted by BlueHorse at 12:27 PM on September 14, 2017 [1 favorite]

Many 1%ers believe they're helping society—because they have so much money, that must mean they're smart, and when they spend money, they're "allocating resources more efficiently" than the common person. But their position gives them a distorted view of the world, where "efficient" means putting billions of dollars into things like stopping hypothetical rogue AIs.
posted by panic at 7:03 PM on September 15, 2017

Great post. I blame the prosperity gospel people for everything.
posted by aspersioncast at 4:13 PM on September 18, 2017 [1 favorite]

Gabriel Zucman on Inequality, Growth, and Distributional National Accounts
posted by kliuless at 6:09 AM on September 20, 2017