Bloomberg's Ben Steverman offers a long and exciting profile of Gabriel Zucman (previously), a protege of Thomas Piketty (Zucman was one of the researchers on Piketty's blockbuster Capital in the 21st Century) who has gone on to a career at UC Berkeley, where he's done incredibly innovative blockbuster work of his own, particularly on estimating the true scale of the wealth gap in the USA and worldwide.
Zucman's research on wealth inequality formed the evidentiary basis for Bernie Sanders's 2016 election campaign, and his later work on modeling responses to wealth taxes and crafting of wealth-tax legislation that blocks loopholes has been the basis of Elizabeth Warren's proposed wealth tax (Zucman also created an online wealth tax simulator that allows skeptics to check his reasoning about the likely returns from and responses to such a tax (I am a donor to the presidential campaigns of both Bernie Sanders and Elizabeth Warren).
Zucman connects inequality with the rise of far-right demogoguery: America's world-leading love-affair with "lower taxes on the wealthy, weaker labor protections, lax antitrust enforcement, runaway education and health-care costs, and a stagnant minimum wage" have "further enriched the rich" and "incentivized greed" (recall Gordon Gecko's summing up of the ideology as "Greed is good"). This leads to "political capture" and a chaotic scramble to survive in a game of musical chairs where there are fewer and fewer chairs and they cost a lot more to get hold of.
Zucman and his colleague Emmanuel Saez have co-authored a forthcoming book on the subject, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, that sounds fantastic.
Zucman responds that most European wealth taxes are poorly designed and that the practical issues can be resolved. For starters, such taxes must be created without loopholes allowing money to be stashed in trusts or offshore accounts. Then, with the legal regime in place, data technology could help tax collectors such as the IRS track and value wealth. A worldwide financial registry—or, failing that, the collection agencies—could require the rich to report all their transactions, exposing their holdings to scrutiny while providing the data needed to valuate similar assets. “Too many people just start from the assumption that it’s impossible,” he says.
The scope of the possible started widening after the financial crisis, as the U.S. and then the European Union moved to crack down on offshore shelters. The Panama Papers, a leak of millions of documents from a Central American law firm, pushed policymakers further. “We’ve won the argument,” says Alex Cobham, CEO of Tax Justice Network, an independent international advocacy group. “More or less everyone thinks banking secrecy should be finished.”
In recent months, Zucman has devoted a great deal of energy to the question of how multinational corporations avoid taxes. He’s produced papers and policy briefs showing that U.S. multinationals shift almost half of their overseas profits to five havens—Ireland, the Netherlands, Singapore, Switzerland, and the Greater Caribbean, which includes Bermuda. “That is a huge problem for the sustainability of globalization,” he says. Countries and territories are engaged in a race to the bottom, Zucman argues, offering ever-lower corporate rates in the fear that companies will shift their profits elsewhere. He proposes to “annihilate” such competition by apportioning profits based on where sales were made.
The Wealth Detective Who Finds the Hidden Money of the Super Rich [Ben Steverman/Bloomberg]
(via Naked Capitalism)
(Image: Gabriel Zucman)
