where'd the money go?

July 11, 2019 11:00 AM

The Wealth Detective Who Finds the Hidden Money of the Super Rich, Bloomberg[possibly paywalled], Ben Steverman - "Thirty-two-year-old French economist Gabriel Zucman scours spreadsheets to find secret offshore accounts."

Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data (with E. Saez), Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data, Emmanuel Saez, Gabriel Zucman, NBER Working Paper No. 20625

Distributional National Accounts: Methods and Estimates for the United States, Thomas Piketty, Emmanuel Saez, Gabriel Zucman, NBER Working Paper No. 22945

Alexandria Ocasio-Cortez’s Tax Hike Idea Is Not About Soaking the Rich - "It’s about curtailing inequality and saving democracy." By Emmanuel Saez and Gabriel Zucman, NY Times Op-Ed
A response: Tax Justice, EconLib, Michael L. Davis

The Intractable Problem of Tax Havens

Libertarian anarchists used to say “taxation is theft.” New research by economist Gabriel Zucman suggests that there is some truth to this—when tax havens are taken into consideration. In his new book The Hidden Wealth of Nations, he makes a persuasive case that the way taxes are levied now—whether on income, wealth, capital gains or corporate profits—allows tax havens to steal revenue from other nations. For ordinary people, this means extra money taken from their pockets, in the form of an increased tax burden, because the world’s wealthiest individuals and firms aren’t paying their fair share.

Gabriel Zucman presents “The Hidden Wealth of Nations”, audio of presentation
Pay Attention to Gabriel Zucman on Tax Havens - "His figures are the hardest figures about tax havens–Switzerland, Bermuda, the Cayman Islands, Singapore, Luxembourg, and so forth–and about the quantity of money stored in them that we are likely to get. His estimate? 8% of the world’s financial wealth. $7.6 trillion. That is more wealth than is owned by the poorer half of the world. "

Previously: Who Owns the Wealth in Tax Havens? 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%."

posted by the man of twists and turns (8 comments total)

"The Financial Secrecy Index ranks jurisdictions according to their secrecy and the scale of their offshore financial activities. A politically neutral ranking, it is a tool for understanding global financial secrecy, tax havens or secrecy jurisdictions, and illicit financial flows or capital flight."
posted by the man of twists and turns at 11:01 AM on July 11, 2019 [2 favorites]

So to get their numbers they use:

income = wealth x return_on_wealth

...which you can rearrange to:

wealth = income / return_on_wealth

So if your income is $5,000 and your return_on_wealth is 10% (0.1), your wealth must be $50,000.

They get income numbers from the IRS and similar sources, and they do their best to estimate returns on various forms of wealth. From that, they calculate how much wealth someone probably has.

Interesting approach.
posted by clawsoon at 11:35 AM on July 11, 2019 [2 favorites]

I don't have the link offhand, but theres a paper by an economist in the UK who tracks UK's wealth distribution from death records--OF EVERYONE WHO DIED over a century. The records have information on how much wealth they left over. Its nuts stuff.
posted by MisantropicPainforest at 12:52 PM on July 11, 2019 [1 favorite]

The figures in the "Wealth Inequality in the United States since 1913" link seem to line up with Thomas Piketty's obervations about global inequality. Unfortunately, Piketty noted that inequality only really decreased on a national or international level as a result of the Great Depression and two world wars, and was rising again by the 70s.

I wonder if anything short of those global-level catastrophes can be realistically done that would have any substantial impact. Piketty proposed a progressive global tax on wealth as a solution, but the odds of that actually happening were vanishingly small when Capital in the Twenty-First Century came out in 2013 and impossible today with current global leadership.
posted by Sangermaine at 1:49 PM on July 11, 2019

It wasn't the catastrophes that brought down wealth inequality. It was the political movements inspired by those events that cut it down. Once we had forgotten the impetus a couple decades of propaganda got the majority to agree that we no longer needed the policies that reduced inequality.

War destroys the wealth of the little people. For the already wealthy and those otherwise in a position to take advantage, however, it creates fortunes.
posted by wierdo at 6:06 PM on July 11, 2019 [4 favorites]

clawsoon, I would rewrite the equation

income = wealth * return_on_wealth

to something more like

income_total = income_salary + wealth * return_on_wealth


For people who have high wealth (and make money off of investment rather than salary),

wealth = income / return_on_wealth

but for people who don't, the salary part of the equation dominates, and your math looks pretty far from reality.
posted by grae at 6:24 PM on July 11, 2019

This would be my dream job.
posted by Gin and Broadband at 1:00 AM on July 12, 2019 [2 favorites]

The fact that Zucman isn't running a viciously heavy handed multinational wealth monitoring organisation and have the powers of Richelieu is a tragedy.
posted by thatwhichfalls at 10:00 AM on July 12, 2019 [2 favorites]