Who Owns the Wealth in Tax Havens? Macro Evidence and Implications for Global Inequality
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Econ 133 - Global Inequality and Growth
Econ 133 - Global Inequality and Growth Introduction Gabriel Zucman [email protected] 1 Econ 133 - Global Inequality and Growth Gabriel Zucman Roadmap 1. What is this course about? 2. Inequality and growth in the history of economic thought 3. Course organization: grading, readings, etc. 4. Overview of the five main parts of the course - 2 - Econ 133 - Global Inequality and Growth Gabriel Zucman 1 What is this course about? 1.1 What you've learned in Econ 1 or 2 Market economies are efficient: • Any competitive equilibrium is Pareto-efficient • Limit 1: assumes no market failures • Limit 2: says nothing about how resources will be distributed at the equilibrium - 3 - Econ 133 - Global Inequality and Growth Gabriel Zucman 1.2 Econ 133: an introduction to economics, but putting distribution at the center stage • How unequal is the world? • What are the forces that push toward equality and inequality? • How does inequality change as countries grow? • What policies can foster equitable growth? - 4 - Econ 133 - Global Inequality and Growth Gabriel Zucman 1.3 Inequality is at the center of research, policy, and the public debate • Rising inequality in many countries • Barack Obama: \Inequality is the defining challenge of our time" Inequality is an important subject for: • Everybody • Economists in universities, academia, think thanks, banks... • Policy-makers in governments & international organizations - 5 - Econ 133 - Global Inequality and Growth Gabriel Zucman 2 Inequality & growth in the history of economic thought 2.1 Thomas Malthus • Essay on the Principle of Population, 1798 • Iron law of wages: population grows ! labor supply increases ! wages fall to subsistence levels • End outcome: misery for the masses, revolution • To prevent this: limit population growth - 6 - Econ 133 - Global Inequality and Growth Gabriel Zucman 2.2 David Ricardo • Principles of Political Economy and Taxation, 1817 • Scarcity principle: if pop. -
Global Wealth Inequality
EC11CH05_Zucman ARjats.cls August 7, 2019 12:27 Annual Review of Economics Global Wealth Inequality Gabriel Zucman1,2 1Department of Economics, University of California, Berkeley, California 94720, USA; email: [email protected] 2National Bureau of Economic Research, Cambridge, MA 02138, USA Annu. Rev. Econ. 2019. 11:109–38 Keywords First published as a Review in Advance on inequality, wealth, tax havens May 13, 2019 The Annual Review of Economics is online at Abstract economics.annualreviews.org This article reviews the recent literature on the dynamics of global wealth https://doi.org/10.1146/annurev-economics- Annu. Rev. Econ. 2019.11:109-138. Downloaded from www.annualreviews.org inequality. I first reconcile available estimates of wealth inequality inthe 080218-025852 United States. Both surveys and tax data show that wealth inequality has in- Access provided by University of California - Berkeley on 08/26/19. For personal use only. Copyright © 2019 by Annual Reviews. creased dramatically since the 1980s, with a top 1% wealth share of approx- All rights reserved imately 40% in 2016 versus 25–30% in the 1980s. Second, I discuss the fast- JEL codes: D31, E21, H26 growing literature on wealth inequality across the world. Evidence points toward a rise in global wealth concentration: For China, Europe, and the United States combined, the top 1% wealth share has increased from 28% in 1980 to 33% today, while the bottom 75% share hovered around 10%. Recent studies, however, may underestimate the level and rise of inequal- ity, as financial globalization makes it increasingly hard to measure wealth at the top. -
Capital Is Back: Wealth-Income Ratios in Rich Countries 1700-2010
Capital is Back: Wealth-Income Ratios in Rich Countries 1700-2010 Thomas Piketty Gabriel Zucman Paris School of Economics Paris School of Economics July 26, 2013⇤ Abstract How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970-2010 national balance sheets recently compiled in the top eight developed economies. For the U.S., U.K., Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise of wealth-income ratios in recent decades, from about 200-300% in 1970 to 400-600% in 2010. In e↵ect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and nineteenth centuries (600-700%). This can be explained by a long run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth, in line with the β = s/g Harrod-Domar-Solow formula. That is, for a given net saving rate s = 10%, the long run wealth-income ratio β is about 300% if g = 3% and 600% if g = 1.5%. Our results have important implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares. ⇤Thomas Piketty: [email protected]; Gabriel Zucman: [email protected]. We are grateful to seminar par- ticipants at the Paris School of Economics, Sciences Po, the International Monetary Fund, Columbia University, University of Pennsylvania, the European Commission, the University of Copenhagen, and the NBER summer institute for their comments and reactions. -
The Silicon Six
The Silicon Six and their $100 billion global tax gap December 2019 © Fair Tax Mark 2019 About the Fair Tax Mark The Fair Tax Mark certification scheme was launched in - regulators, investors and municipalities across the UK in 2014, and seeks to encourage and recognise the globe have expressed a desire to support Fair organisations that pay the right amount of corporation tax Tax Mark accreditation (or equivalent) in their at the right time and in the right place. Tax contributions jurisdictions; are a key part of the wider social and economic contribution made by business, helping the communities - there is in many parts of the world an ongoing in which they operate to deliver valuable public services international race to the bottom on tax, and and build the infrastructure that paves the way for growth. this creates a downward pressure on standards everywhere (including in the UK); and More than fifty businesses have now been certified in the UK, including FTSE-listed PLCs, co-operatives, - if no action is taken by civil society, unscrupulous social enterprises and large private business – which accounting and auditing entities will step into the between them have over 7,000 offices and outlets. vacuum and propagate low-bar tax kitemarks. We operate as a not-for-profit social enterprise and believe that companies paying tax responsibly should Further information at: be celebrated, and any race to the bottom resisted. • Website: www.fairtaxmark.net To date, the Fair Tax Mark’s activities have been focused on the UK; however, a new suite of international • Phone: (within UK) 0161 7690427 / standards is now under development. -
The Missing Wealth of Nations: Are Europe and the U.S
THE MISSING WEALTH OF NATIONS: ARE EUROPE AND THE U.S. NET DEBTORS OR NET CREDITORS?* Gabriel Zucman This article shows that official statistics substantially underestimate the net foreign asset positions of rich countries because they fail to capture most of the assets held by households in offshore tax havens. Drawing on a unique Swiss data set and exploiting systematic anomalies in countries’ portfolio investment positions, I find that around 8% of the global financial wealth of households is held in tax havens, three-quarters of which goes unrecorded. On the basis of plausible assumptions, accounting for unrecorded assets turns the eurozone, officially the world’s second largest net debtor, into a net creditor. It Downloaded from also reduces the U.S. net debt significantly. The results shed new light on global imbalances and challenge the widespread view that after a decade of poor-to-rich capital flows, external assets are now in poor countries and debts in rich countries. I provide concrete proposals to improve international statis- tics. JEL Codes: F32, H26, H87. http://qje.oxfordjournals.org/ I. Introduction There are two puzzles in international investment statistics. The first is a set of statistical anomalies. At the global level, liabilities tend to exceed assets: the world as a whole is a net debtor (Lane and Milesi-Ferretti 2007). Similarly, the global bal- ance of payments shows that more investment income is paid than received each year. Since the problem was identified in by guest on July 6, 2013 the 1970s, the International Monetary Fund (IMF) has commis- sioned a number of reports to investigate its causes, and national statistical agencies have put considerable resources into improv- ing their data. -
$7.6 Trillion $21-32 Trillion
NO EASY TASK: Quantifying Illicit Financial Flows The Financial Transparency Coalition works to curtail the whole range of illicit financial flows. Some FTC members focus on the cross-border movement of money that is illegal- ly earned, transferred, or utilized. These illicit financial flows come from tax evasion, trade manipulation, organized crime, and corrupt payments to public officials. Coalition members also address the wider aspects of illicit flows, including tax avoidance by multi- national companies. But pinpointing the scale of the problem is no easy task. Whether it’s using data to uncov- er trade misinvoicing, measuring the amount wealthy elites hide in secrecy jurisdictions, or quantifying how much corporations shift in profits to avoid tax, there’s a growing body of literature around illicit financial flows. No matter how you look at the data, one thing is clear: financial secrecy has turned illicit flows into a thriving business. HOW DO YOU QUANTIFY ILLICIT FINANCIAL FLOWS? TRADE & FINANCE DATA Lost By Developing Lost In 2013 Alone 1 And Emerging $7.8 Countries To Illicit Financial Flows $1.1 TRILLION (2004-2013) 1 TRILLION Trade misinvoicing, or moving money across borders in a commercial transaction while deliberately misreporting the value – a form of which is trade-based money laundering – is cited by Global Financial Integrity as the largest component of measurable illicit financial flows. To get to their global estimates on illicit financial flows, GFI combines the use of trade data to capture misinvoicing with an analysis of balance of payments data to identify when it looks like more money is leaving a country than what has been reported. -
Of Risks and Remedies: Best Practices in Tax Rulings Transparency.” Leandra Lederman Indiana University Maurer School of Law
FALL 2020 NEW YORK UNIVERSITY SCHOOL OF LAW “Of Risks and Remedies: Best Practices in Tax Rulings Transparency.” Leandra Lederman Indiana University Maurer School of Law September 29, 2020 Via Zoom Time: 2:00 – 3:50 p.m. EST Week 6 SCHEDULE FOR FALL 2020 NYU TAX POLICY COLLOQUIUM (All sessions meet online on Tuesdays, from 2:00 to 3:50 pm EST) 1. Tuesday, August 25 – Steven Dean, NYU Law School. “A Constitutional Moment in Cross-Border Taxation.” 2. Tuesday, September 1 – Clinton Wallace, University of South Carolina School of Law. “Democratic Justice in Tax Policymaking.” 3. Tuesday, September 8 – Natasha Sarin, University of Pennsylvania Law School. “Understanding the Revenue Potential of Tax Compliance Investments.” 4. Tuesday, September 15 – Adam Kern, Princeton Politics Department and NYU Law School. “Illusions of Justice in International Taxation.” 5. Tuesday, September 22 – Henrik Kleven, Princeton Economics Department. “The EITC and the Extensive Margin: A Reappraisal.” 6. Tuesday, September 29 – Leandra Lederman, Indiana University Maurer School of Law. “Of Risks and Remedies: Best Practices in Tax Rulings Transparency.” 7. Tuesday, October 6 – Daniel Shaviro, NYU Law School. “What Are Minimum Taxes, and Why Might One Favor or Disfavor Them?” 8. Tuesday, October 13 – Steve Rosenthal, Urban-Brookings Tax Policy Center. “Tax Implications of the Shifting Ownership of U.S. Stock.” 9. Tuesday, October 20 – Michelle Layser, University of Illinois College of Law. “How Place-Based Tax Incentives Can Reduce Economic Inequality.” 10. Tuesday, October 27 – Gabriel Zucman, University of California, Berkeley. “The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts.” 11. -
Kristof Clerix
Kristof Clerix Kristof Clerix, Belgium, works as an investigative reporter for the Belgian weekly news magazine Knack. He specialises in security related topics. Clerix has worked as a journalist in Belgium since 2002. After two years freelancing for the Belgian daily De Morgen, he joined the team of MO*, a Belgian monthly magazine on international affairs. There he reported from more than 40 countries, including Albania, Armenia, the Baltic States, Bosnia, Bulgaria, Georgia, Kosovo, Moldova, Morocco, the disputed region of Nagorno Karabakh, Poland, Romania, Russia, Slovakia, the disputed region Transnistria and Ukraine. He has written substantially on security topics such as terrorism, international police cooperation, intelligence, NATO, EU defense policy, drug smuggling, human trafficking, illegal arms dealing, nuclear proliferation, city gangs, energy and pipelines, geopolitics and frozen conflicts. In 2006, Clerix wrote the book "Vrij Spel", on the activities of foreign secret services operating in Belgium, host country to the NATO headquarters and European institutions. His second book, "Spionage. Doelwit: Brussel", on Cold War espionage was published in 2013. Clerix is regularly contacted by international media to comment on the Belgian security apparatus. He wrote several contributions for The Guardian, on the fight against terrorism in the heart of Europe. In 2013 Clerix joined ICIJ. He contributed to Lux Leaks, Swiss Leaks, Evicted and Abandoned, the Panama Papers and Bahamas Leaks. Clerix has represented ICIJ at several international conferences, organised by Europol, the European Parliament, and the Financial Transparency Coalition. In 2016 Clerix started working for the news magazine Knack, focusing on international muckracking. Next to ICIJ collaborations, Clerix worked on several other cross border investigative projects, including the MEPs project and Security For Sale. -
Survival of the Richest. Europe's Role in Supporting an Unjust Global Tax
Survival of the Richest Europe’s role in supporting an unjust global tax system 2016 Acknowledgements This report was produced by civil society organisations in countries across Europe, including: Attac Austria (Austria); Vienna Institute for International Dialogue and Cooperation (VIDC) (Austria); 11.11.11 (Belgium); Centre national de coopération au développement (CNCD-11.11.11) (Belgium); Glopolis (Czech Republic); Oxfam IBIS (Denmark); Kehitysyhteistyön palvelukeskus (KEPA) (Finland); CCFD-Terre Solidaire (France); Oxfam France (France); Netzwerk Steuergerechtigkeit (Germany); Debt and Development Coalition Ireland (DDCI) (Ireland); Oxfam Italy (Italy); Re:Common (Italy); Latvijas platforma attīstības sadarbībai (Lapas) (Latvia); Collectif Tax Justice Lëtzebuerg (Luxembourg); the Centre for Research on Multinational Corporations (SOMO) (Netherlands); Tax Justice Netherlands (Netherlands); Tax Justice Network Norway (Norway); Instytut Globalnej Odpowiedzialnosci (IGO) (Poland); Ekvilib Institute (Slovenia); Focus Association for Sustainable Development (Slovenia); Inspiraction (Spain); Forum Syd (Sweden); Christian Aid (UK). The overall report was coordinated by Eurodad. Each national chapter was written by – and is the responsibility of – the nationally-based partners in the project. The views in each chapter do not reflect the views of the rest of the project partners. The chapters on Luxembourg and Spain were written by – and are the responsibility of – Eurodad. Design and artwork: James Adams. Copy editing: Vicky Anning, Jill McArdle and Julia Ravenscroft. The authors believe that all of the details of this report are factually accurate as of 15 November 2016. This report has been produced with the financial assistance of the European Union, the Norwegian Agency for Development Cooperation (Norad) and Open Society Foundations. The contents of this publication are the sole responsibility of Eurodad and the authors of the report, and can in no way be taken to reflect the views of the funders. -
How Much Profit of Multinational Enterprises Is Really in Tax Havens?
Double counting accounting: How much profit of multinational enterprises is really in tax havens? Jennifer Blouin, University of Pennsylvania Leslie Robinson, Dartmouth College (Wharton) (Tuck) May 2020 Abstract: Putting an end to the base erosion and profit shifting (BEPS) activity of multinational enterprises (MNEs) is high on national agendas. Influential work in academic and policy circles suggests that the magnitude of BEPS problem is large. We show that these magnitudes are overstated due to researchers’ misunderstanding of the accounting treatment of indirectly-owned foreign affiliates in the U.S. international economic accounts data. Our work has far-reaching implications as all country-level MNE data must apply some accounting convention that can make international comparisons difficult. We explain how this accounting treatment leads to double counting of foreign income and to its misattribution to incorrect jurisdictions. We demonstrate a simple correction, and show that the correction significantly reduces the magnitude of the BEPS estimates. For instance, our correction reduces an estimate of the U.S. fiscal effects of BEPS from 30-45% to 4-8% of corporate tax revenues lost to BEPS activity of MNEs (Clausing 2016). JEL codes: H32, M41, O50 Keywords: base erosion and profit shifting, measurement, accounting, foreign direct investment ______________________________________________________________________________ We would like to thank participants at the 2019 Oxford Summer Symposium, the September 2019 ITPF Meeting, the 2019 NBER Taxation of Business Income Conference, the 2020 UNC Tax Conference, the 2020 ESG UQAM Workshop on Corporate Taxation in a Globalized World, Rosanne Altshuler, Alan Auerbach, Harald Amberger, Brian Bushee, Travis Chow, Joel Slemrod, Kim Clausing, Scott Dyreng, Roger Gordon, Luzi Hail, Jim Hines, Mirko Heinle, Peter Merrill, Kathryn O’Brien, Richard Sansing, Doug Shackelford, Sebastien Bradley, Dirk Schindler, Tom Neubig, Gabriel Zucman, Ray Mataloni, Vincent Vicard, Juan Carlos Suarez Serrato, and Matt Slaughter, for comments. -
The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts
Journal of Economic Perspectives—Volume 34, Number 4—Fall 2020—Pages 3–26 The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts Emmanuel Saez and Gabriel Zucman or the measurement of income and wealth inequality, there is no equivalent to Gross Domestic Product statistics—that is, no government-run standardized, F documented, continually updated, and broadly recognized methodology similar to the national accounts which are the basis for GDP. Starting in the mid- 2010s, we have worked along with our colleagues from the World Inequality Lab to address this shortcoming by developing “distributional national accounts”— statistics that provide consistent estimates of inequality capturing 100 percent of the amount of national income and household wealth recorded in the official national accounts. This effort is motivated by the large and growing gap between the income recorded in the datasets traditionally used to study inequality—household surveys, income tax returns—and the amount of national income recorded in the national accounts. The fraction of national income that is reported in individual income tax data has declined from 70 percent in the late 1970s to about 60 percent in 2018. The gap is larger in survey data, such as the Current Population Survey, which do not capture top incomes well. This gap makes it hard to address questions such as: What fraction of national income is earned by the bottom 50 percent, the middle 40 percent, and the top 10 percent of the distribution? Who has benefited from economic growth since the 1980s? How does the growth experience of the ■ Emmanuel Saez and Gabriel Zucman are Professors of Economics, both at the University of California, Berkeley, California. -
The Panama Papers Prove: It Is Time for Action!
Herausgegeben von The Panama Papers prove: It is time for action! The Panama Papers constitute a massive leak of 11.5 million documents which are related to the law firm Mossack Fonseca based in Panama. Reports on the Panama Papers were first published on 3 April 2016; a large part of the data set has now been made publicly accessible. The volume of the Panama Papers exceeds the combined total of the Wikileaks Cablegate, Offshore Leaks, Lux Leaks, and Swiss Leaks, and has important implications for development cooperation. A holistic approach is needed to address the various dimensions of IFF. By Johannes Köckeis & Dr. Christiane Schuppert The Panama Papers have brought the issue of illicit financial linked with the revelations. In the case of Peru, both run-off flows (IFF) to the heart of public and political debate. The docu- presidential candidates were specified in the documents. ments reveal how the Panamanian law firm Mossack Fonseca facilitated the creation of about 214.000 anonymous shelf com- The role of secrecy jurisdictions panies. 140 of these companies are connected to politicians or Financial centers that offer far reaching private protection rules public officials, such as Sigmundur Davíð Gunnlaugsson who was and allow the creation of shelf companies and similar legal enti- forced to resign as Prime Minister of Iceland due to the revela- ties are frequently referred to as secrecy jurisdiction. The benefi- tions of the Panama Papers. cial owner, that is the individual or entity that actually benefits from the funds, remains unknown. Many secrecy jurisdictions Within the context of the Panama Papers, several connections offer little or no tax liability to foreign individuals and businesses between partner countries of German development cooperation and are accordingly also referred to as tax havens.