Must-Read: Marshall Steinbaum: Why Is so Much Wealth hidden? Failed Democracy

Must-Read: Marshall Steinbaum: Why Is so Much Wealth hidden? Failed Democracy: “It’s worth noting that few economists would support the existence or proliferation of tax havens…

… [which] impair both efficiency and equity. Zucman proposes… first and foremost, to create a public database of the ownership of registered securities… straightforward, but… still radical: the nationalization of quasi-administrative data for the public benefit. We already do that for the property and housing market in the United States…. Doing the same for financial wealth is straightforward, but it would challenge the interests of an even wealthier demographic…. Zucman further proposes to move to a global apportionment system for corporate taxation…. If the economics is so clearly against tax havens and the policy solutions are straightforward, then how did we get to where we are? The answer is not that a few villainous, self-serving countries act as parasites…. U.S. policymakers tacitly encourage the proliferation of tax havens…. Even now, Congress is debating a ‘Repatriation Holiday’….

Moving beyond tax havens in particular, the ideological justification for low and falling rates of taxation on capital is the Chamley-Judd Theorem, which ‘proves’ that the optimal tax rate on capital is zero in the long run…. The intellectual influence of the theorem has been strong…. Policymakers [tend] to be too credulous about formal ‘optimal policy’ results in theoretical economics. But the worse tendency is to enshrine those theoretical results in the policymaking apparatus at the expense of democratic control…. Subverting democratic control of economic policy is a big reason why inequality has gotten so high across the developed world…

September 28, 2015

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