I’m all in favor of concussive top marginal tax rates, but I want to note here that this will do little to curb the income and wealth (and thus power) of the truly rich. Thread...
2: The first thing to understand is that—unlike lawyers or pro athletes or what have you—the truly rich don’t earn “incomes.” Instead, they own assets, each of which is structured as a separate LLC, usually chained together via a complex series of interlocking ownerships.
3: Now, you might think these entities will end up at least paying corporate taxes. Yes, except the way these ownership chains are put together, typically most of the taxable “profit” is ultimately channelled to some entity in a low tax jurisdiction, e.g. an offshore tax haven...
4: This means that to really taking on the wealth and power of the seriously rich, shutting down tax havens is absolutely essential. (Shutting down tax havens would have lots of other benefits, as well: it would help with anti-money laundering, counter-terrorism, etc.)
5: One serious challenge to shuttering tax havens is that it will only work if coordinated systematically and at a globally scale, because even a single loophole is enough for clever tax lawyers to squeeze their clients through.
6: Exacerbating the challenge is that for a lot of places, providing tax loopholes is essentially their regional business speciality (e.g. tax-arbitrage-as-a service)... places like Monaco, the Cayman Islands or Bermuda are essentially tax shelters masquerading as states.
7: But the biggest challenge by far is a lack of political will — a lack directly related to the fact that any attempt to seriously take on tax havens entails aiming directly at the lifeblood of the most politically powerful and well-connected people in the world.
8/8: For more on this, I warmly recommend the work of two former @ucBerkeley colleagues of mine, @gabriel_zucman and @vanessahistory, who are leading the academic study of tax havens.
