John Quiggin — Piketty crossing the Delaware

Like lots of other readers of Thomas Piketty’s Capital, my big concern is not with the accuracy of the diagnosis and prognosis but with the feasibility of the prescription. Piketty’s proposal for a global wealth tax requires an end to the capacity of capital to escape taxation by exploiting the limitations of national taxations system, through tax havens, transfer pricing, artificial corporate structures and so on.
Given the limited record of success in past efforts to control global tax evasion and avoidance, Piketty is reasonably pessimistic about efforts in this direction. But the latest news from theOECD is remarkably positive. All members of the OECD (notably including evader-friendly jurisdictions like Austria, Luxembourg and Switzerland) have agreed to a system of automatic information exchange for tax purposes. Moreover, the “too big to jail” status of major banks engaged in facilitating tax evasion and money laundering, may finally be coming to an end.

On the face of it, the oft-repeated, but so far unjustified claim that “the days of tax havens are over“, may finally be coming true, at least for all but the wealthiest individuals.

And the wealthiest individuals, the top 0.01%, are the  ones that really count in heredity wealth, according to Piketty. Oh, well.

Crooked Timber
Piketty crossing the Delaware
John Quiggin | Professor and an Australian Research Council Federation Fellow and a Laureate Fellow at the University of Queensland, and a member of the Board of the Climate Change Authority of the Australian Government