Yes, You CAN Tax the Rich

Okay, once more.

It is possible to tax the rich.

It is even easy, IF the major powers (or just the US) decide to do it.

This is for three reasons:

1) None of the tax havens are powerful countries. All of them can easily be coerced.

2) Money is actually earned in specific countries. You can actually tax it before you let it leave, and once it leaves, you don’t have to let it back in.

3) There aren’t a lot of places rich people want to live.

Rich people don’t want to live in a backwater. They want, and indeed, need to live in a “world city”: New York, London, Paris, Berlin, Tokyo, San Francisco, etc. Sure, there are second- and even third-tier world cities like Hong Kong, Vancouver, and various lovely, smaller European cities, but basically, rich people want, and can only really run their businesses from, a few places.

Yes, the telecom revolution matters, and so do private jets (which should basically be illegal), but at the end of the day you need to meet people in person, and you want to live in a place where other big people are, and where all the lovely amenities are, which isn’t a police state utopia (a.k.a., Dubai, which is lovely, unless anything goes wrong, in which case you are in hell, and, no, there is no resort to law).

World elites need to live in world cities. They make their money in the big powers, often in more than one, and they need to be able to spend their money where they live and where their businesses are.

Where is Tim Cook going to go? Where is Jeff Bezos going to go? If someone has a ton of money in tax havens, but can’t get any of it into Europe, the US, and so on, that money is virtually useless to them (yeah, they can still live well, but they’re out of the game).

Regional elites, it should go without saying, are easy to tax. If you’re a big wheel in a country with almost no business outside that country, except perhaps some exporting, you have no choice. You pay or you stop doing business (and this doesn’t mean the business goes away, if the government is smart).

Clamp down on the tax havens, tax money where it is earned, before it leaves the country, and don’t let grey or black money into the country.

This doesn’t work for small countries, except with respect to their own elites, but it is something that the US Treasury and the IRS could do tomorrow if they chose. If the EU and some other countries got together, they could do it because their market is large enough.

Taxing the rich doesn’t happen because it is particularly hard to do technically, but because our governments are owned and run by rich people who do not to be taxed, and will avoid being taxed by evading their country’s taxes. The system is set up the way it is because the rich don’t want to be taxed, as Stirling Newberry has noted.

In other words, this is a political problem. It’s not that rich people inherently can’t be taxed (reading about how rich inheritors felt about being taxed during the 1930s through the 1960s in Europe and the US will disabuse you of that notion). Rich people aren’t taxed because, politically, the desire isn’t there.

Even things like bitcoin and blockchains have not effected governments’ ability to tax the rich. Bitcoin is simply a ledger which records every transaction. Blockchain is an inherently authoritarian surveillance technology, something many of its idealistic or opportunistic boosters refuse to understand or admit. Neither protects rich people’s money. I’ve worked in a financial institution, and when regulators are actually serious (they often aren’t), financial companies get really serious about obeying the law.

We can tax the rich any time a powerful enough government, or governments, choose to do so.

Not doing so is a policy choice, driven by elites’ ownership of the political class, and by politicians’ own membership in the elite class (or their desire to join the wealthy class).

It isn’t more complicated than that.

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