The Zucman paper has a title that might be passed over as too wonky by many readers: "The Missing Wealth of Nations: Are Europe and the U.S. Net Debtors or Net Creditors," published by The Quarterly Journal of Economics, the oldest professional journal on economics in English. It's a stiff read for non-specialists. Krugman goes to the heart of it:
What Zucman points out is that we have international data on investment positions, with each country reporting its assets abroad and foreign-owned assets at home. But the numbers don’t add up: globally, liabilities are substantially larger than assets. That’s mathematically impossible, but Zucman shows that it’s what will appear in the statistics if a lot of money is run through offshore havens, so that the ownership doesn’t show up in anyone’s national statistics. And he uses other data and information to show that this is by far the most compelling explanation.By means of a method he carefully describes, Zucman estimates that the world's wealthy are using tax havens, including Swiss banks, to hide at least $4.5 trillion but more likely $6 trillion from the tax collectors. Just to make it clear, that's $6,000,000,000,000—in the neighborhood of six percent of the entire world's gross economic output for one year. In other words, not chickenfeed.
It's still not nearly as much as a 2012 report claimed was being tucked away in tax havens. That one, much disputed, concluded the total was $21 trillion to $32 trillion.
More about this can be read below the fold.
Regarding Zucman's paper, Alan Pyke notes:
For scale, $5.9 trillion is nearly twice the annual federal budget of the United States and more than a third of the country’s total debt. If they were a country, global offshore assets would be the third largest economy in the world behind only the U.S. and China. Zucman’s estimate of household tax dodging through haven countries is about three times what corporate America hides offshore in untaxed profits.Just think what revenue derived from reasonable taxes on that hoard could achieve. Say, perhaps, that said revenue were used to cover the costs of mitigation of climate change impacts in what we used to call Third World nations. The World Bank has estimated that poor nations need as much as $100 billion a year for this purpose, but they are only getting a few billions at most.
The new estimate comes alongside a report that 40 percent of the world’s population lives on a budget of between $2 and $10 per day. Those 2.8 billion people constitute a “fragile middle” in the developing world between privation and the threshold earnings of the global middle class, according to the Financial Times. They are in danger of slipping back down the income distribution under global economic growth projections for the coming year.
Or, for that matter, think what could be achieved in technological and infrastructural innovations to prevent some of the worst effects of climate change if all that stashed capital went untaxed but was put to work doing something besides generating interest for plutocrats who are hiding it because they are too damned special to pay taxes on it. In a just world (I know, I know), a deadline would be put on how long the offshore hoarders have to bring their stash into the light where it can be taxed. After that date, confiscation would be the rule.