I didn't catch this timeline of US top rates, which surprises me: I thought it wasn't until the latter days of Roosevelt that they got downright confiscatory.
What are some good references on how Western Europe and North America went from Dickensian ambivalence about inequality to certainty that it was both immoral and counterproductive? I know there's unionization and the whole thirties "oh shit revolutions" feeling, but there must have been a good deal of subtler way-leading, such as whatever led to the early estate tax. Plus we basically seem to have gone back to 1860 as far as social attitudes toward inequality go.
I haven't been able to read this chapter yet, due to family visitation, but Parenthetical's summary seems clear enough. It still doesn't answer the question: suppose the will to implement strongly progressive taxes can be brought into existence, what will prevent the 0.1% moving all their assets to Liechentstein or the Caicos islands? Aren't most of them there already? The only mechanisms I can think of which would make the bastards pay their taxes are rather more robust than Piketty seems to have in mind.
NB. I shall be outsourcing all my future comments to this brief article.
I suspect there are some very interesting books to be written about the causes [of the the reversal of progressive taxation], and idly wonder about the effect of the Cold War and the aforementioned rise of the right.
For the U.S., at least, Jacob Hacker's Winner Take All Politics is a pretty good account of the political mobilization of big business in the late 1970s and its role in undermining the elite consensus around New Deal regulation and taxation. As for why large sectors of the U.S. white middle-class went along with it, Rick Perlstein, passim. I've got to believe there are plenty of accounts of the rise neo-liberalism in the U.K., too. The interesting issue is, I guess, why you have convergence in political direction despite fairly different political climates in each country. I don't think, for example, that the reaction against the welfare state in the U.K. was particularly racialized., was it?
It's guard labor, guard architecture, and guard politics all the way down.
The only mechanisms I can think of which would make the bastards pay their taxes are rather more robust than Piketty seems to have in mind.
All these tax havens are very small and most of them don't have any standing armed forces worth speaking of. Let's just annexe them.
(The problem of what we do about Delaware is a bit trickier.)
5: Right. How else would we be able to rein places like the Cayman Islands ...
I think it's sort of missing the point to complain that Piketty doesn't solve the problem. He tells us what a solution would look like. It's up to us to solve it.
Don't blame Piketty for the fact that it looks hopeless.
On the bright side, maybe we'll have massive political and economic upheaval and we'll thus be able to build on the successes of the 20th century.
(I get the sense that this is less true for European countries, and the reason why he's proposing a global progressive income tax in the next chapter, no?)
Less true of European countries, but not less true of Europe as a whole. Maybe someday there will be a functional pan-European government.
Goerge W choosing to give a secretive speech at an investment conference in the Caymans the week of the 2012 election is one of favorite recent Republican Party moments. Clinton,for instance, would be smart enough to wait until after the election.
Heavily armed gunmen stole thousands of pounds in an attack on a convoy of diplomatic vehicles belonging to a Saudi prince in the north of Paris on Sunday evening, French police have reported.
Maybe someday there will be a functional pan-European government.
Don't hold your breath. The present European constitution combines all the cumbersome aspects of the US Articles of Confederation with economic privileges for corporations which would make John Roberts cream himself with envy.
3:The interesting issue is, I guess, why you have convergence in political direction despite fairly different political climates
Wallerstein:
preamble:1848-1968 - coalition (compromise) between conservatives and liberals based on preserving social structures in return for suffrage, welfare state, and racist nationalism The "antisystemic movements" offered an eventual and inevitable surpassing of that, and thus contained populist unreast
Why should this have been so? There is a downside to the bureaucratization of revolution. One of them was documented a very long time ago by an Italian social scientist, Roberto Michels, when he spelled out the ways in which the process of bureaucratization of revolution transforms the leadership of the movements and in effect corrupts and defangs them. This finding is now considered a commonplace sociological truism. What Michels's analysis omitted was the impact of the bureaucratization of revolution on the followers. This seems to me even more important.The world revolution of 1968 was when these popular masses began to kick the habit. The popular antisystemic message was for the first time turned against the leadership of the major antisystemic movements in the world themselves -- the social-democratic movements in the Western world, Communist movements in the bloc from the Oder to the Yalu, national liberation movements in Asia and Africa, populist movements in Latin America. Kicking the habit is never an easy task. It took twenty years for the revolution of 1968 to reach its climax in 1989s and for popular disillusionment with antisystemic forces to overcome the legacy of loyalty engendered by past indoctrination, but eventually it succeeded in breaking the umbilical cord. The process was aided and abetted by the reality of the fact, which became clear in the 1970s and 1980s, that the social improvements of the 1945-70 period had been a passing chimera, that the capitalist world-economy could never offer a real prospect of universal prosperity that would overcome the ever-growing gap between core and periphery.
The result of this disillusionment has been the turn against the state, so visible worldwide in the 1990s. It is being touted as the turn to neoliberalism. But it is in reality the turn against liberalism and its promise of salvation via social reformism that would be implemented by the states. It is being touted as the return to individualism. It is in reality the resurgence of collectivism. It is being touted as the return to
optimism. It is in reality a turn to a deep pessimism
What gets me about the Cayman Islands is that they aren't even an independent country - they are a British Overseas Territory. You would think that being part of the UK would maybe come with some regulatory strings attached.
So also US and Northern Marianas Islands labor practices.
re: 13
They aren't part of the UK. That's part of what being an Overseas Territory means, and they have all kinds of odd quasi-independent, or actually independent features, which seem to vary from territory to territory. Governance is odd. And, in the case of the Cayman Islands, wiki tells me that there actually is a fairly extensive regulatory regime. It's just not a regime that stops the tax haven from existing.
But yeah, in practice, if they really wanted to, the UK government could completely change the law of the Cayman Islands at will as the Governor has the power to do that.
11: In one sense, the continued survival of the European Union is a depressing commentary on the robust nature of current arrangements. The financial crisis exposed the naked will of European oligarchs to fuck the poor, and not even Greece could work up the political will to meaningfully rebel.
Further to 16, there's a recognised tension about the dodgy financial regulations in the Crown dependencies (Jersey and Guernsey, where the Queen is Duke of Normandy, and the Isle of Man, where she's Lord of Mann). Every so often international institutions lean on the British government to do something about them, so the British shout at them a bit to change their laws, and then the financial interests say, "Do you want our money or not?", and it all goes quiet until the next time.
You are right, technically not the UK.
And yet the UK government is allowing this situation to occur, and doesn't seem to be facing any criticism for it. Which is odd, considering they must be losing out on quite a bit of tax revenue through that channel...
Queen is Duke of Normandy
Is the Queen not the Duchess of Normandy?
20. No, she's Duke of Normandy and Lord of Mann. God knows why. The loyal toast in the channel islands is to "The Queen, our Duke."
re: 19.last
I think governments in general make lots of choices that allow very rich people [and corporations] to keep 'their' money. Not just with respect to what happens in overseas territories. I don't think there's anything odd about it, if you consider [as per the article Chris Y linked above] that very rich people [and corporations] have a lot of power.
Plus Guernsey and Jersey, also tax havens under British sovereignty.
I really don't see tax havens as an intractable problem. Imagine if they had been around to this extent in the thirties - they probably would have gotten quiet messages to the effect of "clean up your act or we see Marines in your future".
22 to 23.
Very rich people quite like not paying lots of taxes. Our governments, as currently constituted, very much like staying on the good side of very rich people.
It's not intractable in the sense that a government that wasn't beholden to those interests couldn't do something about the tax havens they had some kind of de facto jurisdiction over. But I don't see that happening in our immediate collective futures.
I don't understand why this is considered so impossible. Several major tax havens, including Switzerland - Switzerland! - have recently started cooperating with tax inquiries, basically because the UK, French, and German governments agreed in 2009 to jump down their throat if they didn't.
But they remain tax havens in the most important sense that if the tax planners are doing their jobs competently their clients still don't have to pay much tax. Joe Rentier's affairs can be written in letters of bronze all over the walls of the Credit Suisse HQ with illustrations by Banksey, and all that will happen is that a lot of people he cares nothing about will hate him a little bit more. He will still be quids in.
3: Amusingly, I have read both authors but somehow did not take away much about taxation. (Probably because it's not really a subject I paid much attention to in the past).
One thing I'm interested to know more about is the passing of the taxes in the first place; it must be Progressive legislation but I'm super curious to situate it in among all the other things they lobbied for (and often failed to get). I probably should have read more or with a different focus for my 20th century comps.
Re: 25
Yeah. It's not that I don't think there can't be stricter regulatory regimes, but there are substantial vested interests lined up against a serious attempt to collect fair levels of tax.
Don't have access to the FT article from which it comes, but a nice graphic on perceptions vs. reality of income distribution in the US and Germany.
I meant not intractable in the sense of technical/logistical, not political. Obviously you need pretty broad political change for this to happen; I'm speaking to the argument from futility in 2 and elsewhere, the idea that even if we get the necessary political change the tax havens will still foil us. No, because the necessary (large) political change would include disabling tax havens as part and parcel of raising tax rates.
IOTM, although I never linked these before, the Bretton Woods system's currency controls must also have done a lot to construct tax havens in the postwar period. Although Wikipedia says these started to be loosened as early as 1958, and I imagine there was plenty of evasion going on regardless, it would have been riskier, and the fact that there were actual laws restricting movement of money on its own across borders would have made for a qualitative mental difference - people couldn't kid themselves that they were engaging in "trend-setting tax management strategies" or some such.
If we can just keep the sabots out of the workings it is definitely a possibility that we are entering a new golden age for a subset of the species.
2: Notably, a capital tax will do little to reduce the capital share of income unless it is supplemented by a policy of full employment. In the absence of such a policy, or something like it, capitalists can recoup their losses through wage cuts and layoffs, thereby preserving their share of national income. (from New Left article)
I understand the pessimism, but this sort of leap of faith microwaved Marxism is exactly what I found Piketty a refreshing change from, honestly. Of course capitalists will quickly drop wages. They'll whiteboard it all out at Davos and it'll be law by September. That's how easy it is to stop paying people who make your stuff. There aren't other companies competing for them at all.
There's an argument to be made there, but make an argument, get some data or something.
OTOH, it's only just occurring to me that the drop in tax rates, release of inheritance laws etc, can be seen as a reaction by capitalists to the declining rate of return. ie, there may be self-correcting forces around capital supply (even if P shows they are weak) but there are also forces pushing the entrenchment of rentier policies precisely at the time when inequality is on the up. Maybe that was obvious to other readers before.
That's how easy it is to stop paying people who make your stuff.
Right.
I don't think it's impossible that something like this could happen, but anybody who thinks it's likely has to first answer one question: If they can cut wages, why haven't they done it already?
http://prix2014.aec.at/prixwinner/12143/
"Paolo Cirio hacked the government website of the Cayman Islands company register to compile a list of all companies registered in the major Caribbean offshore center. He published the data for the first time, and then exposed it by digitally creating counterfeit certificates of incorporation for each company, all issued with his real name and signature.
The counterfeit certificates were published on the Loophole4All.com website, where everyone was invited to hijack companies' identities by buying certificates of incorporation, starting at 99 cents, enabling them to avoid tax. "