Taken from a private share.
A larger income, to ensure that no American fell into absolute abject poverty – say, $12,000 a year – would cost around $3.6tn. That is a big number, but one that once again seems far more reasonable when considered through the lens of the Panama Papers and the scandal of global tax evasion. Because the truth is that we have all been robbed, systematically, by the world’s wealthiest people, for decades. They have used those stolen dollars to build yet more wealth for themselves, and all the while we have been arguing with ourselves over what to do with the leftover pennies.
http://www.theguardian.com/commentisfree/2016/apr/07/panama-papers-taxes-universal-basic-income-public-services
http://www.theguardian.com/commentisfree/2016/apr/07/panama-papers-taxes-universal-basic-income-public-services
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Standard discussion rules: Be polite. Be generous in assumptions of others. I'll moderate if need be, and reserve the right to do so without warning.
ReplyDeleteA little math, and some assumptions:
ReplyDeleteAssumption 1: Due to american tax laws, virtually zero percent of this is American wealth. Americans keep our money elsewhere. We can call this zero.
Assumption 2: This represents all hidden non-US wealth. This assumption is ridiculous, but serves the purpose of generously underestimating hidden US wealth.
Assumption 3: The same percent of wealth is hidden from one country to another. In the absence of evidence, this is what I've got.
From the article, the panama papers show between 21 and 32 trillion dollars of hidden wealth. Let's use a low-end estimate of 20 trillion.
From wikipedia, the US makes up about a third of all wealth in the world.
Therefore, the US has approximately 10 trillion dollars of hidden wealth. As a first-order approximation, this is probably close to right.
What a wild time to be alive
ReplyDeleteThere's a different, more difficult, question than estimating how much hoarded wealth is hidden away, though: The question of "How much more wealth would exist in public if that hidden wealth had remained in circulation."
ReplyDeleteMy grasp of the macroeconomics is tenuous at best, but I'm pretty sure the answer is "That money would have generated way more wealth in motion than it did hoarded."
Orion Cooper Right?
ReplyDeleteTony Lower-Basch That's a much harder questions, and PhD'd economists will give different answers. I tend to think you are right, that money in the hands of the poor maginified the amount of wealth.
Yeah it's really clear to me that this bank is not the only one doing this, either.
ReplyDeleteHere's another question: How much money could this generate, assuming a 4% "safe" withdrawl rate?
ReplyDeleteUS hidden wealth: approx $10tn.
4% of that: 400 billion.
Enough money to give every American 2k per year: 563bn
That is, there is enough hidden US wealth to safely and perpetually give every curently existent american $2,000 a year, without loss of principle. Sort of.
And, remember, this is an understatement of the hidden wealth. To really do it, we'd need to generate nearly 4 trillion dollars a year. And that's absurd -- right?
ReplyDeleteWell, we'd need nearly 100 trillion dollars of hidden US wealth. That's ten times my low-end estimate. If the Panama papers represent a much lower percent of the non-US hidden wealth than 100% (say, 10%), then yes, yes it is possible. If the US hides wealth at a higher rate (i know of no sources for this), then it also becomes possible. If a substantial portion of the panama papers represents US wealth (unlikely, given US tax laws), then this becomes less likely.
Anybody know about those things?
I think it's an interesting perspective, but I think you're missing a level of indirection. Let's assume that all this money is no longer hidden. We don't have wealth taxes in this country, so we don't get an ongoing 4% tax on that money. Instead, we get the 15% capital gains tax on the 7% withdrawal/earnings (4% is the safe real withdrawal rate, but we can tax both the real and inflationary growth) that the holders of those funds get. That really only leaves us with the 1.05% (.15*.07) annual taxation on the 10 trillion, which is not enough. Even at 100 trillion, we're still only bringing in 1 trillion a year. There would be a one-time 15% tax on the whole amount, as it was brought into the light and taxed as capital gains, but I don't think we want to build long-term entitlements on one-time money.
ReplyDeleteTed Cabeen Preface: I understand basically nothing about macroeconomics.
ReplyDeleteFor the last, I wasn't saying: can we tax the hidden wealth in order to produce a poverty-ending measure? I was instead asking "Is the hidden wealth, when taken in its entirely, enough to end poverty?" -- and the answer to that is the 100 trillion dollars. That is, 100 trillion US dollars generates enough money each year to end US poverty.
From that point, its a matter of allocation, and holders of that wealth have chosen to allow children to starve rather than lose the hidden wealth.
Ted: I think there's a fair point to be made that the money currently there does not directly, dollar-for-dollar, correspond with a mass of income that is being hidden from the US tax system.
ReplyDeleteI think, however, that how it does correlate is much more complicated than you're describing. Unless we posit that the money has always been in Panama, the fact of its accumulation in hidden accounts is indicative of past activity of people putting (presumably unreported) income into those hidden accounts.
While there might be a practical question of "How do you sort out what, precisely, has been stolen from the American people?" I suspect that the answer is that having a large hidden bank account indicates large hidden income. Certainly, to the extent that what's happening is money-laundering (and, really, tax evasion and money laundering are very close cousins) it's safe to assume that the income is orders of magnitude greater than cash on hand at any given moment.
It certainly still stands, to my mind, as a good indicator that the claims of the rich that "We can't afford to be fair to people!" are basest hypocrisy.
Also, I had a misread. The total hidden wealth in the world is 20-30 trillion, not in the panama papers. So, call that 6-10 trillion of US assets. 4% of that is roughly 250 billion. So, problematic.
ReplyDeleteAnd still other articles suggest that that estimate is way too low, and that the total amount of hidden wealth could be a order of magnitude higher. Which'd mean, yes, yes we could.
ReplyDelete