The Piketty controversy and the offshore wealth problem

   0   0 Blog, Inequality & Tax Havens

As many readers will already know, there’s a big controversy going on regarding Prof. Thomas Piketty’s world-famous economics work Capital in the 21st Century, with the Financial Times alleging that he faces a ‘Reinhardt-Rogoff moment’ because of data problems. Piketty responds that he’s been transparent about everything and the FT is being ‘ridiculous’ to suggest that it undermines his central conclusions that inequality, particularly at the top of the income scales, has been rising.

We aren’t going to plunge into this debate except to remark that – at the current moment — most pundits seem to agree that further investigation is warranted into the FT’s findings, but that even if the analysis is flawed, the problems that have been identified don’t undermine Piketty’s central conclusions. As The Economist puts it:

“Based on the information Mr Giles has provided so far, however, the analysis does not seem to support many of the allegations made by the FT, or the conclusion that the book’s argument is wrong.”

And of course, as many have remarked, the FT’s claim that inequality isn’t rising just doesn’t pass the “smell test,” as Paul Krugman and many others note. The evidence is everywhere. Just look at this latest tale, for example.

But that’s not really why we’re writing. We’re most interested in this comment in Piketty’s response:

“My estimates on wealth concentration do not fully take into account offshore wealth, and are likely to err on the low side.”

Which is another useful reminder that we think he is underestimating his own underestimation, because we think the main offshore wealth study he refers to (he also does refer to ours, in footnote 55 on p466) itself errs on the low side. Given that many, many trillions of dollars are sitting offshore – the large majority of them perched among the top 1.0 percent and 0.1 percent – that’s going to be quite a significant factor.

Read more here – with more to come.


Related Posts

New research on key role major economies play in global tax avoidance

offshore-network_colorcorrectedAn important new study on Offshore Financial Centres (OFCs) from the University of Amsterdam has made some fascinating discoveries, challenging, as the Financial Secrecy Index has, the popular misconception that tax havens are only palm fringed little islands and exposing that in fact major economies play a key role in global tax avoidance. Specifically they’ve […]

READ MORE →

Launch of international research collaboration, #AltAusterity

alt austerityToday is the launch of #AltAusterity, a new, international research collaboration of which Tax Justice Network is a partner.  The project aims to stimulate public debate on the subject of austerity though high quality research. It is a response to the lack of evidence which has underpinned the current policy agenda on austerity. The project […]

READ MORE →

RB tax avoidance – company calls for public country by country reporting after Oxfam report reveals profit shifting

pictureOxfam has today released a report on tax dodging by RB, the company formerly known as Reckitt Benckiser and the maker of thousands of well known household products. The report looks at the 2012 restructuring of the company which saw it set up ‘hubs’ in the Netherlands, Dubai and Singapore, all well known corporate tax […]

READ MORE →

Half measures mean Mauritius will continue to be a tax haven for the developing world

MauritiusThere was news this week that Mauritius has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). This is an initiative from the OECD to allow countries to take measures designed to stop tax avoidance by multinational companies and put them into their existing network of […]

READ MORE →

G20: Pressure rising on tax haven USA

HamburgWhilst the eyes of the world focused on the isolation of the US from the ‘G19’ position on climate change, something remarkable played out elsewhere in the process. Following closely the common EU position that we highlighted a few days ago, the G20 communique devotes important space to tax justice. It’s so good we quote […]

READ MORE →

About The Author

Nicholas Shaxson is a journalist and writer on the staff of Tax Justice Network. He is author of the book Poisoned Wells about the oil industry in Africa, published in 2007, and the more recent Treasure Islands: Tax havens and the Men who Stole the World, published by Random House in January 2011. He lives in Berlin
View all posts by

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top