wealth inequality

In the Ukraine War, We Can Make Oligarchs — Everywhere — the Big Losers – Inequality.org


But oligarchy, we need to remember, exists as a worldwide phenomenon, not a mere Russian affair. The Ukraine conflict could become a jumping-off point for confronting our entire contemporary global oligarchic empire.

Oligarchs worldwide grow and shield their fortunes through a global tax avoidance web of financial consultancies and shell companies. Landmark data dumps like the Pandora Papers have given us unnerving glimpses into this secret world of high-finance manipulation, a universe where deep-pocketed tax evaders have parked, Global Witness estimates, at least $12 trillion in offshore accounts.

Governments opposing the Russia’s Ukraine invasion are now rushing to impose sanctions on the oligarchs most closely connected to the Putin regime. They’re freezing their assets and denying them entry. But these sanctions have limited utility. They leave untouched the hoards of wealth hidden in the world’s tax evasion networks.

Russia’s top 0.01 percent, as University of California-Berkeley economist Gabriel Zucman reminds us, has over half its wealth parked outside Russia.

“Shouldn’t an effective sanctions policy,” asks Zucman, “start by seizing these assets?”

Easier said than done, given the by-design opacity of global tax havens and the powerful interests within nations like the United States and the UK that have spent the last three decades enabling the oligarchs who’ve been robbing the Russian people.

“Money doesn’t just move and hide itself,” explains Spencer Woodman, an analyst with the International Consortium of Investigative Journalists. “The flight of Russia’s wealth has been supported by big banks and a global industry of professionals who specialize in providing rich clients with shell companies, trusts, and other secretive vehicles.”

We either take on these enablers or let our world’s oligarchs — from Russia and every other corner of the globe — keep building their enormous stashes of wealth. And we need to move with all due dispatch. This moment of outrage over Ukraine will pass. Our global oligarchy will close ranks, after perhaps sacrificing a handful of their Russian brethren, and seek to continue tax-evading business as usual. We can’t let them.

So where do we start our offensive against oligarchy? Woodman sees some immediate simple steps, like getting Congress to pass the “Enablers Act,” legislation pending since last October that would require all those Americans who facilitate the flow of assets into the United States, not just banks, to investigate how their foreign clients have built their fabulous fortunes.

“If we make banks report dirty money but allow law, real estate, and accounting firms to look the other way, that creates a loophole that crooks and kleptocrats can sail a yacht through,” notes Rep. Tom Malinowski (D-N.J.), a co-sponsor of the legislation.

Our eventual goal ought to be systematic transparency throughout the world’s financial system, via a cooperative effort to create what the Independent Commission for the Reform of International Corporate Taxation is calling a “global asset registry.” This GAR, the commission declares, would “prove a vital tool” against both “illicit financial flows” and attempts to avoid taxes on “legitimate income and profits.” With a global asset registry in place, governments could more effectively levy “appropriate taxation to reduce the negative consequences of inequality.”

Western political leaders haven’t yet committed themselves to such a registry. But some are leaning somewhat that way. This past Monday, officials in the UK released a “much-delayed economic crime bill” that will require anonymous foreign owners of UK land and property to reveal their identities.

President Biden, meanwhile, is talking tough.

“We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets,” he promised in his March 1 State of the Union address. “We are coming for your ill-begotten gains.”

But any seizures will likely be little more than more symbolic gestures unless, suggests journalist Edward Ongweso, we shut down the global tax haven networks that let the world’s elite conceal their fortunes in offshore hubs. And any successful shutdown move, he adds, will have to understand and overcome the political reality that elites everywhere have little interest in “establishing precedents that could come back to hurt them.”

We won’t, in other words, be able to take down Putin’s oligarchic buddies unless we directly take on global oligarchy writ large. What might that takedown entail? Imagine a crackdown on oligarchy that combines an assault on global tax havens with “solidarity tax” initiatives that redistribute wealth from oligarchs to refugees or pandemic victims or some other class of people in clear dire need.

Efforts along this line could have broad political appeal. Indeed, Rep. Malinowski has just introduced new legislation that would let the Biden administration confiscate Russian oligarch wealth and apply it toward efforts to rebuild Ukraine.

The trick to moving ahead in a wider, bolder fashion? Timing, says the UK economist Faiza Shaheen.

Our current window, she reminds us, “will only be open for a short time.”


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