While for Benjamin Franklin nothing was considered certain in this world except death and taxes, in the market liberal paradigm tax havens and inequality have seemed to take over this role. For a long time, tax havens were considered inevitable in a globalised world and inequality was not a problem but an incentive. While multinational corporations developed ever more sophisticated methods to channel their profits past the tax authorities, inequality increased over decades.
In their book, which was awarded the Hans Matthöfer Prize this week, the two Berkeley economists Emmanuel Saez and Gabriel Zucman trace how this could have happened. According to the book, inequality and tax havens are not immutable phenomena of the 21st century, but can be politically limited and shaped.
By formulating proposals for fairer tax systems in a globalised world, the two authors contribute to replacing the old paradigm with a new one. How quickly new ideas then find their way into politics can be well illustrated by the new US Treasury Secretary Janet Yellen’s approval of a global minimum tax for corporations. There is also talk of higher taxes on top earners again. As Thomas Fricke put it in his laudation of the two laureates: their merit is the breaking of taboos with the old paradigm, which opens the way for something new.
See Thomas Fricke’s complete laudation on the laureates and their acknowledgements here: