Summary of Game-Changers and Whistle-Blowers

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Game-Changers and Whistle-Blowers summary
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Although income inequality has received a lot of attention lately, wealth inequality gets less notice. Economist Thomas Piketty, in his best-selling Capital in the Twenty-First Century, had even proposed a global wealth tax to tackle the problem, an idea that came to naught. The IMF’s James Brumby and Michael Keen provide an incisive look at ways in which governments could use their tax policies to target wealth inequality. getAbstract recommends this provocative report to policy experts, wealth managers, tax professionals and others with an interest in tax policy.

In this summary, you will learn

  • Why wealth inequality is an important issue,
  • How rich people and multinational corporations avoid paying taxes, and
  • What steps governments could take to fight tax evasion and reduce wealth inequality.
 

About the Authors

James Brumby is a director in the IMF’s governance global practice, and Michael Keen is a deputy director in the fiscal affairs department of the IMF.

 

Summary

While many have voiced concerns about the growing levels of income inequality in some economies, the distribution of wealth is even more skewed than the allocation of income. To make matters worse, the list of OECD countries with a wealth tax in force declined from 12 in 1985 to four in 2007. The ways officials structure these taxes make the levies vulnerable to lobbying, and rich people are adept at finding loopholes to gain tax exemptions. The wealthy also take advantage of low-tax havens in which to park their money. One estimate calculates the amount of offshore wealth in low-tax havens to equal some 10% of global output, of which about 75% remains unknown to authorities. In developing economies, the levels of household wealth held in offshore accounts are even higher, at 22% for Latin America and 30% for Africa. A tax regime can tackle rising inequity in wealth distribution in various ways:

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