As bad as you might think inequality is, the reality is that it’s even worse for a very simple reason: Taxes really are only for the little people.
By which I mean anyone who doesn’t have a net worth solidly in the nine figures.
None of this is exactly news, but, as The New York Times’ blockbuster report on how President Donald Trump managed to inherit $413 million in inflation-adjusted dollars without paying much in the way of gift or estate taxes shows us, it’s important to remember that the super-rich tend to be even more super and rich than the tax returns that economists use to estimate inequality say they are. That isn’t to say that the uber-wealthy are all bending the law to the point of potentially breaking it, like the Trumps are alleged to have done — disguising gifts as “loans,” inflating invoices to make other gifts look like business income, and assessing properties at wildly different values, sometimes within weeks of each other, to minimize their tax bill — but rather that there are plenty of other more and less legitimate ways for well-heeled individuals and companies to shield their money from Uncle Sam.
Like using tax havens.
Now, on the legal end of the spectrum, there’s the way that companies shift their profits to show up in low-tax jurisdictions such as Switzerland or the Cayman Islands. This, according to Berkeley economist Gabriel Zucman and his co-researchers, covers as much as 40 percent of all multinational profits and 50 percent of U.S. ones. To put that in perspective, U.S. companies report more profits in Ireland, the top tax-avoidance destination in the world, than they do in China, Japan, Germany, France and Mexico combined.