Page 102 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

BANKING
“ e battles between the forces of free- market capitalism and the socialists are fought in the o ces of lawyers and in the vessels of trusts and o shore tax-havens, rather than with tanks and ballistic missiles.”
private companies and listed rms. In fact, it is legally impossible for heirs to inherit any wealth at all until such taxes are paid. ere are many cases of previously over-privileged who have spent years in nancial purgatory whilst their parents’ estates are being wound up.
Over the past 150 years, since the tail-end of the industrial revolution, there has been a steady migration of wealth concentration – rather than wealth itself – from regal entities to aristocratic families and then on to entrepreneurial individuals. is migration has been caused mainly by two forces of change; political and social upheaval in the form of war, and tax. One only needs to watch the popular TV series Downton Abbey to observe this. In the early seasons, their sons and heirs are slaughtered on the battle elds of Europe, and in the latter seasons their estates are sold for taxes.
In Western democracies, as Piketty has proven, in spite of high tax rates both during one’s lifetime, and at the point of one’s demise, inequality has reached its highest levels in over a hundred years. e battles between the forces of free-market capitalism and the socialists are fought in the o ces of lawyers and in the vessels of trusts and o shore tax-havens, rather than with tanks and ballistic missiles.
For example, there is a minor loophole in terms of how hedge fund managers treat their accumulated income gains on the portfolios they manage o shore. Once this loophole is closed in 2017, it is estimated that the tax windfall that will accrue to the US government will be in the order of USD 25 billion. Leading hedge fund managers have moved house and home in the past six months in anticipation of this impending change to tax law.
e moral and political question as to whether punitive death tax is appropriate within the context of the geopolitical dominance of free- market capitalism has become irrelevant. e side occupied by the rich has been for several decades now utterly eroded by its use of tax havens and the wilful misinterpretation of tax law. Foundations, trusts, wrapper endowments and a raft of small islands have been the undoing of any real debate on the question of appropriate balance. e haircut tax rate for dying remains high, owing to the di culty in its collection.
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