Bloomberg Businessweek - USA (2019-05-27)

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theiradviceonhisestatetaxplan,whichwouldestablish

ratesashighas77%onbillionaires.AndwhenNewYork

RepresentativeAlexandria Ocasio-Cortezproposed on

60 Minutestohikethetopmarginaltaxratetoasmuchas

70%onincomeabove$10million,ZucmanandSaezwere

fastoutwithaNewYorkTimesop-edinsupport.

Thepairhasnowwrittena cookbookofsortsforany 2020

candidatelookingtosoaktherich.TheTriumphofInjustice, to

bepublishedbyW.W.Norton& Co.earlynextyear,focuseson

howwealthdisparitycanbefoughtwithtaxpolicy.Thetools

Zucmanhasidentifiedtodatechallengea seriesofassump-

tions,fiercelyheldbymanyeconomistsandpolicymakers,

abouthowtheworldworks:Thatunfetteredglobalizationis

a win-winproposition.Thatlowtaxesstimulategrowth.That

billionaires,andthesuperprofitablecompaniestheyfound,

areproofcapitalismworks.ForZucman,theevidencesug-

gestsotherwise.Andwithouttakingaction,heargues,we

riskaneconomicandpoliticalbacklashfarmoredestabiliz-

ingthanthefinancialcrisisthatsparkedhiswork.

A

merica’stopwealthdetectiveprobesthesecretsof

thesuperrichina tidy,white-walledofficewithan

enviableviewoftheSanFranciscoBay.Hismeth-

odsareunusuallybrute-forcecomparedwith

thoseofrecent-vintageU.S.economists,relyingnotonpow-

erfulcomputers,regressionanalyses,orpredictivemodels,

butonsimple,voluminousspreadsheetscompilingthetax

tables,macroeconomicdatasets,andcross-border-flowcal-

culationsofcentralbanks.Hedoesit onhisown,onlyrarely

outsourcingtograduatestudents.

“Youcanconductthisdetectiveworkonlyif youdoit to

a largeextentyourself,”hesays.“Thewealthis notvisiblein

plainsight—it’svisibleinthedata.”Lately,headds,theBay

Areahummingoutsidehiswindow,“IseemoreofSilicon

ValleyinmyExcelspreadsheets,espe-

ciallyintheamountofprofitsbookedin

BermudaandIreland.”

BornandraisedinParis,Zucmanis the

sonoftwodoctors.Hismotherresearches

immunology,andhisfathertreatsHIV

patients.Politicswasa frequentdinner-

timetopic.Hesaysthe“traumaticpolit-

icaleventofmyyouth”occurredwhen

hewas15.Jean-MarieLePen,founderof

thefar-rightNationalFrontparty,edged

outa socialistcandidatetowina spotin

thefinalroundof 2002 presidentialvot-

ing.Zucmanremembersjoiningthespon-

taneousproteststhatfollowed.“Alotof

mypoliticalthinkingsincethenhasbeen

focusedonhowwecanavoidthisdisaster

fromhappeningagain,”hesays.“Sofar,

we’vefailed.”(LePen’sdaughtermade

thepresidentialrunoffin 2017 andwon

almosttwiceasmanyvotesasherfather.)

Zucmanmethisfuturewife,ClaireMontialoux,in2006,in

a universityeconomics class. She’s now finishing her Ph.D. dis-

sertation,whichshows how the U.S.’s expansion of the min-

imumwageinthelate 1960s and ’70s helped black workers,

narrowingtheracialearnings gap. “We share the same vision

forwhywearedoingsocial sciences,” Zucman says. “The ulti-

mategoalis howcanwedobetter?”

HisowngraduateworkinParissawhimcompileevi-

dencethattheworld’srichwerestowingatleast$7.6trillion

inoffshoreaccounts,accountingfor8%ofglobalhousehold

financialwealth;80%ofthoseassetswerehiddenfromgovern-

ments,resultinginabout$200billioninlosttaxrevenueper

year.Atthesametime,hewashelpinghisadviser,Piketty,pull

togethermorethan 300 yearsofwealthandincomedatafrom

France,Germany,theU.K.,andtheU.S.Theyco-authored a

paperonthenumbers, which became a key part of Piketty’s

surprise 2014 bestseller, Capital in the Twenty-First Century.

Thefollowingyear,Zucman’s doctoral research was also pub-

lishedasa book,TheHidden Wealth of Nations.

HearrivedintheU.S. in 2013, the same year President

Obamawasdeclaring inequality “the defining challenge of

our time.” Zucman had been recruited

to Berkeley by Saez, winner of econom-

ics’ prestigious John Bates Clark Medal

in 2009 and a MacArthur Fellowship in

2010. They took up offices next to each
      other and set about trying to solve the
      riddle of America’s hidden wealth,
      unveiling their estimates as a draft
      paper the following year.
      None of it was easy. Tax collectors
      such as the IRS generally require tax-
      payers to report income, not wealth.
      And much of the world’s wealth is
      held in forms—homes, art, retirement
      accounts, non-dividend-paying stocks—
      that produce no income prior to a sale.
      A real estate mogul with a billion-dollar
      property portfolio and billions more in
      cash stashed overseas can still report a
      tiny income. Most inequality research-
      ers therefore rely on voluntary surveys, DATA: WORLD INEQUALITY DATABASE, GABRIEL ZUCMAN

Share of

adults

Share of

wealth

Top 0.1%

Top remaining 1%

Top remaining 10%

Bottom 30%

Middle 40%

Top remaining 30%

20%

18%

34%

20%

8%

-2%

U.S. wealth distribution, 2014

Bloomberg Businessweek

WHERE THEMONEYIS

May 27, 2019

ShareofU.S.wealthheldbythetop1%

50%

40

30

20

1917 1929 1978 2016