To crack down on tax evasion by wealthy investors, create an international register of who owns which financial securities

monopoly-man-with-bag-of-moneySecrecy allows tax-dodging by super wealthy investors to fester around the world. Here’s one idea from economist Gabriel Zucman to help crack down on the practice: create an international register of who owns which investments. That would in turn enable local tax authorities to more accurately verify filed tax returns, thus thwarting attempts to cheat and fudge the numbers.

If the proposal reminds the reader of a blockchain, there’s a reason for that: blockchain technology, most commonly understood in the Bitcoin context, provides for all financial transactions pertaining to something, such as the ownership of property, to be documented and recorded in a secure public ledger. It could be applied here to create the proposed international registry of investments.

Economist Marshall Steinbaum further explains Zucman’s idea in the Boston Review:

Zucman’s most comprehensive proposal for dealing with tax evasion by wealthy individuals is to create an international financial register of who owns which financial securities. In the United States, the Depository Trust Company registers the ownership of stocks and bonds for purposes of transmitting electronic payment, and the UK and Europe have their own systems. These could effectively be nationalized and made accessible to tax authorities to verify filed tax returns.

Often, the wealthy cite privacy concerns. But privacy concerns about an international financial register imply that only the privacy of the wealthy should matter for policy. As Zucman points out, the ownership of and taxes paid on real estate in the United States is public knowledge and has been for all of U.S. history, and real estate is more equitably owned than financial assets.

For more information, see “The Unseen Threat of Capital Mobility,” Boston Review (2015).