July 23, 2021

Trump and the aristocracy of fraud | Economy

Trump and the aristocracy of fraud | Economy

It turns out that I may have committed an injustice with Donald Trump. You see, I've always had my doubts when he says he's a great negotiator. But what we have just discovered is that his skills for negotiation developed soon. In fact, it was so incredible that at an early age he was earning $ 200,000 per year, in updated dollars.

More specifically, that's what I earned at 3 years. At 8, he was already a millionaire. Of course, the money came from his father, who spent decades evading the taxes he was legally required to pay for the money donated to his children.

The popular story of The New York Times about the history of fraud of the Trump family really refers to two different but related types of fraud.

On the one hand, the family embarked on a massive tax fraud, using a variety of money laundering techniques to avoid paying what it owed. On the other hand, the story that Donald Trump tells about his life – the portrait he paints of a self-made entrepreneur who became a billionaire from humble roots – has always been a lie: he not only inherited his fortune and received from his father the equivalent of 400 million dollars, but Fred Trump gave him a cable when business went wrong.

From these revelations it follows that Trump's followers who imagine they have found a tongue-in-cheek champion that will drain the swamp and use their business acumen to return the United States to its greatness, have deceived them, and in a big way.

But Trump's money story is part of a longer story. Even those who are not satisfied with the extent to which we live in an age of increasing inequality and concentration of wealth at the top, have tended to believe that great fortunes have been obtained, in most cases, more or less honored Only now have we begun to pay attention to the enormous corruption and illegality that sustain our progress towards the oligarchy.

I suspect that, until recently, most economists, including tax experts, would have accepted that tax evasion by corporations and the rich – which is legal – was a big problem, but that tax evasion -Shopping money from the treasury- was not so widespread. It was evident that some rich people were taking advantage of legal, albeit morally doubtful, gaps in the tax code, but the prevailing opinion was that outright fraud to the tax authorities and consequently to citizenship was not so widespread in advanced countries.

But this opinion has always rested on weak foundations. After all, tax evasion does not appear, almost by definition, in official statistics, and the super rich are not in the habit of hawking tax evasion. To get a real idea of ​​how much fraud occurs, either you have to do what The New York Times did-exhaustively investigate the finances of a specific family-or rely on lucky strokes to bring out what was previously hidden.

Two years ago, we received a huge stroke of luck in the form of Papeles de Panamá, a treasure trove of leaked data from a Panamanian company specialized in helping people hide their wealth in tax havens, and a minor leak from HSBC. While the unpleasant details revealed by these leaks made headlines immediately, their true importance has only been made clear by the work of Gabriel Zucman and his Berkeley collaborators, in cooperation with the Scandinavian tax authorities.

Crossing information from the Panama Papers and other leaks with the national fiscal data, these researchers discovered that direct tax evasion is very widespread in high places. The truly rich end up paying a much lower effective tax rate than the purely wealthy, not because of the gaps in the tax laws, but because they break the law. The researchers found that the richest taxpayers pay on average 25% less than they should, and of course, many individuals pay even less. It is a very high figure. If the rich of the United States evade money on the same scale (something they almost certainly do), it is likely to cost the State about as much as the food stamp program. And they also use tax evasion to shield their privilege and bequeath it to their heirs, which is Trump's true story.

The obvious question is what our elected representatives do about this epidemic of fraud. Well, Republicans in Congress have been with the case for years: they have been systematically withdrawing funding from the Internal Revenue Service, which has weakened their ability to investigate tax fraud. We are not only governed by tax fraudsters; We have a government of tax fraudsters for tax fraudsters.

Therefore, what we are learning is that the history of what is happening in our society is even worse than we thought. And it's not just that the president of the United States is, as David Cay Johnston said, a journalist expert in tax matters, a "financial vampire" who cheats taxpayers in the same way that he cheats practically anyone who deals with him.

Beyond that, our tendency to the oligarchy – the government of a few – is increasingly more like a kakistocracy: the government of the worst, or at least the least scrupulous. Corruption is not subtle; on the contrary, it is more raw than almost anyone could have imagined. It is also profound, and it has infected our politics, literally, to its highest levels.

Paul Krugman is a Nobel Prize in Economics. © The New York Times Company, 2018

Translation of News Clips.


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