I have no idea whether there’s any meaning behind the pronouncement from the G-20 summit that the era of banking secrecy and tax havens is over. But if there is, that’s extraordinarily big, and extraordinarily good, news. The ease with which the wealthy can evade taxes on unearned income as long as Switzerland and the Caymans and Macao are there to help puts a limit on the extent to which redistribution via taxation is feasible. And of all the forms of distributional intervention, taxation is the least likely to carry large deadweight losses. So if we want to address rising inequality — which the current crisis has temporarily interrupted, but which may still be the long-term trend — then addressing the tax-and-banking-haven issue is a necessary pre-requisite.
I find it surprising that two center-right politicians, Sarkozy and Merkel, were the ones pounding the drum for this, but credit where it’s due.