In the wake of the Panama Papers imbroglio, I’ve had recommended to me a fascinating book on tax havens called The Hidden Wealth of Nations by Gabriel Zucman.

In it, Zucman, an Assistant Professor of Economics at UC Berkley, attempts a history of tax havens – how and why they came into being, and then suggests some courses of action. I’m about a third of the way through, currently delving into Zucman’s analysis of the deep inconsistencies in the way financial assets are reported – 2014 saw a $6.1USD trillion imbalance in global reporting of financial assets and liabilities, which Zucman is using as a proxy for the amount held “offshore”.

But the thing is, this is only a measure of financial securities. And it is a perfect encapsulation of what has made this whole mess possible – wealth is no longer held in land, capital is mobile and it is the rich that are the most mobile.

From early on in the book:

“the tax-evasion industry was also made by the transformation of the nature of wealth. In industrialised countries, financial wealth had, since the middle of the nineteenth century, overtaken that of land ownership.”

The mobility of capital is only one part of the equation, however. Tax havens are costly for individuals. It isn’t just lawyers and accounts, the transaction and opportunity costs bite as well. As ingenious as the Lombard Credit system is – parking capital offshore and borrowing against it locally, the rich aren’t doing it for fun.

The benefit is the tax arbitrage in a world that refuses to acknowledge globalisation. It’s what kicked it off in the first place:

“In France, on the eve of the war, a pretax stock dividend of 100 francs was worth 96 Francs after taxes. In 1920 the world changed. Public debt exploded, and the state vowed to compensate generously those who had suffered during the war and to pay for the retirement of veterans. That year the top marginal income tax rate rose to 50%; in 1924 it reached 72%. The industry of tax evasion was born.”

The problem lies in the way we conceive of taxes. We still do it like its 1920. Every country does it in isolation. As if capital isn’t mobile. It’s why taxing consolidated profits rather than country-by-country has been a non-starter.

Even if Zucman’s proposed global financial register is established. The way we talk about tax needs to change.