What Americans Do All Day

They commute, work, and sleep, mostly.  48 minutes to groom, 34 minutes to care for others, 6 minutes to learn something.  Oh, for a country by country comparison.  From NPR:

FATCA & Multilateralism

I have suggested before that FATCA seems to me to be a bargaining chip to get other countries to negotiate on tax info exchange with the US.  The OECD seems to support this objective:

 The OECD welcomed today a new model international tax agreement designed to improve cross-border tax compliance and boost transparency.

Developed by the United States, France, Germany, Italy, Spain and the United Kingdom, the model allows the implementation of the Foreign Account Tax Compliance Act (FATCA) through automatic exchange between governments, reduces compliance costs for financial institutions and provides for reciprocity.   

...OECD Secretary-General Angel Gurría said:  “I warmly welcome the co-operative and multilateral approach on which the model agreement is based. We at the OECD have always stressed the need to combat offshore tax evasion while keeping compliance costs as low as possible. A proliferation of different systems is in nobody’s interest. We are happy to redouble our efforts in this area, working closely with interested countries and stakeholders to design global solutions to global problems to the benefit of governments and business around the world.” 

As a next step, the OECD will organise, in cooperation with the Business and Industry Advisory Committee to the OECD, a briefing session on the “Model Intergovernmental Agreement on Improving Tax Compliance and Implementing FATCA” at OECD headquarters in Paris in September 2012. The Organisation will then quickly advance to design common systems to reduce costs and increase benefits for governments and businesses alike. 

A major irony in the model agreement is that it's not at all clear to me that the US can furnish what it requires to be furnished by other countries, from the get go:

The information to be obtained and exchanged is:

(a) In the case of [FATCA Partner], with respect to each U.S. Reportable Account of each Reporting [FATCA Partner] Financial Institution: 

(i) the name, address, and U.S. TIN of each Specified U.S. Person that is an Account Holder of such account and, in the case of a Non-U.S. Entity that, after application of the due diligence procedures set forth in Annex I, is identified as having one or more Controlling Persons that is a Specified U.S. Person, the name, address, and U.S. TIN (if any) of such entity and each such Specified U.S. Person;...

This will be hard for the US to do in the face of anonymous incorporation, nor do I understand how a multilateral agreement can work if it cannot ensure reciprocity.  Nevertheless, it now begins to come clear that FATCA looks like a unilateral attempt to accomplish that which is not being  accomplished multilaterally through the usual (OECD) channels, namely, automatic info exchange with the US.  Steven Dean disagrees, though, and says the multilateralism envisioned here won't lead to more information being shared.  I hope he will weigh in and give his insights on this.

Meanwhile, one of FATCA's architects recently defended it in "A Report from the Front Lines."  Using imagery like "the front lines" gives the general idea about the tone: this is war.  He takes on the sovereignty issue as follows:

[T]he United States also has the sovereign right to protect its tax base by implementing a FATCA regime, and that if a Swiss FI does not want to be part of the regime, it is free to either avoid the U.S. financial system or incur a 30 percent withholding tax. Said differently, if tax haven and bank secrecy jurisdictions want to build their banking system to cater to tax evaders, the United States and other countries should not be prevented from taking counteractions.

He concludes with this on multilateralism:

Nevertheless, the United States needs to continue aggressively pursuing FATCA, especially in the multilateral context. Obtaining significant progress toward a multilateral FATCA regime could provide many benefits:

• reducing discrimination against U.S. citizens living abroad; 
• providing relatively standard customer due diligence procedures; 
• reducing the number of investment options available to U.S. persons attempting to hide money overseas; and 
• eliminating the complex passthrough payment rules. 

...In summary, the U.S. government has made significant progress toward addressing the use of offshore accounts to evade U.S. tax, but the war is not yet won. Much work still needs to be done. In addition to implementing FATCA in the United States, Treasury and the IRS should be pursuing an agreement among major countries as to the proper level of customer due diligence, and, ultimately, a multilateral FATCA regime involving several major countries. A multilateral approach will provide many benefits.

It is left to the reader to wonder, what benefits, and to whom?

Glaxo Tax Dodging: Belgium Edition

This article is in French but roughly translated it asks, how could Glaxo pay something like 3% in taxes on  2.3 billion euros in profit in Belgium?  And the answer is Belgian tax policy that allows earnings stripping to the tune of a 320 million euro tax break for the global pharma conglomerate.  TJN explains:

The main story is about how the GSK Group used Belgium as a tax haven to avoid tax on over a billion Euros in royalties linked to GSK's worldwide sales of the swine flu vaccine Pandemrix in 2009-2011. In a nutshell, these royalties were taxed at less than 3%, thanks to two Belgian fiscal measures: first, a 80% deduction on royalties earned by the company, and second, the so-called "notional interests", a Belgian tax specialty. 

More generally, these two "fiscal gifts" helped GSK (through its Belgian subsidiary GSK Biologicals) to deduct €2.6 billion from its profits before tax between 2008 and 2011, and thus legally avoid 892 million euro of taxes in Belgium on worldwide sales of vaccines (H1N1 + others)

Fixing Carried Interest Today

Conventional wisdom seems to hold that Congress  must act for there to be any reform of the taxation of "carried interest" (the type of fees earned by investment fund managers such as Mitt Romney).  But if the goal is to tax carried interest at the same rate as, say, salary earned by auto workers, Congress need not act at all.  Rather, the Treasury Department could accomplish this on its own today.

This somewhat surprising conclusion comes from the fact that the Code already authorizes the Treasury Department to prevent taxpayers from using partnerships to convert certain types of income that would have been taxed at the ordinary 35% rate into income taxed at the preferential 15% tax rate.  For somewhat technical reasons, carried interest requires a partnership to be used for tax purposes.  Thus, Treasury could simply issue a regulation disallowing the 15% rate for carried interest.  Voila!  Carried interest fixed.

(Technically, Treasury could not issue a final regulation in one day.  But it could issue proposed regulations combined with a temporary regulation effective immediately upon publication and good for three years pending finalization, so long as the regulation is not "significant" - which Treasury believes (subscription required) tax regulations rarely are.  Close enough for my book.)

This may not be a "perfect" solution for many, or even most, people. It seems everyone has a pet theory, myself included, about what (if anything) should be done about carried interest.  But given the seeming inability of Congress to accomplish anything over the past couple of years, why waste time with Congress seeking a perfect solution when Treasury could enact a perfectly good one all on its own?

OECD on information

Here are two new OECD reports of interest: one on automatic information exchange (they are sort of for it) and the other on confidentiality of tax info (they are really for it).

Collecting Taxes from Alter Egos: A Pyrrhic Victory for the IRS?

The government can usually only collect taxes from the person who owes them.  This makes sense - nobody wants the IRS showing up with a bill for someone else's taxes.  But there are exceptions to this rule - one of the most powerful being the "alter ego" doctrine. In short, the alter ego doctrine permits the IRS to seize the property of a shareholder for taxes owed by a corporation. This may surprise a lot of people.  After all, isn't the whole point of a corporation to provide limited liability to shareholders?  Can the IRS just ignore limited liability?

Unfortunately, the answer isn't entirely clear.  This is due, at least in part, to a conflict between two fundamental principles of tax law: first, that a validly formed corporation under state law is respected as a separate taxpayer from its shareholders and, second, that pure shams, even if they are valid for state law purposes, are disregarded for federal tax purposes. Owners of corporations, supported by most Courts of Appeals, tend to assert that state corporate law applies under the first principle, while the IRS claims that federal law applies and permits collection under the second.  This disagreement has recently bubbled into a controversy (subscription required).

A Fifth Circuit case from 2000 seemed to foreshadow the rise of this controversy (full disclosure: I clerked for Judge Dennis during the term this case was decided).  In that case, the Fifth Circuit held that the IRS needed some evidentiary basis to claim that a corporation was an alter ego before levying its property, rejecting the argument of the IRS that it could rely on subsequently discovered facts to justify its actions.  A separate concurrence went even further, concluding that the Fourth Amendment applied, meaning that the IRS had to meet the even higher "probable cause" standard of alter-ego status before imposing the levy.

It seems odd that the IRS can disregard state law, but that seems pretty well established (at least in certain contexts).  But I do think the IRS should be careful what it wishes for.  If a corporation exists as a separate entity from its shareholders under state law, even if it is an alter-ego for federal purposes, it is difficult to see why the Fourth Amendment would not apply to protect its shareholders.  In such case, the IRS would need probable cause that the corporation is an alter ego of the shareholder before starting any collection procedures against the shareholder.  But if the corporation didn't even exist for state law purposes, this would not be an issue and the IRS could collect against the shareholder.  So could insisting that federal law apply to alter-egos prove a pyrrhic victory for the IRS?

Is Transfer Pricing the Real Problem?

While Lee Sheppard provides a typically thoughtful and provocative analysis of transfer pricing, debating transfer pricing versus formulary apportionment feels much like rearranging deck chairs on the Titanic.  The real problem with international tax lies not in which technical rules should apply, but with a more fundamental question of how to divide the international tax base.

The original idea behind transfer pricing was to mitigate multiple countries taxing the same income - the so-called "double tax" problem.  What is often forgotten is that transfer pricing has done a pretty good job at mitigating double tax.  Unfortunately, it did so at the cost of creating double non-taxation, or income falling through the cracks.  Absent international agreement, there is no way to reduce one without increasing the other.  In other words, fixing double non-tax could just bring back double tax.  That may well be better than what we have, but it is definitely not free.

I agree with Sheppard that there are numerous problems with transfer pricing. I also agree that a shift to formulary apportionment would recapture much of the tax base lost to transfer pricing.  This has to be true.  For example, if tax base is allocated to the country of consumption, high consumption countries will benefit.  But there is little reason to believe low consumption countries would go along.

So how to get countries with disparate interests to agree on anything when it comes to division of tax base, especially when some countries can't even agree on signing a tax treaty with each other?  Thinking outside the tax treaty could well provide some answers.  This is not necessarily mutually exclusive with a move to formulary apportionment, but it may be necessary to fulfill its promise.

Sheppard on transfer pricing: clumsy, sorry, and doomed

Lee Sheppard asks Is Transfer Pricing Worth Salvaging, and answers no: it is "the leading edge of what is wrong with international taxation."  She calls transfer pricing a "clumsy tool[] that affluent developed countries have used among themselves, to their collective detriment" and "a sorry vestige of a system that will be gone in 10 years."  She points to a series of factors that will kill transfer pricing as a going concern: resistance from the BRICs, Europe's move to combined reporting with formulary apportionment, social justice activists' increased scrutiny of and scorn for high profile tax dodging, and various prior failures of tax policy that have already allowed multinationals to exit from the tax system on a global basis.  She concludes:

Booking income from an intangible in a tax haven is not a fit subject for tax competition. Tax competition for foreign direct investment is honest competition. Tax competition for booking income is not. Poor little Ireland is still poor, despite the billions of dollars of multinationals’ income booked there. It was only booked there. It sloshed through Ireland on the way to somewhere else, and did not pave the dirt roads on its way out.

HT: TJN, which is hosting a copy of the column on their website.

Fleming on U.S. Tax Treaty Shopping

J. Clifton Fleming Jr. has posted a new article on treaty shopping that is of interest, entitled Searching for the Uncertain Rationale Underlying the US Treasury's Anti-Treaty Shopping Policy.  In it, he explores the questionable policy behind anti treaty-shopping measures and shows that the exceptions to the limitation on benefits provisions found in US tax treaties basically eviscerate the ability of these provisions to prevent treaty shopping.  It's a quick and straightforward read in Professor Fleming's usual approachable style.

Corporate Tax Transparency: U.S. Update

A step forward in the global tax transparency effort: the U.S. SEC has finally approved rules for implementing the extractive industries transparency provisions of Dodd Frank s. 1504.  The rules were due, by statute, more than a year ago.  Industry lobbying against their issuance was fierce but, perhaps spurred by Oxfam's lawsuit compelling the SEC to stop its foot-dragging, the agency has finally produced.  Here is the announcement from the SEC.  A number of stories call this a big day for transparency and a big step by the US, from the New York Times, Global Witness, the Financial Integrity Task Force, the Brookings Institute.

Of course, as Brookings notes, the devil will be in the details, a.k.a., the implementation.  From their report:

Tomorrow those details will be in the hands of the SEC and will determine whether ‘effective transparency’ is attained or continues to remain elusive. Namely the SEC will determine whether the information that needs to be disclosed by companies is sufficiently detailed, relevant and accessible, enabling effective monitoring and analysis by civil society, investors and government reformists.

Given the content of the 2-year-old Dodd-Frank legislation, the SEC has no choice but to mandate disclosure. However, effective disclosure is by no means guaranteed as the SEC could issue weak rules, rendering disclosure ineffective. Thanks to Dodd-Frank legislation mandating transparency, the main danger is no longer wholesale ‘transparency evasion’ by many companies, but the more nuanced risk of enabling ‘transparency elusion’ (or ‘transparency avoidance’) by companies that wish to skirt detailed disclosure, thereby masking possible misdeeds.

Similarly, from the NYT:

Oil experts said it was difficult to know how onerous the payment disclosure rule would be since it was not yet known how the S.E.C. would define some of the requirements. Kevin Book, an analyst at ClearView Energy Partners, said in a research note that the ruling could “impose very real competitive challenges for U.S. companies,” particularly if “compliance leads to disclosure of previously secret terms of concessions, leases and production-sharing agreements.”

More on this to come.

Does Intimacy Matter in the Tax Law?

The home mortgage interest deduction has been in the news a fair amount lately, for a number of reasons.  But one that has received less attention in the media has been: what constitutes a "home" for purposes of the home mortgage interest deduction? The IRS and the Tax Court recently confronted this issue with some startling conclusions.

Slightly simplified, two unmarried taxpayers each owned their own house with a mortgage of $1 million, for which they each properly deducted the entire interest (under the law, each taxpayer is permitted to deduct interest on $1 million principal amount of mortgage, but that is capped at $500,000 per spouse for married couples filing separately).  The couple sold their separate houses and jointly bought a new house with a mortgage of $2 million, each as 50% co-owners and co-obligors.  Each taxpayer deducted half the mortgage interest.  The IRS disallowed half the interest deductions on the theory that the $1 million cap applied to the single home, not to each taxpayer separately.

The taxpayers countered with one simple fact - they were not married.  The Code clearly says that the $500,000 cap applies for a married couple filing separate returns but the cap is $1 million for everyone else. Yet that is not the end of the story - the taxpayers, although not married for tax purposes, were an intimate, same-sex couple.  The Tax Court agreed with the IRS that the taxpayers shared a single "residence" and interpreted the statute to read that the $1 million cap applied to that single residence and not to each taxpayer's share of the mortgage.

The decision raises a number of troubling issues, although there are technical and statutory arguments both in favor and against this result.  At a minimum, it is extremely difficult to determine how to draw any reasonable line under this approach.  What if the taxpayers lived in adjoining rowhouses that shared a common wall?  What if they also shared an emergency exit door?  Or they lived in neighboring apartments with shared common spaces?  What if the couple bought neighboring houses and tore down the fences so they shared a yard?

Perhaps the most troubling aspect of this case is the certainty demonstrated by the IRS and the court that the taxpayers were in fact part of a single residence.  After all, a home with a $2 million mortgage must be pretty large, presumably it would be quite easy for co-owners to pursue independent lives in a house of that size.  Maybe the IRS and the court mistakenly fell victim to the idea that this was a case about same-sex marriage?  But the logical conclusion of the case need not be limited to same-sex couples - it could apply to adult siblings sharing a house, roommates buying an apartment together to share expenses, or long-term, intimate, opposite sex couples who choose not to marry.  How are these different?  This seems like an absurd question, but implicit in it is an inquiry into the intimate nature of the relationship.

Nothing about the legal status of marriage requires spouses to pool resources, share expenses, or even like one another, but once the tax law leaves the relative safety of the bright line of marriage, the intimacy of relationships becomes relevant.  Any rule that distinguishes based on intimacy would not only permit, but would seem to require, the IRS and the courts to judge the intimacy of taxpayer relationships, or even construct what "intimate" means for these purposes.  What is intimate enough to justify tax benefits?  Would taxpayers have to kiss each other in court to prove their intimacy?  Would hiding intimate feelings become the new tax shelter?  Regardless of one's opinion about the holding in this particular case, such an approach would seem to open a door I am not sure most people would want open.  Perhaps the ultimate lesson is that we already have.

The Cayman Islands: A Modern Morton's Fork?

The Cayman Islands has come to stand as the epitome of the offshore tax haven.  Yet, until just the other day, the Cayman Islands had proposed a first of its kind income tax (dubbed a "community enhancement fee") of 10% on the income of expats.  Unsurprisingly, expats were less than pleased about this, even going so far as to claim that the mere discussion of the possibility of an income tax could kill the Cayman Islands as the preferred tax haven destination in the Caribbean.  Also unsurprisingly, the Caymans reversed course, introducing a new proposed tourist tax to replace the expat tax.

So what is going on?  The Cayman Islands has one of the highest GDP per-capita in the world, and thus presumably should have no problem raising the relatively small amounts of money at issue.  The problem is that the tax base of the Caymans is fleeting.  Expats (and capital for that matter) came to the Caymans precisely for their zero income tax rate, and presumably will leave just as quickly without it (in the words of one Cayman expat - "no tax or we leave").

Attracting financial business and the people who support it through tax competition is what made the Caymans wealthy from a GDP per-capita standpoint.  That it also is what makes it trapped from a revenue standpoint: raise taxes and lose this tax base (and business) or don't raise taxes and never fund any new public goods.  In a recent article I identify and analyze this phenomenon in depth (subsequent work by economists has also begun to do so).  In the article, I refer to this as a modern Morton's Fork, providing small tax haven type countries with a choice, of sorts, between two equally unappealing options.  In the article, this was a matter of theory.  But, lo and behold, it appears to have become real life.

From a US tax policy standpoint, this should be particularly troubling.  The United States needs tax havens such as the Cayman Islands to stop engaging in tax competition to collect the billions, or even trillions, of lost tax revenue.  The Cayman Islands, at least as evidenced by recent events, can't.  So the world appears stuck.

Perhaps it is time to start thinking differently about tax competition.  Instead of ignoring the Morton's Fork plaguing the Cayman Islands and continue insisting it just stop being a tax haven, the United States could adopt policies to make it easier for the Cayman Islands to do so.  For example, if US tax law made it easier for capital to invest in the Cayman Islands, there would be less pressure on the Caymans to rely on tax competition.  In turn, it would become easier for the Cayman Islands to impose some income taxes, share information, or otherwise cooperate with the United States on tax matters, the benefits of which should vastly outweigh any costs.  I discuss some specific proposals in detail in the article, but the basic premise remains.  While this may seem counter-intuitive at first, recent events only further support the idea that counter-intuitive may be precisely what the international tax system needs at this time.  Absent some fundamental change, my guess is we will only continue to see skirmishes such as the one over the failed Cayman "community enhancement fee" increase over time.

Tax Transparency, California style

California is considering a new bill that would have the FTB "publish a list of the 1,500 largest corporate taxpayers per taxable year, including each taxpayer's tax liability and income apportionment information..."  The 1,500 are "as measured by gross receipts, less returns and allowances, that filed a Form 10-K with the federal Securities and Exchange Commission for that taxable year."  Industry reps consider this a privacy violation for corporate taxpayers.  Maybe, but maybe not.  This involves public companies that have disclosure requirements because they are publicly traded, and it involves information they already disclose to the SEC, only with extraneous (non-California) information removed.  It's not at all clear to me why public companies need privacy rights when it comes to taxes paid.  Why are taxes paid and basic measures of how they are calculated so different than all the other financial information these companies already have to disclose in the interest of illuminating their public shareholders about their financial health?

There is no real difference, but tax disclosure presents a very real social/cultural problem for public companies that are paying very low rates of tax--which apparently includes most or all public companies.  The real worry therefore is not a loss of privacy at all but the legitimate worry that sunshine will lead to bad press as data emerges regarding how public companies arrange their tax affairs.

The latest action on the bill, AB 2439, was a second read plus a third reading ordered in the state Senate.  From the Aug. 8 Senate Floor analysis, we get this:

Existing state and federal laws generally prohibit unlawful disclosure or inspection of any income tax return information. ... the FTB may publish statistical data related to taxpayer information so long as nothing specific to a single taxpayer is disclosed.  Notwithstanding these provisions, the Legislature directed FTB to publish a list of the top 500 tax delinquencies over $100,000... 

ARGUMENTS IN SUPPORT: According to the author's office, this bill will ask for the FTB to post one specific data point on its website which corporations already have: corporation taxes paid to California. It simply disaggregates the amount already reported in their SEC 10-K form to be California-specific.  This simple data is urgently needed for several reasons.  First, California recently made significant changes in its corporation tax system, adopting "elective single sales factor apportionment." This new system means that corporations have a choice of how to apportion multi-state income to California. The FTB has estimated that this choice will cost the state nearly $1 billion annually, beginning in tax year 2011. With this bill, we will be able to accurately determine the distribution of benefits and costs from this drastic change.  

ARGUMENTS IN OPPOSITION: The opposition expresses concerns that this bill will result in misleading information that provides no context for a taxpayer's disposition and will provide no objective evaluation of the single sales factor. For many multi-state corporations, their finality tax liability may not be resolved for years after their return is actually filed so the information in this bill may not be accurate. Furthermore, the opposition states that breeching [sic] taxpayer confidentiality is punitive to the individual taxpayer but will not provide further information to the state to determine whether specific tax policies made sense. 

Regarding the "arguments for," I don't know that the legislature's ability to "accurately determine" things requires the data to be publicly disclosed.  The legislature could as easily simply require public companies doing business in California to include the information on their confidential tax returns, which are typically available to state legislatures to review in the aggregate for policy purposes.  Someone needs to make an argument about why public disclosure is necessary.  There are plenty of available arguments, one need only review the CBCR and PWYP campaigns (or you can read my chapter which examines these arguments).

Regarding the "arguments in opposition," I am not sure why the information is misleading unless companies are reporting false or misleading data to the SEC; if that is the case, we have bigger problems.  No, it is not that the data is misleading.  On the contrary, it is more likely that the data is likely going to be painfully and inconveniently accurate.   True, returns are subject to contestation by the FTB.  I would submit that in the name of the rule of law, the process and outcome of agency contestation ought also to be public information  (it is not, unless the matter ends up in court).  But that is no reason why the original claim is somehow misleading, unless intentionally so by the author.  It is the company's stated position at the time it is made.

Interesting typo alert: it is "breaching" not "breeching" that belongs in that last sentence, but the visual of corporate confidentiality as a baby trying to emerge wrong-way around is quite fascinating.  Still, they've made the right point--the case has not (yet) been made for public disclosure.

Hello, and Thanks for the Invite

I want to thank Allison for inviting me to contribute some thoughts to this blog.  I definitely agree with her on one thing - we do not always agree on matters tax and society, but I too always enjoy reading her perspective on things and almost always learn something new.

I look forward to the opportunity to post on some issues I am working on and thinking about, and hope you find them interesting, if not thought provoking.

Welcome to Adam Rosenzweig

I'd like to welcome Adam Rosenzweig, Wash. U. Professor of Law, as a new contributor to the Tax, Society & Culture blog.  We don't always agree on everything tax, society, or culture, but I always enjoy his perspective and look forward to his participation here.

Signs you are the 1%: credible fear of thronging marauders.

I am going to apologize in advance for bringing zombies into this discussion.  But first, this:

“The rich are always afraid. I saw robbers in a bad year once rush into the gate of the great house and the slaves and the concubines and even the Old Mistress herself ran hither and thither and each had a treasure that she thrust into some secret place already planned."

That is from Pearl Buck's The Good Earth (1931).  Now comes this story from NY Magazine:

..."It's incredible, right?" shouts Jeff Greene over the roar of the two-seater dune buggy's motor. "It's 55 acres!" Still in his whites from this morning's tennis match, he's giving a personal tour of his Sag Harbor estate, barreling at 30 miles per hour through the vast forest of scrubby pines and soft moss of its gated grounds. ... Greene made his fortune in real estate, and he’s never been shy about showing it off. “Having money is great,” he says. “It’s fun. The more the better.” ...  “I wish we could spend more time here,” he says. “Honestly, we have so many great homes.

He cuts the engine, and for a moment the only sound is the waves lapping peacefully against the shore. Greene gazes across the bay at the multi-million-dollar houses peeking from behind the trees. I assume he’s quietly contemplating acquiring even more of the shoreline, but then he says something surprising. “If somebody wanted to go after a rich person,” he observes, “they have got their pick of the litter out here.” 

 It’s not a stretch to say many residents of Park Avenue harbor vivid fears of a populist revolt like the one seen in The Dark Knight Rises, in which they cower miserably under their sideboards while ragged hordes plunder the silver.

“This is my fear, and it’s a real, legitimate fear,” Greene says, revving up the engine. “You have this huge, huge class of people who are impoverished. If we keep doing what we’re doing, we will build a class of poor people that will take over this country, and the country will not look like what it does today. It will be a different economy, rights, all that stuff will be different.” 

...He and Mei-Sze plan on rebuilding as soon as they are done with their renovation in Palm Beach. He's not sure what he wants it to look like, but one thing is likely: The new property will have gates. "You're in Palm Beach, you're in the Hamptons, you think you're so secure," Greene says. "Do you really think if you had 50,000 angry people coming across the river, you think you're safe?"

This speaks volumes about what it means to be free.  Fear, even if irrational, is driving the superrich to wall themselves off from society, fearful of a day of reckoning that must eventually destroy their careful efforts to hoard.  Can anyone really be free in a society which allows the haves to amass such wealth that the resulting disparity creates a credible safety threat from the have-nots?

Now for the zombies.

In the final scenes of the second season of the Walking Dead, the camera pans out to show the survivors huddled around a fire, thinking about what they are going to do to protect themselves from the coming zombie onslaught.  A dim but unmistakable picture emerges that the group is not too far from what looks to be an enormous and well protected prison complex.  One leaves the season with the question of whether barricading the group behind a big enough wall will ensure their survival.  Can they survive behind the wall, and for how long?  How will they feed themselves?  What kind of life can they hope to rebuild there?  The alternative is finding a way to live out in the open without being detected as prey by the vast and apparently growing population of zombies (an alternative suggested by the extremely disturbing and creepy entourage that rescues another of the survivors that had been separated from the group).

We may look back and wonder what on earth sustained the zombie craze that has currently infected all levels of social discourse today, even among academics (besides the sheer silliness of the whole venture).  Perhaps the growing sense of unease about what happens in a world defined by absolute social stratification drives some of the allure. 

Yes, we should tax Olympian athletes.

Well said, Christine.

Wealth disparity pyramid

I wish this diagram would draw the rest of the picture, i.e., the enormous block holding up the rest of the pyramid, but this is a powerful visual in any event:

From TJN via Richard Murphy.