Hayward, Tim. "The Monetary Constraints on Tax Justice". In Global Justice and Finance, by Tim Hayward, 126-145. Awaiting Publication.

Hayward, Tim. "The Monetary Constraints on Tax Justice". In Global Justice and Finance, by Tim Hayward, 126-145. Awaiting Publication.

• The biggest problem with plans to solve global poverty, climate change, or any other issue by taxation is that most tax systems are broken and circumvented by the rich and powerful. These tax schemes cannot be realistically implemented unless contemporary tax systems are improved upon (127-128).
• In addition to the complexity of actually combating tax avoidance, the general trend following globalization for states to decrease the tax burden on corporations in an attempt to encourage investment exacerbates the issue by creating new loopholes for tax evasion and lowering overall tax threasholds (128).
• Other philosophers have proposed creating international organizations, on a treaty basis similar to the WTO, to coordinate national tax policy for global benefit. This organization would both prevent competition for investment and demand members close important tax loopholes (129-130).
• Tax evasion constitutes by far the largest flow of illicit money. The hidden or laundered profits of legal commercial transactions likely account for around 65% of all illicit financial flows, the rest accounted for by the financial proceeds of crime and bribery (130).
• It is often difficult to distinguish between legal and illegal financial flows by major corporations and banks because of how modern finance is constructed. In particular, the existence of shadow banking systems creates a major lack of transparency. In the most basic sense, shadow banks are all banks which trade in commodities other than fiat money, especially debt; they make up around one-third of all banks. The fact they these banks trade in debt and other financial products rather than cash means that their transactions are significantly harder to track (133-135).
• This debt trading through shadow banks can having good or bad effects for the global economy. During times of economic expansion, shadow banking allows for larger gains on successful investments and thus more profit for reinvestment. During recessions, shadow banking deals are more likely to default and cannot be liquidated like other assets, placing considerable hardship on balance sheets (134-135).
• The debt-based assets held by shadow banks are more prone to risk and more difficult to manage if they fail than simple cash-based assets. They are useful to banks because they can promise high rewards for investors, but that same high risk leads to massive losses during recession (135-136).
• The intensity of trade in debt-based assets during boom cycles in the economy can led many financiers and bankers to think of these assets as liquid, because the demand for these financial products is so high and they are easily transferable. Treating them as liquid, as many banks do, leads to bad predictions and huge inescapable losses during financial crises (137-138).
• The author argues that the perception that politicians are no longer able to control the financial sector, a factor mostly true in the West, degrades public trust in institutions and the liberal values central to the West. This largely an accurate assumption since global financial flows are not currently controlled by any national power (139-140). The claim that this erodes liberal values is both deeply questionable and unsupported.
• The fact that currency speculation exists requires countries, especially poor countries, to hold large amounts of foreign currency in reserve to guard against the threat of speculators. This is all money that could be used for development purposes. So currency speculation and the threat of speculation both hinder development efforts (140-141). Although true for most developing countries, Uzbekistan clearly shows that if you don't have a floating exchange rate regime then you can't get fucked by speculators or anyone else. There is an easy solution to this particular problem.
• The modern liberalized system of finance emerged from the heavily regulated Keynesian, Corporatist, and Command economic systems of the 1930s through the 1950s. By the late 1950s the Keynesian system of the West began to degrade under pressure from business groups concerned with stagnant growth and negative interest rates. This liberalization accelerated rapidly during the 1980s under President Reagan and Prime Minister Thatcher, and became the new norm for global finance (142-143).
• The present distribution of capital is so uneven that, in a situation were billion do not have access to the funds necessary to engage in more economic behavior than subsistence activities, the global financial sector is so flush with capital that it lacks opportunities for sufficiently profitable investment (144-145).
• The author then makes a fun conspiratorial leap to assuming that the global financial sector is the reason that such disparity exists and that private individuals own all of this cash. He also claims that the increased use of debt-assets in finance has trapped the world in debt bondage to that financial overclass (144-145). This fundamentally misconstrues the meaning of debt-assets, which are trading between banks of the rights to profits from investments [which will hopefully exist]. It does not trap people in debt bondage anymore than any other type of loan.

The author started out talking about how redistribution plans based on taxes were difficult because of tax evasion; this is a pretty solid practical point. He then switches to complaining about first tax evasion, then debt-based assets, then currency speculation. All these points are used to show that the current financial system carries large risks that don't obviously benefit the majority of people. He then goes a bit crazier and suggests that this is a) purposeful because bankers control the world, and b) trading in debt-based assets is trapping the entire world in debt bondage and leading to impoverishment.