Digital banks raised over $1.1bn in fresh funding throughout 2018 in Britain, a figure that is set to be dwarfed if the current pace of growth continues to demand the attention of investors. Claudio Alvarez, Partner at GP Bullhound, explains for Finance Monthly.
Europe is truly leading the fintech charge, accounting for roughly a third of global fundraising deals in 2019, up from only 15% in the fourth quarter of 2018 according to our data. These are digital firms raising globally significant levels of capital. Adyen, the Dutch payment system, is now one of the frontrunners to become Europe’s first titan, valued at over $50bn. Europe has become a breeding ground for businesses that can go on to challenge US tech dominance, and it is fintech where we will find most success. Europe’s unique capacity for incubating disruptors is a phenomenal trend to have emerged over the past few years.
It’s true, European culture has always been more open to contactless and cashless, in contrast the US, where legislation and the existing banking infrastructure make adopting new technologies in banking slower and more convoluted. Europe has been able to take an early lead, while the US remains fixed on dollar bills.
As the ecosystem evolves, borders will become less relevant and markets more integrated, allowing the big players based in Europe to expand into further geographies with greater ease. European success garners the growth, momentum and trust needed to brave new regions and cultures. Monzo won’t be alone in the US for long.
As the ecosystem evolves, borders will become less relevant and markets more integrated, allowing the big players based in Europe to expand into further geographies with greater ease.
Whilst the Americans’ slow start has allowed European start-ups to become global players, it’s also true that the regulatory environment has distracted the European big banks and opened up the space for innovative and disruptive newcomers. While PSD2 has eaten up the resources of the incumbents, the likes of Monzo and Revolut have focused on consumer experience, product development and fundraising. The result? Newcomers are able to solve problems that older institutions simply don’t have the capacity to address.
However, a word of warning: traditional bricks and mortar banks aren’t dead yet. For one, digital banks will still need to justify the enormous valuations they’ve secured recently, and will have only proved their worth if, in 3 to 5 years’ time, they have managed to persuade consumers to transfer their primary accounts to them, which would allow digital banks to effectively execute on their financial marketplace strategies
Meanwhile, traditional banking institutions have a plethora of options to fend off the fintech threat and most are developing apps and systems that mimic those created by the digital counterparts. Innovation isn’t going to come from internal teams – it needs to be a priority for the old players and they need to invest in third party solutions to excel as truly functional digital platforms in a timely manner. In the first instance, the traditional banks will need to solve the issues that pushed consumers towards the fintechs and secondly, work on attracting consumers to stay by offering, and bettering, the services that make fintech’s most attractive.
Competition breeds innovation. For the fintech ecosystem as a whole, this new need for advancement is only good news – a rising tide lifts all ships. As traditional banks try to innovate and keep pace, we’ll see them investing in other verticals in the fintech market. Banks’ global total IT spend is forecast to reach $297bn by 2021, with cloud-based core banking platforms taking centre stage. Digital banking may have been the first firing pistol, but the knock-on effect of the fintech revolution is being felt across the board.
The fintech boom shows no sign of bust, market confidence is riding high and will continue supporting rapid growth. The aggressive advance of digital banks has opened doors for a whole host of fintech innovation - from cloud-based banking platforms to innovation in the payments sector. The number of verticals that sit within financial services creates a plethora of opportunity for ambitious and bullish fintechs to seize the day.
The comments from Nigel Green, founder and CEO of deVere Group, which launched its pioneering cryptocurrency trading app deVere Crypto last year, come after two days of congressional hearings this week to discuss Facebook’s planned digital currency, Libra.
It also follows Bitcoin’s impressive 9% jump on Thursday.
Mr Green affirms: “Many of the lawmakers’ stance on cryptocurrencies – which are almost universally regarded as the future of money – is out-dated and blinkered.
“Some of their comments in the congressional hearings suggest that they think cryptocurrencies are a passing fad. That is delusional.
“The demand for digital, global, borderless currencies is only going to increase. This is inevitable as the digitalisation of our economies and our daily lives grows further and picks up pace further still.”
He continues: “And because demand is set to soar over the next few years as retail and institutional investors pile into crypto, lawmakers now need to embrace them and bring them fully into the mainstream financial system with proper and robust regulation.
“It is bordering on negligent not to do so for three key reasons.
“First, it would provide further protection for the growing number of people using and investing in cryptocurrencies.
“Second, unless the US leads the way in the digital currency revolution, other countries - with perhaps counter values to those of America - will control it and it would be hard to ever take back that control.
“And third, there are enormous potential opportunities for higher economic growth by embracing cryptocurrencies. Why are lawmakers not seizing these with both hands?”
In a similar vein, the deVere CEO slammed President Trump last week when he criticised Bitcoin, the world’s largest cryptocurrency by market capitalisation. At the time he said: “Standing on the sidelines, or worse looking backwards, on the issue of cryptocurrencies - which are redefining and reshaping the financial system - is a baffling approach for the leader of the world’s largest economy to take.”
Mr Green concludes: “Digital currencies are the biggest innovation in payment systems in many decades. Facebook’s jump into the sector is a clear indication of the direction of travel in this regard and lawmakers must not put their heads in the sand and/or attack – that is futile and counterproductive.
“Instead they must work alongside stakeholders to make the market stronger still as investors continue to dive into the likes of Bitcoin, Ethereum, Ripple’s XRP and Litecoin.”
Money makes the world go round, and it’s at the centre of our day-to-day lives for a variety of reasons. A 2018 study found that three quarters of Britons were worried about their finances, and further research concluded that over half of UK adults are concerned that their mental health is suffering in relation to money worries. So, what’s the current situation and how can we improve on teaching young people how to manage their finances?
We take a look, with some help from Business Rescue Expert, company liquidation specialists.
The millennial challenge
Millennials have brought a host of gaps in the teaching of finance to the surface, and countless studies have concluded that when it comes to money, this generation haven’t been taught adequate lessons. Millennials’ spending patterns stand in stark contrast to their predecessors; they’re keen to splash out on experiences and don’t often take to the idea of big commitment purchases seriously — for example, houses. Millennial spending habits signify the disparity of their knowledge and attitude towards budgeting — research has found that 60% of these youngsters said they are willing to spend more than £3.11 on a single cup of coffee, while only 29% of baby boomers would splurge for caffeine. A lack of financial literacy in education has undoubtedly played a role in this, with many young people under the illusion that simply earning a lot of money means that you’ll never be in any debt, along with a general unwillingness when it comes to making sacrifices for the sake of budgeting. One survey found that 42% of teenagers said that they wanted their parents to talk more about finances, and a staggeringly low 32% said that they knew how credit card fees and interest worked. Teenage years are pivotal points for learning, so why is financial literacy being left out?
Revised curriculums
Finances are complex and teaching them can require a lot of technicality and practical examples in order to make any sense. Lessons in finance differ from core subjects like English and Science, as they provide life skills which, if not learned, will be detrimental as kids grow older and enter adult life. One UK primary school created its own bank, to combat ‘below average’ financial literacy learning. Despite financial literacy being introduced to the national curriculum in England in 2014, not everyone believes that school is the place for financial education. Some believe the duty should be on parents to teach their children the real value of money and how to approach it. It’s worth noting that in private schools, faith schools, and academies, it isn’t a compulsory part of the curriculum, so many youngsters would still miss out on these lessons. A lot of schools who do incorporate it into the school day compartmentalize it into general ‘citizenship’ lessons, but it’s arguable whether enough emphasis is placed on it here.
The benefits of teaching financial literacy
The areas of financial literacy currently covered under the national curriculum include savings and investments, pensions, mortgages, insurance, and financial products. It’s still a relatively recent introduction to schools, so not all teachers may feel confident in teaching it yet, due to the specialised, complex nature of the topics. There is also the matter of religious differences in the approach to and teaching of these finance lessons. Followers of the Islamic faith are prohibited from using any form of compound interest. This relates to things like conventional mortgages, student loans and car loans, all of which are commonplace in many other cultures.
For this reason, making financial literacy universal, understandable, and an essential part of learning can be difficult. Maths might seem like an obvious place to drop lessons of finance in amongst existing content, but debate is rife as to whether subjects like trigonometry are still deserving for a place on exam papers, when finance lessons could take their place and provide long-lasting life skills.
While there is undoubtedly an absence and lack of depth in financial literacy, these lessons could become more popular in the future. These skills will prove invaluable for youngsters as they progress through life, and they could eventually counteract the stereotype of a financially irresponsible or illiterate millennials.
This Customer Experience Exchange for Banking, Financial Services & Insurance (BFSI) is an outstanding opportunity for you to learn lessons from the most successful financial institutions in the field. In just two days out of the office you’ll save months and potentially years of strategy heartache. You'll hear from leaders from across North America talk about their winning strategies in Financial Services, Banking and Insurance.
To ensure the Exchange offers the highest degree of relevancy, only senior executives responsible for strategic customer experience development and investment are invited to attend. This exclusive format allows you to connect with those peers whose insights you respect most – through exceptional networking, business meetings and strategic information sharing sessions.
For more information visit the Customer Experience Exchange for Banking, Financial Services & Insurance website
Here's the story of how the country's largest bank got to where it is today.
Biographer of J.P. Morgan Jean Strouse, longtime bank analyst Mike Mayo and CNBC banking reporter Hugh Son help tell the story. You’ll learn about how Aaron Burr and Alexander Hamilton are part of the bank’s history, along with the first ATM, and the company’s position moving forward into the future of digital banking.
The comments come ahead of the recent TV debate between Boris Johnson and his rivals to be the next leader of the Conservative party and British Prime Minister.
Mr Johnson has been publicly open about a no-deal Brexit, which has weighed heavily on the pound.
The deVere CEO’s observation also comes at a time as Bitcoin, the world’s largest cryptocurrency, hit a 13-month price high on Sunday above $9,300, with predictions of the next crypto bull run making headlines. Bitcoin prices have soared more than 200 per cent over the last several months.
Mr Green comments: “It looks almost certain that Boris Johnson will be Britain’s next Prime Minister. His vow to leave the EU in October — deal or no-deal — has prompted a decline in the value of the pound.
“Sterling has lost almost 5% of its value against the US dollar since the start of May. Similarly, it continues six straight weeks of falls against the euro.
“As Mr Johnson’s campaign moves up a gear – as it moves into the next phase to win over the party’s grassroots – we can expect him to also up his hard Brexit rhetoric and this will likely drive sterling even lower.”
He continues: “We are already seeing that UK and international investors in UK assets are responding to the Brexit-fuelled uncertainties by considering removing their wealth from the UK.
“One such way that many are looking to diversify their portfolios and hedge against legitimate risks posed by Brexit is by investing in crypto assets, such as Bitcoin.
“Crypto assets are often used around the world as alternatives to mitigate geopolitical threats to investment portfolios.”
He goes on to add: “The no-deal Brexit issue might be the catalyst for new investors in this way, but they are likely, too, to be aware that many established indicators and analysts are pointing towards a currently new crypto bull run.
“As such, they might think this is now the time to jump into cryptocurrencies - which are almost universally regarded as the future of money.”
In May this year, deVere carried out a global survey that found that more than two-thirds of HNWs - classified in this context as having more than £1m (or equivalent) in investable assets - will be invested in cryptocurrencies in the next three years.
The poll found that 68% of participants are now already invested in or will make investments in cryptocurrencies before the end of 2022.
Of the survey’s findings, Nigel Green commented at the time: “Crypto is to money what Amazon was to retail. Those surveyed clearly will not want to be the last one on the boat.”
The deVere CEO concludes: “As Boris and Brexit continue to dominate the agenda, Bitcoin and the wider cryptocurrency sector could experience a boost as investors seek to protect – and build – their wealth by hedging against the geopolitical risks they pose.”
(Source: deVere Group)
The concept of sharing is so far ingrained in our everyday that most of us couldn’t imagine living in a world where we can’t share a ride, couch-surf or leave our dog with a stranger at the tap of a screen. The advancement of the sharing economy, defined by Google as an economic system in which assets or services are shared between individuals, is a prime example of this.
In fact, per the Innovation Report 2018 published by Lloyds, the global sharing economy is expected to grow to $335 billion (approximately £261 billion) by 2025. That’s considerable growth in comparison to 2014, when the estimated size of the global sharing economy was circa $15 billion (approximately £12 billion.)
This isn’t surprising when in theory the sharing economy is supposed to save resources, strengthen regional and local communities, cut costs, enable consumption for lower income groups, increase investments and provide new jobs. However, while there is a plethora of benefits to the sharing of assets and services, there is also countless risks.
In analysing Lloyd’s innovation report, British marketplace OnBuy.com wanted to share how American and British consumers feel toward the sharing economy and what they believe the risks and benefits are.
To achieve this, OnBuy designed graphics to showcase data collated by Lloyds from more than 3,000 US and UK consumers as well as representatives from 30 sharing economy companies.
In terms of benefits, both American and UK consumers believe ‘it can be cheaper for users’ - the number one benefit to the share economy, at 60% and 58% respectively.
Thereafter, it is clear American consumers are more enthused with other benefits, such as ‘it is more convenient for users’ and ‘it provides more flexibility for users’ at 52% apiece.
Comparably, just 39% of British consumers believe ‘you can earn money from your assets when you aren’t using them’. While 43% of American consumers would say the same.
In terms of risks, American consumers believe ‘there’s a risk to personal safety interacting with strangers’ which is cited as the number one risk to the share economy, at 60%.
While British consumers are caught between ‘there’s a risk to personal safety interacting with strangers’ (44%) and ‘there is no guarantee of the quality of the service or facilities (44%) in sharing their opinions on the number one risk.
Other risk factors to consider include ‘people sharing their assets could have them damaged’ (American 46%; UK 42%) and ‘people sharing their assets could have them stolen’ (American 43%; UK 41%.)
Lastly, 37% of American consumers and 33% of British consumers agree ‘there aren’t sufficient safeguards or protections in place for users’ in the sharing economy.
Cas Paton, Managing Director of OnBuy.com, comments: “If the sharing economy is to reach the proposed $335 billion mark in 2025, the industry needs to thoroughly consider the opinions of consumers. Today, the way people spend money and interact with the everyday is changing. Companies need to match this change with innovative products which meet the needs and expectations of their customers.
To combat risk, Lloyds recommends sharing economy companies partner with insurers to enhance credibility, instil confidence and build trust to drive business growth and gain a competitive advantage. I truly believe this is the way forward. Especially considering 58% of American and UK consumers currently believe the risks outweigh the benefits of using sharing economy services.”
(Source: OnBuy.com)
The guide, on How to Make Money from eSports, also labels the United States as the highest-earning country and Dota 2 the highest-paying game.
Aimed at both talented gamers and those who have an interest in eSports, content included uses historical data and cutting-edge insight to offer realistic guidance to those who dream of being the next MVP (Most Valuable Player).
Jesse “JerAx” Vainikka, from Finland made short of $2,500,00 last year, topping the five highest-earning players in 2018:
- Jesse “JerAx” Vainikka ($2,290,632)
- Johan “N0tail” Sundstein ($2,282,717)
- Sébastien “7CKNGMAD” Debs ($2,280,217)
- Topias “Topson” Taavitsainen ($2,249,842)
- Anathan “ana” Phan ($2,249,136)
2019 is set to be particularly profitable, with the highest-earner predicted to pocket $3,292,966 in winnings.
Top tips to being the best include:
- The qualities most appropriate for streaming and competing.
- Step by step guide on how to become a streamer or pro-league player.
- How to monetise channels.
- An overview of affiliate marketing.
- How to find your niche (as a streamer or player).
- How to get noticed and rise from a gamer to a pro-league player.
2018 proved to be a successful year for the top five highest-earning eSports players, who each took home an average of $2,270,509.
With prediction data, the average winnings of the top five players are set to rise by 39.6% from $2,270,509 in 2018 to $3,169,957 in 2019.
The highest-paying game in 2018 was Dota 2, which awarded a staggering $41,395,452 in prize winnings. Further success is apparent for Dota 2, which is forecasted as the highest-paying game for the next five years.
Below, Finance Monthly hears from David Worthington, VP, Payments at Rambus, on the growing obsolescence of cash.
According to the World Payments Report, compiled by Capgemini and BNP Paribas, the global volumes of non-cash transaction volumes grew by 10.1%, reaching 482.6 billion between 2015 and 2016. In addition, McKinsey’s recent Global Payments 2018 report highlighted an 11% growth generated by payments, which topped $1.9 trillion in global revenue.
A thread that runs through both reports, which helps to explain this combination of transition and growth, is real-time payments (RTP). How then are RTP – aka faster or instant payments – evolving around the globe?
Innovation in real-time payments
Many countries around the world are at various stages of implementing RTP, and challenges still remain.
In early October 2018, US Federal Reserve Governor Lael Brainard outlined the organization’s commitment to addressing current systematic issues limiting the growth of RTP. Summing up the challenge faced in markets around the world, she said, “faster payment innovations are striving to keep up with this demand, but gaps in the underlying infrastructure pose challenges associated with safety, efficiency, and accessibility.”
As a result, Brainard added, “we need an infrastructure that can support continued growth and innovation, with a goal of settlement on a 24/7 basis in real time.”
With established initiatives such as The Clearing House’s RTP system however, America is in a good position to accelerate adoption and implementation of faster payments.
Investment is not limited to America, though. Across the Atlantic, the TARGET instant payment settlement (TIPS) service has launched to increase the speed of euro payments in the European Union, settling payments in central bank money, irrespective of the opening hours of a user’s local bank.
In the Southern Hemisphere, it has now been a number of months since the launch of Australia’s New Payments Platform (NPP), and Reserve Bank of Australia Assistant Governor, Lindsay Boulton, has highlighted the government’s hesitancy to move services to the platform without it being firstly tested by industry. To encourage private sector interest in the scheme, a sandbox for developers to test APIs has been unveiled but there is clearly more work to be done.
But Capgemini is optimistic, expecting that NPP will drive non-cash transactions growth by not only enabling RTP, but also providing further value-added features.
Faster payments – faster fraud
These are just examples of two countries and global demand for faster payments is clearly going to grow. This growth, however, can provide the environment for increased fraud if new systems fail to learn from the problems experienced by previous implementations.
It is well known that where money goes, fraud follows. The ability to move funds quickly allows criminals to evade traditional checks like the identification of out-of-pattern activity, automated clearing house (ACH) block services and manual reviews.
There are various security approaches available to fight against fraud, but tokenization has already proved successful in protecting in-store and online card payments, with all the major payment systems, digital wallets and original equipment manufacturers adopting the technology.
By replacing unique sensitive information or data with a token, the risk associated with account-based fraud can be significantly reduced, fostering safe and secure RTP initiatives across the world.
The so-called ‘resource curse’ has reduced a once prosperous nation into a financial meltdown. The increased social and economic upheaval has sparked protests on a nationwide level and led many poor people to lose faith and withdraw their allegiance to President Nicolás Maduro. Amidst the political and economic turmoil, the EU, the US and a number of other countries across the globe have recognised opposition leader Juan Guaidó as the South American nation’s rightful interim president. In a bid to alleviate “the poverty and the starvation and the humanitarian crisis” currently gripping Venezuela and stop “Maduro and his cronies” looting the assets of the country’s people, US President Donald Trump has announced sanctions against Venezuela’s state-owned oil company PDVSA. US National Security Adviser John Bolton announced that the measure will “block about $7 billion in assets and would result in more than $11 billion in lost assets over the next year”. Effective from 29th January, the sanctions guarantee that any purchases of Venezuelan oil from US entities flow into blocked accounts and are supposed to be released only to the country’s legitimate leaders.
The situation in Venezuela has puzzled social scientists for years. On paper, oil-exporting countries and their economies are supposed to be thriving. Why is this not the case for Venezuela and what does the ‘resource curse’ have to do with it?
The Oil Curse Explained
The resource curse is a concept that a number of political scientists, sociologists and economists use to explain the deleterious economic effects of a government’s overreliance on revenue from natural resources.
In Venezuela’s case, being overconfident in its status as an oil powerhouse, the country’s socialist government became so dependent on oil production that it managed to lose track of its food production. Farms and other similar industries were expropriated by the government, which combined with the lack of private ownership due to the country’s socialist regime, led to a massive decrease in food production. Crop farmers weren’t able to acquire pesticides from now-government owned chemical companies, animal farmers weren’t able to acquire feed from crop farmers and food depleted. Nationalising businesses meant that business owners were forced to stop food production, while the government ignored food production altogether due to its full reliance on oil riches, which became the main focus.
As with any commodity, stock or bond, though, the laws of supply and demand cause oil prices to change. In 2014 for example, when oil prices were high, Venezuela’s GDP per capita was equivalent to 13,750 USD, while a year later, due to a dip in oil prices, it had fallen 7%.
This example perfectly illustrates the resource curse concept. A country, in most cases an autocratic country, becomes so dependent on a single natural resource that it disregards all other industries. The government is happy because the revenue is enough to feed them and secure their position of power. Naturally though, over time all other branches of the economy slow down to the point when the commodity prices inevitably drop, the country’s economy is not equipped for survival. According to the concept, the resource curse is an issue seen in the Middle East, however, it has never been so clearly displayed as it is now in Venezuela.
US Sanctions & their Impact
As mentioned, the oil industry is the main sector that is responsible for Venezuelan government’s revenues - for more than 90% of revenues to be precise. Before delving into the way the sanctions are expected to affect the country’s economy, let’s take a look at the country’s oil production stats. According to data from Rystad Energy, in 2013, Venezuela was producing 2.42 million barrels per day, while the output today is lingering above the 1 million mark. Production has been dropping more intensely in recent months and even without the recent US sanctions, the oil production in the country would have experienced a drastic drop due to lack of investment. Trump’s administration’s restrictions are only rubbing salt into the wound.
Even though the White House’s intention is to make oil revenues reach the people of Venezuela and bypass Maduro’s government, which owns most of the oil industry through PDVSA, the sanctions have the power to be disastrous for the country’s economy and potentially set off a domino effect in the global energy market. Two things are worth mentioning here: Venezuela used to be the fourth biggest crude importer in the US (after Canada, Saudi Arabia and Mexico), while the US is Venezuela’s number one customer. Thus, the problems that arise from the sanctions are that A) US Gulf Coast refineries are frantically looking for alternate sources for the crude oil that Venezuela has been providing them with up until now and B) Venezuela, on the other hand, is struggling to find new customers. On top of this, the US was Venezuela’s key source of naphtha, which is the hydrocarbon mixture used for diluting crude. Without it, PDVSA won’t be able to prepare its crude oil for export. Rystad Energy forecasts that some operators in Venezuela will run out of the crucial diluent by March.
However, not all hope is gone. Paola Rodriguez-Masiu from Rystad Energy believes that the impact of the sanctions will be significantly lower than Washington has predicted and says that: "The oil that Venezuela currently exports to the US will be diverted to other countries and sold at lower prices. For countries like China and India, the news was akin to Black Monday. They will be able to pick up these oil volumes at great discounts." She adds that Venezuela exports 450,000 barrels of oil per day to the US – a little under half of its total output and the amount of new oil which will flood the markets. Mrs Rodriguez-Masiu also mentions that so far, oil markets have massively shrugged off this new oversupply as investors have been pricing in the crisis in Venezuela for quite a long time.
So now what?
Although Venezuela is still seen as an oil powerhouse, especially due to its production of heavy crude (which is not widely available in the world), the oil world is expecting the historic collapse of its oil output to only intensify. The country needs to offset the effects of the US sanctions, find new financing and not let the people of Venezuela bear the brunt.
This will not be easy though. As the government desperately courts new buyers for its oil, it may find them hard to come by, with Chinese sales in a pattern of decline and new markets such as India worried about quality and transport issues due to much of Venezuela’s shipping designed for shorter distance travel. Indeed the government and prospective buyers will only be too aware that it is always harder to negotiate from a position of weakness.
Unfortunately for the people of Venezuela who are struggling to get basic supplies, and are facing starvation and illness, the actions and the effects of the country’s government and the oil curse look set to reverberate for some time.
Sources: https://www.thetimes.co.uk/article/venezuela-frustrated-poor-losing-faith-in-beleaguered-maduro-22cf7f66z https://edition.cnn.com/2019/02/04/americas/europe-guaido-venezuela-president-intl/index.html https://edition.cnn.com/2019/01/28/politics/us-sanctions-venezuelan-oil-company/index.html https://www.investopedia.com/terms/r/resource-curse.asp https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=IVE0000004&f=A https://www.forbes.com/sites/ellenrwald/2017/05/16/venezuelas-melt-down-explained-by-the-oil-curse/#39dcb3d0282b https://www.ogj.com/articles/2019/02/rystad-energy-venezuela-production-could-fall-below-700-000-b-d-by-2020.html https://www.bbc.co.uk/news/world-latin-america-47104508
Senators Elizabeth Warren and Bernie Sanders and freshman Representative Alexandria Ocasio-Cortez, have all proposed major tax increases on wealthy Americans. History shows that the United States has not only survived, but thrived when the rich had higher marginal tax rates. But how much would increasing rates actually raise, and what could it do to the economy? The real reason to tax might be to decrease inequality itself.
There is a common misunderstanding about how tax brackets work in the US, and it’s causing us to have uninformed debates about taxes. In this video, Vox explains this misconception, where we’re going wrong, and how it actually works.
