How do foreign/transnational companies affect mobility of investment assets?

External question — Economics Stack Exchange Author: user2153235 Original post: https://economics.stackexchange.com/questions/59962 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I've been viewing a lot of videos by Gary Stevenson about growing wealth inequality, due in part to tax loopholes and havens. It is commonly believed that a flat tax rate is unrealistic. Political will and obligations aside, extremely wealthy would rather move their wealth to less taxing nations than to pay more tax. Gary's observation was that investment assets are generally not so mobile, e.g., housing. I was discussing these ideas with a colleague, who pointed out that: (i) stock exchanges do have foreign companies, and furthermore, (ii) some companies are transnational. Neither of us are economists. What are the implications of these two observations on the mobility of investment assets? I understand that there can be debate about Gary Stevenson's model of cause and effect. I just provided that as background for how I arrived at the question. I'd appreciate it if answerers can address the question rather than Gary Stevenson's model of how wealth inequality comes about. If you do have thoughts about about the latter, however, I'd be interested in seeing it as a comment.

External answer — Economics Stack Exchange Author: 1muflon1 Original post: https://economics.stackexchange.com/a/59963 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. First, It is commonly believed that a flat tax rate is unrealistic. Political will and obligations aside, extremely wealthy would rather move their wealth to less taxing nations than to pay more tax. This is a bit of a non sequitur, although literature on optimal taxation shows that flat income taxes are not optimal (e.g. Saez 2001), this has nothing to do with tax havens but with the shape of income distribution (e.g. a log normal income distribution would result in more or less flat tax as shown by Mirrlees in his seminal work on optimum taxation, but more realistic log normal with pareto tail distribution results in non-linear tax). Gary's observation was that investment assets are generally not so mobile, e.g., housing. I was discussing these ideas with a colleague, who pointed out that: (i) stock exchanges do have foreign companies, and furthermore, (ii) some companies are transnational. Neither of us are economists. What are the implications of these two observations on the mobility of investment assets? Trivially, if a company is multinational then their costs of moving capital is lower than for a national company, since it for example doesn't need to incur fees for setting up new accounts etc. Moreover, when it comes to factor mobility we do not necessarily talk about how hard it is to physically move factor. Capital has typically greater cross border mobility than lets say labor, because even though it is often easier to physically transport people over border than factories or some equipment, there are other factors that come to play such as government imposed restrictions on movement of capital which are generally more lax. Ultimately it is empirical question how much capital mobility there is at any moment, you can look at this IMF paper for some measurements.