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We are well aware of the rise of the 1% as the rapid growth of economic inequality has put the majority of the world’s wealth in the pockets of fewer and fewer. One much-discussed solution to this imbalance is to significantly increase the rate at which we tax the wealthy. But with an enormous amount of the world’s wealth hidden in tax havens—in countries like Switzerland, We are well aware of the rise of the 1% as the rapid growth of economic inequality has put the majority of the world’s wealth in the pockets of fewer and fewer. One much-discussed solution to this imbalance is to significantly increase the rate at which we tax the wealthy. But with an enormous amount of the world’s wealth hidden in tax havens—in countries like Switzerland, Luxembourg, and the Cayman Islands—this wealth cannot be fully accounted for and taxed fairly. No one, from economists to bankers to politicians, has been able to quantify exactly how much of the world’s assets are currently hidden—until now. Gabriel Zucman is the first economist to offer reliable insight into the actual extent of the world’s money held in tax havens. And it’s staggering. In The Hidden Wealth of Nations, Zucman offers an inventive and sophisticated approach to quantifying how big the problem is, how tax havens work and are organized, and how we can begin to approach a solution. His research reveals that tax havens are a quickly growing danger to the world economy. In the past five years, the amount of wealth in tax havens has increased over 25%—there has never been as much money held offshore as there is today. This hidden wealth accounts for at least $7.6 trillion, equivalent to 8% of the global financial assets of households. Fighting the notion that any attempts to vanquish tax havens are futile, since some countries will always offer more advantageous tax rates than others, as well the counter-argument that since the financial crisis tax havens have disappeared, Zucman shows how both sides are actually very wrong. In The Hidden Wealth of Nations he offers an ambitious agenda for reform, focused on ways in which countries can change the incentives of tax havens. Only by first understanding the enormity of the secret wealth can we begin to estimate the kind of actions that would force tax havens to give up their practices. Zucman’s work has quickly become the gold standard for quantifying the amount of the world’s assets held in havens. In this concise book, he lays out in approachable language how the international banking system works and the dangerous extent to which the large-scale evasion of taxes is undermining the global market as a whole. If we are to find a way to solve the problem of increasing inequality, The Hidden Wealth of Nations is essential reading.    


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We are well aware of the rise of the 1% as the rapid growth of economic inequality has put the majority of the world’s wealth in the pockets of fewer and fewer. One much-discussed solution to this imbalance is to significantly increase the rate at which we tax the wealthy. But with an enormous amount of the world’s wealth hidden in tax havens—in countries like Switzerland, We are well aware of the rise of the 1% as the rapid growth of economic inequality has put the majority of the world’s wealth in the pockets of fewer and fewer. One much-discussed solution to this imbalance is to significantly increase the rate at which we tax the wealthy. But with an enormous amount of the world’s wealth hidden in tax havens—in countries like Switzerland, Luxembourg, and the Cayman Islands—this wealth cannot be fully accounted for and taxed fairly. No one, from economists to bankers to politicians, has been able to quantify exactly how much of the world’s assets are currently hidden—until now. Gabriel Zucman is the first economist to offer reliable insight into the actual extent of the world’s money held in tax havens. And it’s staggering. In The Hidden Wealth of Nations, Zucman offers an inventive and sophisticated approach to quantifying how big the problem is, how tax havens work and are organized, and how we can begin to approach a solution. His research reveals that tax havens are a quickly growing danger to the world economy. In the past five years, the amount of wealth in tax havens has increased over 25%—there has never been as much money held offshore as there is today. This hidden wealth accounts for at least $7.6 trillion, equivalent to 8% of the global financial assets of households. Fighting the notion that any attempts to vanquish tax havens are futile, since some countries will always offer more advantageous tax rates than others, as well the counter-argument that since the financial crisis tax havens have disappeared, Zucman shows how both sides are actually very wrong. In The Hidden Wealth of Nations he offers an ambitious agenda for reform, focused on ways in which countries can change the incentives of tax havens. Only by first understanding the enormity of the secret wealth can we begin to estimate the kind of actions that would force tax havens to give up their practices. Zucman’s work has quickly become the gold standard for quantifying the amount of the world’s assets held in havens. In this concise book, he lays out in approachable language how the international banking system works and the dangerous extent to which the large-scale evasion of taxes is undermining the global market as a whole. If we are to find a way to solve the problem of increasing inequality, The Hidden Wealth of Nations is essential reading.    

30 review for The Hidden Wealth of Nations: The Scourge of Tax Havens

  1. 4 out of 5

    Mehrsa

    You don't need to read the whole book to get the gist, which is basically that there are billions (maybe trillions) of dollars missing from every country's tax balances because rich people are hiding their money in tax shelters. Let's go get it.

  2. 5 out of 5

    Patrick F

    Hot Take: For those interested in knowing more about tax havens and the #PanamaPapers this is a foundational resource. (This doesn't cover the #PanamaPapers - this book came out last year - but this book does unpack just what tax-havens are and their implications for governance capability.) Not only does Zucman explain the history of tax havens beginning between the the World Wars, particularly in Switzerland, he also diagnoses the problem with half-hearted solutions that the world has tried to imp Hot Take: For those interested in knowing more about tax havens and the #PanamaPapers this is a foundational resource. (This doesn't cover the #PanamaPapers - this book came out last year - but this book does unpack just what tax-havens are and their implications for governance capability.) Not only does Zucman explain the history of tax havens beginning between the the World Wars, particularly in Switzerland, he also diagnoses the problem with half-hearted solutions that the world has tried to implement, including a recent OECD proposal of on-demand information sharing. Further, Zucman actually proposes solutions to the global tax haven problem. One I like to call an act of deterrence; the other is an act of compliance. First, we need to implement sanctions/penalties/constraints that make it harmful for places like Switzerland to act as a government for the very rich to the detriment to Europe, for example. France, Germany, and Italy could team up together in a coalition and impose customs duties on goods they import from Switzerland that is proportional to the amount of benefits that Switzerland receives from storing all of these profits. This is act of deterrence. Finally, there must be a creation of a public, or at least solely under the control of governments and not private entities, global wealth register. Before the world can even begin thinking about such things as a global wealth tax, a register of stocks, bonds, and shares (long term, this also has to include derivatives) must be first on a list of solutions. In an era of austerity where average people are told to expect less and demand less, a book such as The Hidden Wealth of Nations, illuminates the truth: there can be global cooperation and it doesn't have to be in support of the very few; we can do this for the global community. Also, this study illuminates the fact that, like almost every other facet of governments, to do nothing and to cut government spending is a choice and it is not a imperative. Approximately one out of every ten taxable dollars is going untaxed - to the detriment of teachers, low-income communities, shareholders, even in some ways, governments around the world, especially Britain, Germany, France, and the U.S., and the global middle class as well. Far from a conspiracy, the reality is that a select few "countries" on Earth have sold their sovereignty on the free market on a race to the bottom, functioning as neoliberal libertarian utopians for the world's wealthiest individuals and corporations. This money is mostly not taxed - approx. 80% according to Zucman - and is mostly not invested in the country that is holding it. We can change this.

  3. 5 out of 5

    Meghan

    Concise and powerful delivery of some staggering figures. Interesting that the U.S. is held up as the standard in establishing effective plans to force tax havens to cooperate... I wouldn't have expected that.

  4. 5 out of 5

    Martin

    Really great introduction to the topic, well-written, and at about 120 pgs it's not wasting anyone's time.

  5. 4 out of 5

    Bob Anderson

    So if you add up the books of the world’s corporations, you wind up with a total global assets that is some six trillion dollars lower than total global liabilities. These numbers should be equal, by GAAP. So there are six trillion dollars in assets that are simply not there; the question is, where are they? How are they hidden? And what are the consequences of this? This is a laser-tight exploration of these questions, and is simply a great read. If you want to learn how those who are willing t So if you add up the books of the world’s corporations, you wind up with a total global assets that is some six trillion dollars lower than total global liabilities. These numbers should be equal, by GAAP. So there are six trillion dollars in assets that are simply not there; the question is, where are they? How are they hidden? And what are the consequences of this? This is a laser-tight exploration of these questions, and is simply a great read. If you want to learn how those who are willing to play loose with the spirit of the law can accumulate wealth safe from any prying taxmen, look no further.

  6. 4 out of 5

    Rj

    Zucman looks at the history of tax havens beginning with Switzerland and how they have proliferated across the globe. While figures for hidden wealth are hard to analyze Zucman uses formulas to arrive at estimates for how much wealth remains untaxed in these havens. He finishes offering suggestions on how to stem the problem, citing the biggest problem is that those who use tax havens also have access to political power ensuring that laws will not change.

  7. 5 out of 5

    howl of minerva

    Nice review/summary from Cass Sunstein in the NYRB. http://www.nybooks.com/articles/2016/... Nice review/summary from Cass Sunstein in the NYRB. http://www.nybooks.com/articles/2016/...

  8. 4 out of 5

    Laurent Michiels

    Tax havens have received a lot of press attention in recent years, with the uncovering of LuxLeaks, Panama Papers, etc. Building on his academic research, Gabriel Zucman goes beyond the anecdotical evidence by writing a concise yet comprehensive take on the phenomenon of tax havens. One of the main achievements of the author is to quantify the extent of tax evasion by tapping into various statistical database. Doing so, he astonishingly estimates that c. 8% of financial wealth (stocks, bonds, ban Tax havens have received a lot of press attention in recent years, with the uncovering of LuxLeaks, Panama Papers, etc. Building on his academic research, Gabriel Zucman goes beyond the anecdotical evidence by writing a concise yet comprehensive take on the phenomenon of tax havens. One of the main achievements of the author is to quantify the extent of tax evasion by tapping into various statistical database. Doing so, he astonishingly estimates that c. 8% of financial wealth (stocks, bonds, bank deposits, etc) of households is held offshore in tax havens, of which Switzerland plays a pivotal role. This 8% accounts for $7,600 bn dollars and is in fact a conservative estimate, not taking into account bank notes held in vaults, nonfinancial wealth, and undeclared activities (e.g. black market). Obviously this is problematic, since it increases the burden on law-abiding citizens that do pay their fair share of taxes as the taxes that are evaded need to be compensated for by higher taxes in general. He quantifies that this boils down to a staggering amount of c. $200 bn of annual lost tax revenue, mostly comprising income tax on interests and dividends, and to a lesser extent also inheritance and wealth tax. The author further critically assesses existing measures that have been taken so far in Europe and the US to curb tax evasion and also sheds light on which characteristics would make reforms the most effective. His proposed solutions include (i) a global publically-owned financial register of financial wealth which records who owns which financial products; (ii) automatic exchange of information between banks of all tax havens and foreign tax authorities; and (iii) a multilateral joint effort to penalize tax haven countries that do not cooperate by introducing sanctions (e.g., trade tariffs) proportional to the tax losses. In addition, Zucman also discusses the problem of corporate taxation, whereby country-by-country profits are manipulated through transfer pricing, which results in multinational companies paying a very low effective tax rate (vis-à-vis the nominal tax rate). He suggests that corporate taxation should be done on worldwide consolidated profits instead, since these cannot be manipulated. Profits should then be attributed to different countries using a formula based on e.g. sales, capital, or employment measures. I highly recommend this easy-to-read and well-structured book, which has significant implications for policymakers. The proposed solutions will undoubtedly require much courage to be implemented, but by quantifying the problem, Zucman has made an important contribution to further fuel the debate and guide policy. Indeed, even though the (most recent) publication of the book dates from 2015, the topic remains as relevant today.

  9. 4 out of 5

    Siah

    My mind is blown! Gabriel Zucman has done a wonderful job researching this book. Especially since collecting data for this book should have been extremely difficult. After all there is nothing more secretive than the details of the trillions of dollars that are sheltered in Switzerland. I used to think the rich just parks its money in Switzerland or in the Cayman Islands just to hide their wealth but God the actual system that is devised to help the wealthy is more complex than that. They have t My mind is blown! Gabriel Zucman has done a wonderful job researching this book. Especially since collecting data for this book should have been extremely difficult. After all there is nothing more secretive than the details of the trillions of dollars that are sheltered in Switzerland. I used to think the rich just parks its money in Switzerland or in the Cayman Islands just to hide their wealth but God the actual system that is devised to help the wealthy is more complex than that. They have turned financial engineering to the new and questionable heights. The book walks you through how the wealthy registers a pair of companies in the US and in the Switzerland or in Ireland and uses this pair to shelter money in a very convoluted fashion. You have to read the book to truly understand the complexity of this system. The book is so well researched and so detailed I wouldn't be surprised if I imagine the author can update the book with new material on how cryptocurrencies have made this system more complex. I absolutely loved this book. And I don't say that often but this book is really wonderful. I have borrowed it 2 times and read it four times and still like to go through it once more. Highly recommended.

  10. 4 out of 5

    Ali علی

    A phenomenal work. Based on solid background research but presented in non technical, non jargonistic, clear style, it quantifies the tax frauds and evasion and presents a clear actionable plan to combat the problem

  11. 5 out of 5

    Billie Pritchett

    Gabriel Zucman's The Hidden Wealth of Nations is about how the wealthy have found a way to stick large sums of money away in foreign countries virtually tax free and with little or no interest. It is quite ingenious how it works. In an amusing section called "Tax Fraud 101," he gives the following example (I'm paraphrasing): Imagine Michael is CEO of the U.S. company Michael & Co. His company has 800 employees, and he is the single stockholder. Michael wants to stow $10 million of the company's m Gabriel Zucman's The Hidden Wealth of Nations is about how the wealthy have found a way to stick large sums of money away in foreign countries virtually tax free and with little or no interest. It is quite ingenious how it works. In an amusing section called "Tax Fraud 101," he gives the following example (I'm paraphrasing): Imagine Michael is CEO of the U.S. company Michael & Co. His company has 800 employees, and he is the single stockholder. Michael wants to stow $10 million of the company's money to avoid taxation. In order to do this, he needs to play a shell game. He opens a fake company up in the Cayman Islands. Call it FakeCo. (The Cayman Islands are a good place to do this because the Cayman Islands doesn't disclose who owns which companies.) Michael then opens up a bank account in Geneva under the fake company, FakeCo. Next, he pays for fake FakeCo services, perhaps claiming that Michael & Co. is doing consulting with FakeCo. He deposits money into the FakeCo Geneva account, creating a paper trail that looks like money has changed hands between two companies. Michael is now able to save money in two ways. First, he is able to hide the actual amount of money made by the company by housing a good proportion of it in Geneva. Second, he is able to generate interest on the money he sent to FakeCo because now that money is circulating in the international market. With the release of the Panama Papers recently, it has been discovered that these sorts of shell games are being played by major political figures. For example, borth presidential candidates Hillary Clinton and Donald Trump are using Panama as a tax haven, the whole while Panama is forced to default on its debt. Zucman's book The Hidden Wealth of Nations has two proposals for how to deal with the problem. The first is to create a global financial register that will show who has money where. To do this, there will have to be international coordination with governments and economic organizations. The next thing to do would be to impose a flat tax on corporate money, which Zucman says should be about 20 per cent. All this could happen but probably will not, unfortunately. It is not that it is inevitable. It is just that major political and elite figures within and across nations have no interest in changing a system that are definitely benefitting from. Unless there is intense political pressure from below, nothing will change.

  12. 4 out of 5

    Amber

    This book is short, sweet, and to the point. Zucman does a good job of outlining the problem and a three-pronged solution. Of course, like any elegant solution, the logistics aren't the problem. Lack of political will is the problem. I've said for many years that the "ultra-rich" (Zucman's term) stay rich and undertaxed because they have convinced both the "regular rich" and the "working wealthy" that they are all on the same side. If you are one of the regular rich or working wealthy who think t This book is short, sweet, and to the point. Zucman does a good job of outlining the problem and a three-pronged solution. Of course, like any elegant solution, the logistics aren't the problem. Lack of political will is the problem. I've said for many years that the "ultra-rich" (Zucman's term) stay rich and undertaxed because they have convinced both the "regular rich" and the "working wealthy" that they are all on the same side. If you are one of the regular rich or working wealthy who think that policies that cut your personal taxes, cut taxes on business, and ensure a lack of banking and tax transparency are OK because you benefit (oh so slightly) from those policies, I suggest you read this book and then re-examine your opinions. I'm not saying it WILL change your mind. I'm saying it might be an eye opener.

  13. 4 out of 5

    Nils

    Excellent short introduction to the rise and impact of tax havens. The only missing component, and it's a big one, is that it focuses primarily of tax havens as tax avoidance vehicles for wealthy individuals and corporations, but ignores the way these same vehicles and mechanisms are central to the laundering of illicit profits, and how this connects to a whole series of other deviant financial practices such a mis-invoicing. Thus China fails to appear at all in the book.

  14. 4 out of 5

    Laurent Franckx

    Whereas Thomas Piketty has done groundbreaking research in using new data sources to measure inequality, his former PhD student Gabriel Zucman has gone a step further: using publicly available data to estimate the amounts of wealth that are hidden (from the taxman). This book summarizes his findings for a general public. As was the case with his mentor, it is difficult not to be impressed by the work performed by Zucman . Just as Piketty, Zucman is also a scholar with a mission: he does not just c Whereas Thomas Piketty has done groundbreaking research in using new data sources to measure inequality, his former PhD student Gabriel Zucman has gone a step further: using publicly available data to estimate the amounts of wealth that are hidden (from the taxman). This book summarizes his findings for a general public. As was the case with his mentor, it is difficult not to be impressed by the work performed by Zucman . Just as Piketty, Zucman is also a scholar with a mission: he does not just collect data for the intellectual thrill, but in order to change the world. But, contrary to Piketty, Zucman knows how to write in a concise manner - you can easily read this book in one (long) evening (I have also taken a look at the more technical work he has made publicly available - the simplicity of the book's language is misleading). So Zucman takes us on a ride through fiscal paradises, and it's a quite rough one. I was surprised to learn how recent Switzerland role's as a save heaven for tax "optimizes" is, and the simplicity of the most common tax evasion mechanisms is simply astonishing. The inadequate reactions of some national governments, and the deceptive arguments used to justify the lack of action are often profoundly disturbing. This being said, I don't really know what to think of Zucman's proposed remedies. Part of it is simply lack of expertise: I am not specialised in tax law, and I find it difficult to judge how easy or difficult it would be to develop new loopholes if we would implement Zucman's proposals. One point Zucman also has in common with Piketty is that some of the proposals would require a fundamental overhaul of international law (especially European law), and that I am not convinced it will be easy to find a winning coalition. I am also not really convinced by Zucman's pooh-pooing of the argument that offshore finance is needed to protect the assets of people who live in politically dangerous countries. If I were an opponent in a country with a history of political violence, I would probably sleep better if I would have some accounts in a safe place. Finally (as has already been pointed out by others than me), it is paradoxical that both Piketty and Zucman argue that high marginal tax rates have no negative impact on incentives to work and invest - but at the same time they explain how Switzerland started its activities as offshore centre in the 1920s, to allow rich French people to avoid the high taxes imposed after the first World War. This is an important criticism that they do not address. This being said, this is a very important book. It deserves to be read widely, albeit with a critical eye.

  15. 4 out of 5

    Dschreiber

    When the Panama Papers were leaked in May of 2016, the scheming of the super-rich to avoid paying taxes by hiding their identities offshore was thrown into headlines around the world. Some journalists, scrambling to make sense of the 11.5 million documents, set about trying to uncover the identities of the shadowy figures behind the web of deceit, while others valiantly tried to explain the complex financial mechanisms. What the public needed was an overview by an expert, a clear analysis of how When the Panama Papers were leaked in May of 2016, the scheming of the super-rich to avoid paying taxes by hiding their identities offshore was thrown into headlines around the world. Some journalists, scrambling to make sense of the 11.5 million documents, set about trying to uncover the identities of the shadowy figures behind the web of deceit, while others valiantly tried to explain the complex financial mechanisms. What the public needed was an overview by an expert, a clear analysis of how tax havens work, in simple language, with enough detail to make the picture complete yet without being too technical. In The Hidden Wealth of Nations: The Scourge of Tax Havens, Gabriel Zucman has done that brilliantly—and much more. Eschewing scandals and the naming of individuals, he provides a clear description of how the system works, revealing, perhaps surprisingly, that it is, at its core, rather simple. But he goes much further, calculating the true extent of tax evasion, in dollar terms, by crunching publicly available economic numbers in ways that have not been used before. (Tax evasion, in his analysis, includes what lawyers call “tax avoidance,” the legal exploitation of loopholes, since both evasion and avoidance exist only to dodge the taxman.) He shows that more than 8% of global financial wealth, consisting of stocks and bonds, shares in mutual funds, and bank deposits, is hidden from tax authorities, amounting to 7.6 trillion dollars. That enormous figure is a minimum, because it does not include non-financial forms of wealth such as real estate, gold, jewelry, art, etc. Now that governments are at long last in possession of real numbers, they are much better placed to address the problem of tax havens and lost taxes. Finally, Zucman presents a simple plan for bringing global tax cheating to an end. It’s a breathtaking achievement to do so much in a book consisting of only 120 pages. But is it to be believed? In the foreword no less a luminary than Thomas Piketty, author of the monumental Capital in the Twenty-First Century, calls The Hidden Wealth of Nations “probably the best book that has ever been written on tax havens and what we can do about them.” While the book is certainly an important handbook for policy makers, and while it might yield deeper insights to readers with a background in business and finance, Zucman has written it with the layperson in mind. Because governments, he says, “have not been stellar” in fighting the scourge of tax havens, an informed and mobilized public is needed to drive the campaign against tax havens to its conclusion. What do his numbers reveal? Nine percent of Canadian financial wealth or US$300 bn is held offshore by Canadian citizens, resulting in an annual loss of US$6 bn in tax revenue. If back taxes were collected and penalties assessed for not declaring assets, the government would reap an enormous windfall. Even more, these numbers do not include losses incurred when governments had to lower tax rates to slow the flight of capital to tax havens. Four percent of U.S. wealth is held offshore, representing $1,200 bn in annual lost tax revenue. Ten percent of the financial wealth of Europe is held offshore, depriving European governments annually of $87 bn. The numbers for Russia show the extent of the oligarchy, with 52% of financial wealth held offshore. Sadly, Africa, which needs its tax revenue sorely for basic services and development, has 40% of its financial wealth hidden from tax authorities. After tracing the history of tax havens from the end of World War I, when governments instituted progressive taxes in order to offset their huge debts and provide benefits to veterans, and following a chapter on the failed efforts of governments to address the problem of tax havens, Zucman proposes a straightforward solution, a global financial register. Such a record, listing who owns all financial securities in circulation—all stocks, bonds, and shares in mutual funds worldwide—perhaps managed by the IMF, would strip tax cheaters of their anonymity and enable nations to collect the taxes due to them. Reporting must be automatic, leaving bankers in tax havens with no discretion to falsify information about their clients, as Swiss bankers did on a huge scale at two critical points in the past. Also because of past failures to eliminate tax havens, Zucman insists that countries tempted to continue operating as tax havens must be compelled to participate through sanctions. In plain economic terms he demonstrates how the threat of carefully crafted trade tariffs against recalcitrant countries, designed to capture lost tax revenue, would leave tax havens no choice but to surrender, and he points out that such a move is allowed under current treaties. Fiscal dissimulation does not end with wealthy individuals; there is also the problem of corporations avoiding taxes through profit shifting. Various accounting tricks are used to ensure that branches in high tax countries show little or no profit, while most of the company’s profits show up in countries with low taxes, Luxembourg being a favourite destination because of its “modest”`corporate tax rate of 0%. Again Zucman provides numbers: 55% of foreign profits of U.S. firms are declared in tax havens; and U.S. tax losses amount to 20% of all U.S. profits. Rather than asking governments to play cat and mouse with the corporations over their profits (the tax department of GE consists of almost 1,000 employees), Zucman proposes that corporate profits not be approached country by country; rather, the worldwide profit of a corporation should be calculated. Each country would then be assigned a weighting based on sales, capital, and employees, and based on its weighting the country could then assess taxes according to the rate of its choice. This corporate solution, he explains, would be easier to implement than the global financial register for individuals. He even proposes a method for ensuring that corporations would pay up. For all his proposed solutions, Zucman preempts objections that they are “utopian” by demonstrating how they are currently operating successfully in smaller jurisdictions. The big surprise about large-scale tax dodging is how essentially simple it is, resting entirely on anonymity, and how relatively straightforward the solutions are. While the G20 summit in 2009 made a good, if unsuccessful, effort at eliminating the scourge of tax havens, Zucman`s book may make it possible that we truly will one day see the much sought-after “end of banking secrecy.”

  16. 5 out of 5

    Nathan Rose

    This succinct volume is a highly-readable, data-backed inquiry into the topical issue of tax havens, along with concrete recommendations about what policy-makers can do in response. The subtitle gives away the fact that the author unambiguously sees tax havens as a problem (or "scourge") in need of urgent fixing. The libertarian view that taxation and big government is itself the immoral thing is not given any airtime. This isn't a criticism of the book, but readers should know where Zucman stand This succinct volume is a highly-readable, data-backed inquiry into the topical issue of tax havens, along with concrete recommendations about what policy-makers can do in response. The subtitle gives away the fact that the author unambiguously sees tax havens as a problem (or "scourge") in need of urgent fixing. The libertarian view that taxation and big government is itself the immoral thing is not given any airtime. This isn't a criticism of the book, but readers should know where Zucman stands. The book starts with a very interesting history of the development of banking secrecy in the 20th century, centering mostly on Switzerland at first, then extending to Luxembourg, the Bahamas, Singapore and others as we approach the present day. This history could very well be the most engaging part of the book to the casual reader. It neatly dispels many commonly-held beliefs about the reasons for the rise of Swiss banks: it wasn't from people fleeing totalitarian regimes in the 1930's, nor was it investors craving the stability of the Swiss Franc. No - it shows that Swiss banking grew due almost entirely to people wanting to avoid their tax obligations. Zucman points out that in the modern day: "The giants of tax avoidance are companies of the new economy: Google, Apple, and Microsoft." This was very interesting for me personally, as I am researching tax avoidance / tax optimization for micro-multinationals - many of whom build their businesses on top of the infrastructure the tech giants make possible. Even small entrepreneurs can now shift the location of their profits to wherever is taxed least. As Zucman writes: "The fundamental problem is that the corporate tax is not adapted anymore to today's globalized world and must be reinvented." The book estimates that 8% of the global financial wealth of households is held in tax havens, costing about $190 billion per year in lost taxes (as of the book's publication in 2015). Zucman admits again and again that the data is imperfect - it's impossible to get every country to supply data of the same quality - but argues that these are reasonable estimates, in spite of the acknowledged difficulties. Then come the recommendations about what can be done to make tax dodgers comply. The main suggestions are the creation of a global register of all financial securities, implementing an automatic exchange of information, and imposing trade tarriffs on any tax haven who refuse to cooperate. A global tax on wealth is also floated. "The Hidden Wealth of Nations" is obviously indispensable reading for anyone involved in setting tax policy, but I feel it should be added to the bookshelf of anyone interested in geopolitics and globalization. Highly recommended.

  17. 5 out of 5

    Andrew

    The Hidden Wealth of Nation by Gabriel Zuchman is a short treatise on reforms governments should make to combat tax income lost in offshore tax havens. Zuchman points the finger at Switzerland, mainly, which generates a good chunk of its overall GDP by catering to wealthy tax dodgers and thrifty corporations. Other nations on the list include Luxembourg, Singapore, British Overseas Territories like the Cayman's and Virgin Islands, and Panama. These financial centres offer services to hide income The Hidden Wealth of Nation by Gabriel Zuchman is a short treatise on reforms governments should make to combat tax income lost in offshore tax havens. Zuchman points the finger at Switzerland, mainly, which generates a good chunk of its overall GDP by catering to wealthy tax dodgers and thrifty corporations. Other nations on the list include Luxembourg, Singapore, British Overseas Territories like the Cayman's and Virgin Islands, and Panama. These financial centres offer services to hide income from wealthy clients by neglecting to disclose the nationality of clients, hiding accounts through shell corporations and offering low or no tax on deposited funds. The benefit to these small nations is one of overwhelming income. Luxembourg, with a population of just 500 000, and little in the way of resources or services, is one of the wealthiest nations in the world, and has great sway in the European Union because of this. Decisions made in Luxembourg often effect millions of other Europeans. Switzerland has long been held as tax haven central. Zuchman ascertains that Switzerland actually controls many of the services offered by other tax havens, and each haven operates its own specific brand of tax avoidance, such as securities, or holding companies and the like. Therefore, Switzerland is his main target, with Luxembourg following closely. Zuchman's solution to offshore tax havens is twofold. One, amalgamate tax and banking information on a global scale, to combat tax avoidance. An amalgamation of such information would be useful in linking hidden accounts to there true owners, and taking back tax dollars that should rightfully be invested in their country of origin. Zuchman estimates $7.6 Trillion is off shored yearly from the world economy, and maintains this estimate is probably low. Some economists have speculated up to $30 Trillion is lost every year. This money would have a large impact on growing wealth inequality in the world, and take the burden off of honest and middle class taxpayers who often suffer the most form tax avoidance schemes by the rich. This is pie in the sky thinking, but leads to his second solution. Zuchman goes so far as to say a coalition of European nations, such as France, Italy and Germany, would be able to put enough pressure on Switzerland to make tax schemes unprofitable, and force policy change through aggressive international agreements and banking sanctions. Nations like the USA have tried, implementing their FATCA to try and force other banks to release information on country of origin for investors in their nation, in order to pinpoint taxable dollars owed. The USA's policy could be very successful but operates on a "good faith" basis with nations, meaning banks are often incentivized to break the law and risk sanction. The Hidden Wealth of Nations is an interesting read. However, Zuchman's policy proposals seem extreme. It is true that small nations make large amounts of money off of tax avoidance, but is it really necessary to take such drastic measures? Why should international power spheres like the US and EU be able to dictate financial and monetary policy to other nations? Is this not a very neo-imperialist idea? I am on the fence personally about Zuchman's ideas. Even so, the book was interesting in expanding my knowledge of nations like Switzerland and Luxembourg, who derive a large percentage of their income from questionable tax avoidance schemes for disreputable businesses and wealthy individuals. It was a good read, interesting, and concise, and offers and interesting perspective and solution to the issue of tax havens. Worth a read for anyone interested in economics and international monetary policy.

  18. 4 out of 5

    Helen

    This is a readable, not very technical book about the information the author uncovered with respect to tax evasion by multinational corporations & high net-worth individuals, including how tax evasion has developed over the span of the past hundred years. This is actually a "page-turner" in a way - it's not dry, or boring (I only fell asleep once) and includes only a minimal number of easy-to-understand graphs/charts. The information the author conveys is eye-opening and definitely points the wa This is a readable, not very technical book about the information the author uncovered with respect to tax evasion by multinational corporations & high net-worth individuals, including how tax evasion has developed over the span of the past hundred years. This is actually a "page-turner" in a way - it's not dry, or boring (I only fell asleep once) and includes only a minimal number of easy-to-understand graphs/charts. The information the author conveys is eye-opening and definitely points the way to reforming the global system of finance so that tax revenue is rightfully returned to us - the nations that are being ripped off by tax cheats. The recent ruling that Apple owes 14 billion dollars in taxes is probably the tip of the iceberg - the author has calculated how much is lost when corporations like Apple, Google, Microsoft, locate their offices in places like Ireland, Bermuda, Cayman Islands and so forth. The total amount is mind-boggling - and adding in the amount of money high net-worth individuals are getting away with not paying taxes on, the total is truly staggering. The only way to correct the theft of taxes (tax evasion by the 1% and multinationals) is to link national financial registries, and impose tariffs/sanctions on the tax havens (Switzerland, Luxembourg, Bermuda, Hong Kong, Singapore, etc) so that they will comply with sharing financial information with the tax authorities of the countries the depositors are from, or the multinationals are based in. This is a quick/superficial summary of what Zucman recommends - but essentially the "cure" for the problem depends on the cooperation of the bankers of these tax havens, which have historically relied on or sold opacity to money launderers, criminals, and the 1%-ers - who can put their money into Swiss accounts where it will then be "managed" that is invested, with the proceeds not being taxed. The owner of the account can easily access the money - there are many clever ways of hiding his identify, and disassociating himself from the account (the book explains how) yet still access the money from any ATM etc. The Swiss banks do not have to disclose the earnings/deposits - or the money can be moved via mouse clicks to other tax havens, under the guise of foundations, shell corporations, and the like. About 20% of global wealth is not taxed - it's hidden in these accounts - so the amount of money lost to us, the nations - is immense. Although this is a book about economics, I'd recommend it to any reader - it is very easy to read, it's non-technical, and is most enlightening. The key to correcting the scourge of tax havens, is to force the tax havens to disclose financial information to the tax authorities of various nations, like the IRS, and the only way to determine who owns what security/bond (most of the wealth is in the form of securities) is to set up a global financial registry. Transparency is the key to solving the puzzle - a global financial registry is only possible via global cooperation to stop global tax evasion.

  19. 5 out of 5

    Athan Tolis

    So if you compare the assets and liabilities of the banking systems of economies around the world you realise there's 6 trillion of undeclared financial wealth (orphan liabilities that don't appear as anybody's asset) and if you account for a couple more effects it's more like 8.5 trillion. And it's really all about Switzerland, with supporting roles for Luxembourg out of where the funds are invested (because Luxembourg does not withhold any tax on dividends or interest) and the Cayman Islands ou So if you compare the assets and liabilities of the banking systems of economies around the world you realise there's 6 trillion of undeclared financial wealth (orphan liabilities that don't appear as anybody's asset) and if you account for a couple more effects it's more like 8.5 trillion. And it's really all about Switzerland, with supporting roles for Luxembourg out of where the funds are invested (because Luxembourg does not withhold any tax on dividends or interest) and the Cayman Islands out of which you can create shell companies to hide who the beneficial owner of the assets is, but it's primarily about Switzerland. Recently also about a couple other places like Singapore, but still controlled out of Zurich and Geneva, mainly. And it costs $200 billion of tax that rich people don't pay and everybody else (other rich people) have to pay. Additionally, corporates avoid $120 billion of taxes by moving their profits to countries Luxembourg and Ireland, or by moving their IP to the Bahamas via Ireland. The trick with people is to 1. punish the countries (Switzerland) that help the rich tax avoid by imposing taxes on their exports and 2. create a global registry of financial assets and 3. tax distributions (and wealth, hello Thomas Piketty) at source and let those who don't actually owe the tax claim it back. The trick with corporates is to shout very loud at Luxembourg (but not Ireland, for some reason) Also, all these states that help the rich hide their tax never deliver on promises they make to clamp down on people who avail themselves of the tax-avoidance setups they provide. I wonder why that is. This covers the entire contents of the book. The End. (Incidentally, the idea that you could simply get rid of corporate tax and impose a tax on all distributions in lieu of a corporate tax (which again individuals who owe it could claim back) does not occur to the author, much as it could kill two birds with one stone. Perhaps he could not fit that within the 140 characters....)

  20. 5 out of 5

    Itay

    For the layman really. In the first part of the book, Zucman gives a fairly basic and general explaination on the mechanics of tax havens, the history of banking secrecy in Switzerland, and the foreign profits of US corporations. It serves as a pretty good introductory material for people outside the financial and wealth management industry. In the second part, Zucman paints the target around his proposed "solutions" to the grave "problem" of tax planning and tax havens. In a dichotomy taken fro For the layman really. In the first part of the book, Zucman gives a fairly basic and general explaination on the mechanics of tax havens, the history of banking secrecy in Switzerland, and the foreign profits of US corporations. It serves as a pretty good introductory material for people outside the financial and wealth management industry. In the second part, Zucman paints the target around his proposed "solutions" to the grave "problem" of tax planning and tax havens. In a dichotomy taken from Orwell's "Animal Farm", Using offshore accounts to minimize tax liabilities is bad, four legs are good. The government always uses tax dollars to build "roads and hospitals", and is repetedly getting duped by evil white haired overlords who bank at Switzerland. Zucman's proposal reside in a fantasy land where western countries abandon real politik to join forces and build economic pressures on offshore tax havens. To summerize, this is a good book as an introduction to this subject, but don't drink the kool-aid.

  21. 5 out of 5

    Qasim Ahmad Ilyas

    A very short and concise but provocative, the Hidden Wealth of Nations, though the title sounds extravagant relative to its composition, is the right one for reading, if you are serious enough to understand the working of Tax Havens. Gabriel Zucman has succinctly elaborated the import and function of tax havens like Switzerland, Luxembourg, and has forcibly endeavored on many occasions to propose radical measures to reduce the tax theft. The foreword is written by none other than an ingenious sch A very short and concise but provocative, the Hidden Wealth of Nations, though the title sounds extravagant relative to its composition, is the right one for reading, if you are serious enough to understand the working of Tax Havens. Gabriel Zucman has succinctly elaborated the import and function of tax havens like Switzerland, Luxembourg, and has forcibly endeavored on many occasions to propose radical measures to reduce the tax theft. The foreword is written by none other than an ingenious scholar on pioneering inequality studies, Thomas Piketty, a notorious (pun intended) author of the best seller Capital In Twenty First Century. In fact, Piketty has summarized the major theme and arguments of Zucman's book, with "a fascinating history of tax havens" and "probably the best book that has ever been written on tax havens and what we can do about them." I wont go further than describing a few things- lessons- I took from this book. Beginning with the total share of Switzerland in affording the services of tax evasion to the citizens, foundations, trusts, funds and corporations of some other sovereign states. Even, set apart the tax evasion. The opacity with which the tax havens, inspired from the vintage Swiss bankers' practices operate and collude with illegal entities like drug dealers and terrorist organizations around the globe, is something to abhor. However, the figures Zucman provides, for the countries of poorest region ie, Africa, are nothing short of astonishment. Africa, with hunger and catastrophic civil wars, hoards around $150 billion in the Swiss Banks. It is huge as the American share ($80 bn) decidedly shies away. The billions of aid, a pie of hard earned money of global tax payers, are donated to fight the hunger, civil wars, human degradation to the poor countries where the elite appropriate this hard money to their end. This is the classic problem of pouring money into the poorest countries that have either been poorly governed (lacking effective strategy) or are under effective totalitarian regimes. In fact, this dilemma is captured best in the Poor Economics by Abhijit Bannerji and Esther Duflo. One may say that the direct money transfer to these countries has actually bombarded the elites to steal the aid money and hoard at the tax havens. Secondly, the story of Luxembourg whose success is envied in Europe. Zucman estimates that total GDP of Luxembourg is nothing but actually a third of its original economic activities. Rest is based on finance, and that too based on providing incentives to tax dodgers. Interestingly, two-third of Luxembourg GNP is paid to the workers commuting daily from different nearby countries, who are highly specialized in consultancy services. Unlike any other European States, Luxembourg has managed to manipulate the special clauses of Treaty of Rome pertaining to its then (1950s) steel industry, now relegated to third or lower position in the economic life of its total 500,000+ subjects. This is something to look for, and Zucman has aptly written on this. Third, Zucman has exposed the multinational companies in their practice of transfer pricing strategies and offshore location of their headquarters or their subsidiaries in tax havens. Worth around trillions of US dollars that Google, Apple and Microsoft make are actually accounted in fallacious accounting principles to steal taxes. Taken under this frame, the transfer pricing strategy is a bogus scheme of corporations to buy and sell their products and services within their own organization, usually to their subsidiaries whose offices on paper are located in tax havens. This serves the purpose of increasing the cost, decreasing the revenue and therefore profits. In one estimate that Zucman shares, this practice costs the United States a whooping $130 bn annually. Imagine this kind of amount being spent on Health Care. Fourth, Zucman proposes a number of programs for to curb the activities of tax dodgers and tax havens. It proposes a global wealth register whereby all kinds of investments by their true beneficiaries made in the tax havens or in their home countries are to be registered and automatically shared with the tax authorities. Though Utopian it seems, however, Zucman argues, much like land registries, similar registers are already being maintained at private level; the most famous at regional level are Clairstream and Euro Clear; and for securities and bonds, central depository companies within the geographical countries. Further, he maintains that if such a wealth register, even maintained at state or regional level, the tax evasion and the profits generated abroad but not repatriated by the tax dodgers would bridge the gap. Zucman also takes aggressive verbose against the tax havens. He proposes that a strict trade sanctions are to be introduced in accordance with the mutual cooperation of the affected states, particularly Germany, France, Belgium, United Kingdom and United States. He puts that such strict trade tariffs would bring the tax havens on knees to cooperate and share the data of offshore investments made by their citizens in bogus shell companies, trust, and foundations. For corporate tax evasions, he suggests that a consolidated profit must be taxed, by deducing the workers, sales, profits, captial investments on geographical basis. I think this is revolutionary. As the multinational companies sell absolutely in one country but repatriate the profits back to the tax havens and never bring back that profit where they do business. It costs not only lost tax revenues to the affected countries but also brings inflated export prices to the tax havens that house them. The price is ultimately born by the real sectors of tax havens. In the world of post financial document 'leaks', the detailed history and working of the infamous tax havens and the consequent wealth distribution and equality on asymmetrical trend due to lost tax revenues are important to understand before embarking on any policy action. And a great policy suggestions as put forward by Zucman are no mean feast. These are provocative and practically achievable.

  22. 4 out of 5

    Jim Davidson

    A clear and concise picture of how basic tax havens work. This short book is a good companion to "Capital in the 21st Century" and "Saving Capitalism" to understand one mechanism of wealth concentration. However, the net number of lost tax revenue, $200b/yr across all developing countries, is large but not huge compared to the $1T/yr of rent extracting over charging in the US health care system alone. So, good problem to solve but there are larger fiscal challenges to focus on first.

  23. 4 out of 5

    Lani M

    Panama Papers news are everywhere. I feel the need to get thorough knowledge on that, rather than just reading articles. So, I dedicated my time to read this book. Well, what I can say is this concise book will beef up your knowledge on tax avoidance and evasion practices around the world. The history of them up to now and then the writer offers his recommendations to tackle these die-hard problems. Give this book a chance to open your mind.

  24. 4 out of 5

    Adam Ross

    Zucman's book is the first to empircally trace the missing wealth of nations, the money that the wealthy and powerful have slipped out of the jurisdictions of nation-states to avoid taxes. He argues there is at least 2.5 trillion missing from the world economy that has been hidden away in tax havens all over the world, which are really part of a Switzerland network. Really rigorous and infuriating stuff.

  25. 4 out of 5

    Umang

    Very informative. Good background information on the evolution of Swiss and other tax havens over the years. Not sure how much can happen on the recommended solutions but left ignored this is a crisis in the making that will surely unfold down the road.

  26. 5 out of 5

    Nick Clark

    Not dealing effectively with this costs an annual USD 200 bln in forfeited tax revenue. Provides a clear and compelling case for coordinated government intervention.

  27. 5 out of 5

    Robert

    Concise and demonstrably important but who are we kidding? Nothing will change.

  28. 5 out of 5

    Dylan Groves

    Thanks Marteen! im ready to talk

  29. 5 out of 5

    Bill

    Could have been a short article

  30. 4 out of 5

    Jason Roberson

    Great insight into the history/inception of tax haven countries. Some takeaways for my own future reference: ***A tenacious legend, maintained since the end of WWII by Zurich bankers, claimed that Swiss banking owed its rise to depositors who were fleeing totalitarian regimes (it was passed in the 1930's to help persecuted Jews protect their savings). This myth has been debunked, 2.2 million accounts were opened by non-Swiss individuals between 1933 and 1945, and around 30,000 (1.5%) have been li Great insight into the history/inception of tax haven countries. Some takeaways for my own future reference: ***A tenacious legend, maintained since the end of WWII by Zurich bankers, claimed that Swiss banking owed its rise to depositors who were fleeing totalitarian regimes (it was passed in the 1930's to help persecuted Jews protect their savings). This myth has been debunked, 2.2 million accounts were opened by non-Swiss individuals between 1933 and 1945, and around 30,000 (1.5%) have been linked to victims of the holocaust. Data shows it was in the 1920's--not 1930's-- that the Swiss "Big Bang" occurred. From 1920-1929 assets grew at an average annual rate of 14%. From 1930-1939, they grew at 1% annually. Which coincidentally were the years that immediately followed the years when France began to increase its top tax rates to rebuild from the war. ***This must be stated clearly: the goal of commercial sanctions is to force tax havens to cooperate, not to establish protectionism. Customs duties of 30% have never lastingly profited anyone. In the long term, free exchange benefits all nations and protectionism is to be avoided. ***Solution=Global Financial Registers. The goal of the GFR extends beyond curbing tax evasion: a better accounting of wealth and would do much good in the fight against money laundering, bribery, and the financing of terrorism. ***Not all countries have the same attitudes toward transparency, and such attitudes change over time. In some Scandinavian countries, taxpayers' income and wealth is made public. Not so much in the United States--although in 1923/1924 US income tax payments were publicly disclosed. ***Global Wealth Tax: This proposal has generated a heated controversy. Quite simply, let's assume that a tax on wealth might turn out to be desirable in certain places, at certain times, if wealth concentration was to reach extreme levels above which inequality harms growth, innovation, or the well functioning of our democratic institutions. ***This is why the giants of tax avoidance are companies of the new economy: Google, Apple, and Microsoft. There is nothing less risky than manipulating the prices of patents, logos, labels, because the value of these assets is intrinsically difficult to establish. Companies simply establish a subsidiary in a low tax country and "export" their division these products to take advantage of the low taxation on profits. ***Accounting manipulations do not just cost governments a lot. They also cause basic macroeconomic statistics to lose significance, with adverse consequences for financial regulation and stability. The national accounts of Ireland, for example, are seriously contaminated by the trickery of multinationals. First, in the balance of payments:to shift profits to the island, where they are taxed at only 12%, companies have there Irish branches import at low prices and export at artificially elevated prices--which results in an amazing trade surplus for Ireland of 25% of GDP. This surplus has nothing to do with competitive advantage; it doesn't benefit the Irish population at all: it is simply paid back to the foreign owners of the firms that operate in Ireland. Meaning that the Irish national income is only 80% of Irish GDP!

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