The Hidden Wealth of Nations: The Scourge of Tax Havens by Gabriel Zucman (PDF)

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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, 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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Editorial Reviews: Review “Zucman’s work on tax havens is the first serious economic research in this area. His evaluation of the share of global household wealth that is located in tax havens has become the standard in the profession. Most importantly, this is the first work offering credible estimates of the kind of economic sanctions that would make tax havens give up the financial opacity that allows them to prosper. The conclusions are powerful.” — Thomas Piketty, author of Capital in the Twenty-First Century“Zucman seems to have little ambivalence about how to interpret the data, as his book is subtitled The Scourge of Tax Havens. He acknowledges that some view tax havens as perfectly legal and legitimate. But whatever the politics, for anyone who cares about understanding the economy, it’s clear a dramatic shift is under way.” ― Wall Street Journal“With his book, The Hidden Wealth of Nations, Zucman is positioning himself as this year’s Piketty, whose opus renewed a debate about inequality last year. . . . There has never been as much wealth sitting in tax havens as there is today, Zucman says, whether it’s Apple Inc. funneling billions in profits through a tiny Irish unit or a French cabinet minister using secret accounts to cheat on his taxes. . . . What is to be done? Zucman said there needs to be a central global register of the owners of the world’s wealth, similar to various registries for real estate holdings. Such a database doesn’t have to be public, but it must be available to regulators.” ― Bloomberg Business News“Zucman has built his career remarkably quickly, and in the process has made a place for himself among the most influential economists working today. . . . Stitching together data sets that chronicle roughly a century of offshore banking, Zucman shows how wealth in tax havens has grown to account for roughly 8% of total global household financial wealth, or roughly $7.6 trillion in 2014. . . . Armed with those figures, he makes the case that tax avoidance and evasion are at the core of the issues such as inequality and financial stability.” ― Quartz“A short and lively investigation into the global effects of tax avoidance. . . . As Zucman argues, ‘Financial secrecy—like greenhouse gas emissions—has a costly impact on the entire world, which tax havens choose to ignore.” ― The Week“A provocative new book. . . . In Piketty’s forward, he urges all those interested in inequality, global justice and the future of democracy to read the book. The wealthy among them might want to take particular note. Attacking tax havens is a crucial first step to ratcheting up taxation on the rich. The more information there is about offshore assets, the harder they will be to defend.” ― Financial Times“Tax havens are by design secretive and opaque. The entire point of their existence is to conceal the wealth hidden within them. And a new book by Zucman, The Hidden Wealth of Nations: The Scourge of Tax Havens, reveals, as never before, the extent of their role in the global economy. . . . If we are ever to combat inequality effectively, truly progressive taxation will have to be a part of the policy mix. But unless we eliminate tax havens now, we are likely to find that we lack the ability to implement it.” ― Project Syndicate“Zucman writes crisply and is forthright in his scorn for tax fraud. He also briefly addresses solutions to corporate tax manipulation, whereby multinationals shift income to tax havens. . . . Zucman’s eye-opening study will be of interest to all readers concerned about growing wealth disparity and is a fitting supplement to Capital in the Twenty-First Century by Thomas Piketty.” ― Library Journal, starred review“Zucman is a sometime co-author with Thomas Piketty and his new book The Hidden Wealth of Nations is set to do for tax havens what his colleague’s did for wealth inequality: define and popularize the problem.” ― Guardian“A short, pioneering guide to estimating the trillions of dollars moved to tax havens to evade or avoid paying taxes to the nations from which this expanding mountain of money was made. Zucman proposes measures to end the party of these giant tax escapes and make tax avoiders and evaders pay their fair share.” — Ralph Nader“One of the most thorough books on the topic.” ― Le Monde“A small book worth ten volumes on financial globalization. . . . Zucman dares to suggest to the leaders of democratic states ‘a concrete and realistic plan of action’ to fight against the fiscal hemorrhaging that is bleeding their public coffers and economies dry.” ― La Croix“In this small, yet brilliant and tightly argued book, Zucman unravels the mechanisms of tax secrecy and evasion during the past century, an always lucrative activity but probably never as lucrative as it is today. The amounts involved are staggering: one out of every ten dollars of financial assets is hidden in tax havens. Zucman proposes a whole gamut of measures to put an end to this scourge, and indeed those who benefit from financial secrecy must feel uncomfortable to have to face such a formidable opponent.” — Branko Milanovic, City University of New York“Offshore tax evasion is an outrage. Preventing it should be a major objective of international cooperation. This important book documents the problem and addresses what can be done. It is actionable economics at its finest.” — Lawrence H. Summers, Harvard University“Drawing on his recent pathbreaking research, Zucman offers a short, lively, and non-technical discussion of tax heavens. He presents the most rigorous measurement to date of the wealth hidden in tax heavens and proposes a clear and feasible set of recommendations to fight evasion through tax heavens and restore the ability of our democratic societies to tax their wealthiest residents in this globalized world. His recommendations are already having a significant policy impact.” — Emmanuel Saez, University of California, Berkeley“The book’s argument—that the rich steal from the rest of us by secreting their money away in tax havens—will please Bernie Sanders fans.” ― Wall Street Journal“It is because Zucman takes the courageous step of moving beyond academia to being an activist committed to promoting a new and radical solution that he has unambiguously (even if cautiously) identified, that I welcome this book. Far too few academics are willing to take on the role of the public intellectual who steps up and demands action to address a problem that they have identified. Zucman deserves full marks for doing so.” ― Times Higher Education“Zucman’s main achievement in this slim volume is to have quantified these thefts: $200 billion in state revenues lost through private individuals’ use of tax havens, plus another $130 billion in losses created by U.S. firms booking their profits offshore. . . . Zucman showcases this remarkable feat in unusually lucid and elegant prose—particularly for an economist—complemented by an admirable grasp of history. His review of the ways that efforts to combat tax evasion have stalled for the past century makes the book a worthwhile read in and of itself. But perhaps the most ambitious aspect of Zucman’s work is his claim that, despite the immense scale of the problem, there are ways to solve it and thereby put a stop to the recurrent economic and political crises triggered by the use of offshore finance. . . . Zucman is still at the beginning of what promises to be a brilliant career.” ― Atlantic“Zucman, a young French economist now at the London School of Economics and the University of California at Berkeley, has written a masterful survey of the origins, importance, and dangers of tax havens. The Hidden Wealth of Nations is a tremendously important contribution to the current discussion of how to adjust the world’s income-tax systems, which are over a century old, to the realities of the 21st century.” ― American Prospect”reads like Capital in the Twenty-First Century’s lost chapter.” ― Nation“Gabriel Zucman has two goals in his new book, The Hidden Wealth of Nations: to specify the costs of tax havens, and to figure out how to reduce those costs. He writes with moral passion, even outrage; he sees tax havens as a ‘scourge.’” “Zucman has produced an important book, above all because of his effort to calculate the magnitude of the world’s hidden wealth. . . . A strong virtue of Zucman’s book is that it puts a bright spotlight on an area in which significant reforms might appeal to people who otherwise disagree on a great deal. You might believe that the tax system should be made more progressive, or you might believe that it should be made less so. But whatever you think, you are unlikely to support a situation in which trillions of dollars are hardly taxed at all.” — Cass Sunstein ― New York Review of Books About the Author Gabriel Zucman is assistant professor of economics at the University of California, Berkeley.Teresa Lavender Fagan is a freelance translator living in Chicago; she has translated numerous books for the University of Chicago Press and other publishers. Excerpt. © Reprinted by permission. All rights reserved. The Hidden Wealth of NationsThe Scourge of Tax HavensBy Gabriel Zucman, Teresa Lavender FaganThe University of Chicago PressCopyright © 2015 The University of ChicagoAll rights reserved.ISBN: 978-0-226-24542-3ContentsFOREWORD by Thomas Piketty, INTRODUCTION Acting against Tax Havens, ONE A Century of Offshore Finance, TWO The Missing Wealth of Nations, THREE Mistakes, FOUR What to Do?: A New Approach, FIVE The Tax Avoidance of Multinational Corporations, CONCLUSION, NOTES, INDEX, CHAPTER 1A Century of Offshore FinanceOf all the countries involved in offshore wealth management, one has been active longer than any other, and it is still the number-one offshore center today. If we take a close look at this country’s banking history, we’ll reveal the intricate mechanisms of dissimulation that, starting from its center, have spread out all over the world, and the ingenuity of some bankers in safeguarding financial secrecy and fraud. And while tax havens rarely publish instructive statistics, this country is actually the exception to the rule: there is a remarkable amount of data from the country available, which have received astonishingly little attention. This country, of course, is Switzerland.The Birth of a Tax HavenThe fabulous destiny of the Swiss financial center began in the 1920s when, in the aftermath of World War I, the main countries involved began to increase taxes on large fortunes. Throughout the nineteenth century, the greatest European families were able to accumulate wealth by paying little or no taxes. In France, on the eve of the war, a pretax stock dividend of 100 francs was worth 96 francs after taxes. In 1920 the world changed. Public debt exploded, and the state vowed to compensate generously those who had suffered during the war and to pay for the retirement of veterans. That year the top marginal income tax rate rose to 50%; in 1924 it reached 72%. The industry of tax evasion was born.The industry’s birthplaces — Geneva, Zurich, and Basel — enjoyed fundamentally favorable trends that were already in motion. At the beginning of the century, banks had formed a cartel (the Swiss Bankers Association was established in 1912) and were able to make the Swiss government pay relatively high interest rates, which made Swiss banks very profitable. And since 1907, they had benefited from having a last-resort lender, the Swiss National Bank, which could intervene in the event of a crisis and ensure the stability of the entire system. So by the eve of World War I, Switzerland had a financial industry with clear marching orders and a well-developed network of credit establishments. Also, since Switzerland has enjoyed the guarantee of perpetual neutrality since the Congress of Vienna in 1815, it emerged from World War I and the accompanying social upheavals relatively unscathed.The boom in the tax-evasion industry was also made possible by the transformation of the nature of wealth. In industrialized countries, financial wealth had, since the middle of the nineteenth century, overtaken that of land ownership. In 1920 the holdings of the richest people in the world were essentially made up of financial securities: stocks and bonds issued by public authorities or by large private companies. These securities were pieces of paper that resembled large bank notes. Like notes, most of the securities did not bear names, but instead the phrase “pay to bearer”: whoever had them in his possession was the legal owner. So there was no need to be registered in a cadastre. Unlike individual notes, stocks and bonds could have an extremely high value, as high as several million dollars today. It was possible to hold a huge fortune anonymously.If you wanted to keep these paper securities at home under your mattress, you would run the risk of their being stolen, and so owners looked for safe places to keep them. In order to respond to this demand, beginning in the mid-nineteenth century European banks developed a new activity: wealth management. The basic service consisted of providing a secure vault in which depositors could place their stocks and bonds. The bank then took responsibility for collecting the dividends and interest generated by these securities. Once reserved for the richest individuals, in the interwar period these services became accessible to any aspiring capitalist. Swiss banks were present in this marketplace. But — an essential point — they offered an additional service: the possibility of committing tax fraud. The depositors who entrusted their assets to them could avoid declaring the interest and dividends they earned without the risk of being caught, because there was no communication between the Swiss establishments and other countries.Looking for Lost SecuritiesUp until the end of the 1990s, the amount of wealth held in Swiss banks was one of the best kept secrets in the world. Archives were kept under lock and key, and banks were under no obligation to publish the details of the assets they were managing. It is important to understand, in fact, that securities deposited by customers have never been included in banks’ balance sheets, even now, for a simple reason: those securities don’t belong to the banks. Since the financial crisis of 2008–9, the term “off-balance sheet” has acquired a nasty connotation, notably referring to the sometimes complex arrangements that were carried out to remove American mortgage loans from bank books. But one of the off-balancesheet activities par excellence — coincidentally the oldest and still today one of the most common — is actually of childlike simplicity: holding financial securities for someone else.If today we are able to know the amount of wealth held in Switzerland during the twentieth century, it is thanks to two international commissions appointed in the second half of the 1990s. The mission of the first — presided over by Paul Volcker, former chairman of the US Federal Reserve — was to identify the dormant accounts belonging to victims of Nazi persecutions and the victims’ heirs. For three years, hundreds of experts from large international auditing firms explored the archives of the 254 Swiss banks that had been involved in managing wealth during World War II, producing masses of never-before-seen information — notably, the sum of assets held by each establishment in 1945. The goal of the second commission was to better understand the role played by Switzerland during the war. Presided over by the historian Jean-François Bergier, it also had extensive access to the archives of Swiss banks, which enabled it to establish the sum of securities deposited in the seven largest Swiss establishments during the twentieth century, which, from buyouts to mergers, became the UBS and Credit Suisse of today.The statistics produced by the two commissions have limitations. Part of the archives had been destroyed; others were kept beyond their reach. But the information gathered by Volcker, Bergier, and their teams is by far the best we have for studying the history of offshore finance. In particular, the data on the assets under custody are of high quality, because, without publishing them, the banks internally kept a detailed accounting of their wealth-management activities, precisely recording the value of the securities that had been entrusted to them, stocks at their market value, and bonds at their face value.In spite of all this, up to now that information had never been compared to the overall level of European income and wealth in the interwar period, notably due to a lack of statistics on national capital stocks. This is the first contribution of this book: to bring everything together — and the results deserve our attention, for they challenge many of the myths that surround the birth of Switzerland as a tax haven.The Swiss Big BangThe first thing we learn is how extraordinary the rise of Swiss banking at the end of World War I was. Between 1920 and 1938, offshore wealth — meaning that belonging to non-Swiss residents — managed by Swiss banks increased more than tenfold in real terms (that is, after adjusting for inflation): it went from around 10 billion in today’s Swiss francs to 125 billion on the eve of World War II. This growth contrasts vividly with the stagnation of European wealth in general: due to a whole series of economic, social, and political phenomena, the private wealth of the large European countries was approximately the same in 1938 as it was in 1920. Consequently, the percentage of the total financial wealth that households on the Continent were hiding in Switzerland, fairly negligible before World War I (on the order of 0.5%), increased greatly to reach close to 2.5%.Who owned all of this wealth? A tenacious legend, maintained since the end of World War II by Zurich bankers, claimed that Swiss banking owed its rise to depositors who were fleeing totalitarian regimes. For proponents of this thesis, the banking secrecy law that was enacted in 1935 had a “humanitarian” aim: it was meant to protect Jews fleeing financial ruin. And so in 1996 the Economist wrote that “many Swiss are proud of their banking secrecy law, because it … has admirable origins (it was passed in the 1930s to help persecuted Jews protect their savings).”This myth has been debunked by a great deal of historical research. The Volcker commission identified more than 2.2 million accounts opened by non-Swiss individuals between 1933 and 1945. Out of that total number, around 30,000 (or 1.5%) have been linked, with varying degrees of certainty, to victims of the Holocaust. The data established by Bergier and his team show that it was in the 1920s — and not the 1930s — that the Swiss “big bang” occurred. From 1920 to 1929, assets under custody grew at a yearly rate of 14% on average. From 1930 to 1939, they grew only 1% per year. The two most rapid phases of growth were the years 1921–22 and 1925–27, which immediately followed the years when France began to increase its top tax rates. Swiss banking secrecy laws followed the first massive influx of wealth, and not the reverse.What does it matter if reality belies the propaganda put out by the bankers? The legend hasn’t died — at the very most it has metamorphosed. These days, as is constantly repeated, most customers are fiscally irreproachable and deposit their money in Switzerland only to flee the instability or oppression of their home country. But, as we will see, more than half of the wealth managed by Swiss establishments still today belongs to residents of the European Union (although the share held by developing countries is rising fast), thus making this assertion as fallacious as the preceding one, unless we consider the EU to be a dictatorship.In the interwar period, the customers of Swiss banks for the most part were French. For example, at Credit Suisse, at that time the largest bank involved in wealth management, 43% of the foreign-owned assets belonged to French residents, only 8% to Spanish or Italian savers, and 4% to Germans. The geographical percentages are imperfect, because the depositors did not always give their true address (instead, some gave that of a Swiss hotel, in which case the funds were recorded as belonging to Swiss residents), but all the other data collected within the framework of the Bergier commission confirm that the highest percentage of capital came from France. On the eve of World War II, the available data suggest that 5% of all the financial wealth of French residents was deposited in Switzerland.What did hidden wealth look like? For the most part, it was made up of foreign securities: stocks of German industrial companies or American railroads, bonds issued by the French or English government, and so on. Swiss securities occupied a very secondary place, for two reasons: the local capital market was much too small to absorb on its own the mass of wealth that took refuge in Switzerland, and the returns on foreign investments were more attractive — on the order of 5% for securities from North America versus 3% for those from Switzerland. After financial securities, the balance was made up of liquidity (bank deposits such as saving accounts, which appear in banks’ balance sheets) and a bit of gold, but foreign stocks and bonds dominated by far. The same is true today, and it is essential to emphasize this point, because it is a source of recurring misunderstanding: for the most part, non-Swiss residents who have accounts in Switzerland do not invest in Switzerland — not today, and not in the past. They use their accounts to invest elsewhere, in the United States, Germany, or France; Swiss banks only play the role of intermediary. This is why it is absurd to think that Swiss offshore banking owes its success to the strength of the Swiss franc, to the traditionally low inflation rate prevailing in Switzerland, or to political stability, as its apologists continue to claim. Through their accounts in Zurich or Berne, bank customers from other countries make the same investments as from Paris or Rome: they buy securities denominated in Euros, dollars, or pounds sterling, whose values go up and down depending on devaluations, defaults, bankruptcies, or wars. Whether these bits of paper are held in Switzerland or elsewhere doesn’t change anything.For a customer, the main reason to deposit securities in a Swiss bank is and always has been for tax evasion. A taxpayer who lives in the United States must pay taxes on all his income and all his wealth, regardless of where his securities are deposited; but as long as Swiss banks don’t communicate comprehensive and truthful information to foreign governments, he can defraud tax authorities by reporting nothing on his tax return.The First Threats to BerneAt the end of World War II, wealth management in Switzerland went through a crisis. First, there was a lack of customers. The destruction of the war, the collapse of financial markets, the inflation in the years immediately following the war, and nationalization — altogether these factors annihilated the very large European fortunes that had survived the Great Depression. Private wealth on the Continent reached a historically low level — at scarcely more than a year of national income in France and in Germany versus five years’ worth today. Switzerland had not been affected by the war, but the rest of Europe was in ruins. Between 1945 and 1950, the value of hidden wealth decreased, which hadn’t happened since 1914.But above all, for the first time Switzerland found itself under the threat of an international coalition that wanted to do away with banking secrecy. In the spring of 1945, Switzerland, which had compromised a great deal with the Axis Powers during the war, sought the good graces of the victors. Charles de Gaulle, supported by the United States and Great Britain, imposed a condition on this rapprochement: Berne was to help France identify the owners of undeclared wealth. The pressure that was exerted then was all the greater in that a large part of the French assets managed by Swiss banks — around a third of the total, according to accounts at the time — was made up of American securities physically located in the United States (conveniently for the banks and their customers, who could thus buy and sell more quickly). But these assets had been frozen since June 1941 by Uncle Sam, who suspected Switzerland of being the sock puppet of the Axis countries. To unfreeze them, the United States demanded two declarations: one from Switzerland revealing who really owned the funds; the other from the French tax authorities indicating that the assets had indeed been declared. For Congress, it was out of the question to send billions of dollars via the Marshall Plan without first trying to tax French fortunes hidden in Geneva!The history of private banking in Switzerland might have stopped there, because the situation was objectively catastrophic. By freezing assets, the United States had a powerful means of pressure. Swiss bankers, with the complicity of the authorities, nevertheless got out of the predicament brilliantly. How? By engaging in a vast enterprise of falsification, which has been documented by the historian Janick Marina Schaufelbuehl. They certified that French assets invested in American securities belonged not to French people but to Swiss citizens or to companies in Panama — a territory where it was already particularly easy to create shell corporations. The US authorities were duped and, with very few exceptions, unfroze the assets on the basis of these false certifications. Boding well for the future, Swiss bankers used this same fraud again in 2005 to enable their customers to escape a new European tax, as we will see in chapter 3.From the mythology created expressly to justify the banking secrecy law up to large-scale fraud to cover defrauders, everything points to the dishonesty of many Swiss bankers. And so no solution to the problem of tax fraud can be based on their so-called goodwill, as are, however, all the plans recently devised to fight against tax evasion. For example, according to the Rubik agreement with Great Britain, set up in 2013, banks agree — without any checks in place — to collect a tax on the accounts of British customers and to give the proceeds to Her Majesty’s Treasury. But history has proven that this approach doesn’t work: agreements of this type are destined to fail because banks will always claim to have no, or very few, British customers and will collect essentially no taxes. Therefore, it is essential to break with such logic and no longer rely on goodwill and self-declaration, but on constraints and objective procedures for verification. (Continues…)Excerpted from The Hidden Wealth of Nations by Gabriel Zucman, Teresa Lavender Fagan. Copyright © 2015 The University of Chicago. Excerpted by permission of The University of Chicago Press. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site. Read more

Reviews from Amazon users which were colected at the time this book was published on the website:

⭐Tax havens represent one of the ugly by-products of capitalism. They are places where the super-rich (individuals and corporations) keep their money. They are kept in secret accounts so that they cannot be accounted for as part of the taxable income of the individual or corporation. The consequence is that the super-rich pay less taxes than others, and the burden of public expenditure falls on those others. The rich call it tax planning, but Zucman attempts to persuade the reader that keeping money in tax havens is unfair to those who do not have the money to do so. Recently, the International New York Times (23 October 2015) reported that the European Commission ordered Starbucks to pau up 30 million euros in back taxes to the Dutch government. Starbucks had channelled large amounts of profits from payments for its coffee roasting recipes. The payments were not made to Starbucks but to an entity known as Alki LLP, a ‘mysterious and opaque box’ that was not required to file financial statements and which has since shut, but ‘Alki was folded into a new company, Starbucks EMEA Holdings’ which has yet to file any financial statements, according to the INYT.In this book, Zucman shows how tax havens come about, where they are (Virgin Islands, Luxembourg, Switzerland among the main ones), who goes to them, and the inequality between the super-rich and the rest that results from placing money in tax havens. Zucman says that 55% of $650 billion ‘foreign profits’ of corporations is made in six countries with low or no taxes and where little or no production or sale is done to generate that money in those countries. He named the countries as ‘Netherlands, Bermuda, Luxembourg, Ireland, Singapore, and Switzerland’. He proposes three major actions to rectify this. First, he thinks that there should be an open register of financial wealth of every wealth-owning entity. Secondly, he calls for adequate sanctions against tax havens, and thirdly, he thinks that tax structures should be revamped. For example, not allowing profits to be accounted separately in different countries. Only when the world can see the true global profit and loss accounts of any given company, can the taxation be fair and equitable.A great deal has been packed into this slim 113-page book that is extremely thought provoking. It also calls into debate the age old issue of not penalising entrepreneurs so that their motivation to create greater wealth will be maintained. Is capitalism taking another knock?

⭐This short but potent book is virtually the first treatment of the scourge of offshore bank accounts. Zucman’s expose maybe read in one or two sittings but contains a wealth of information on an issue discussed but little understood.There is a good reason why his book is so short. There are not a lot of solid information about this area because the subject is, well, hidden. THis is a netherworld of offshore banking, where, in addition to “wealth management,” a euphemism Zucman deciphers as “tax evasion,” the hallmark of this type of banking is secrecy. The wealthy utilize offshore accounts for the express purpose of squirreling away cash and to avoid paying taxes. To hide these assets even further, Zucman reveals that if not holding the deposits of these super-rich, which include not only individuals but corporations and other business entities, these offshore banks will manage mutual fund accounts for their clients held by other off shore entities.Zucman includes the global multinational corporations as the other main participants of this phenomenon. The multinationals use a different tax dodge, typified in a recent news story concerning Apple. Apple created controversy when it was revealed the corporation paid little corporate tax in the US (!), because its profits had been transferred to Ireland, all apparently legal moves. Zucman classifies this as another example of “hidden wealth.”We all pay the price for this skullduggery. The countries that can need the tax revenues the most for infrastructure and domestic purposes are the most prominent victims of these offshore activities. Zucman conservatively estimates that up to one tenth of the world’s wealth are held in offshore accounts, while countries such as Russia have to fifty percent of their GDP in offshore account.The most famous of these offshore accounts are in Swiss banks. Other locations exist in Hong Kong, Singapore, Cayman Islands, the Bahamas, and other locales. Zucman debunks several myths concerning Swiss banks.Zucman shines a light on a particularly nefarious business practice. This is required reading.

⭐Zucman exposes the stark realities of tax avoidance around the World today, and makes clear the steps that will be necessary to prevent it.His conclusions are well justified with data, and complement the ideas of Piketty ( Capital in the Twenty-First Century ). Together they clearly lay out the mechanisms which are creating unsustainable levels of inequality across the World today, The use of offshore tax havens hides upto 8% of household wealth from legitimate taxes Worldwide, and upto 10% in Europe. Worse still the effects of tax avoidance impact most heavily on developing nations, where Zucman estimates upto 30% of their household wealth is held in offshore tax havens.If we want a better future for the global race we must demand international action now to put this right.

⭐Well written and persuasive but does the political will exist to attack the tax havens effectively.?The recent disclosures about Panama and South Dakota simply add fuel to the flames. The author makes a great point that Europe is robbing itself and the disproportionate influence of the smaller European states allows this to continue.Time to start with a blank piece of paper and rewrite the principles of taxation amongst the G20 countries and some harmonisation of rates would be a great start. Many good suggestions in this book to improve tax collections across the board and to reduce the ‘offshore wealth impact’.The Governments have a duty to act especially given the perilous nature of their own finances. Are the Politicians up to the task?

⭐a timely analysis of the scale and consequences of off-shore tax havens written in a style that can be understood by the average reader

⭐Interesting but quite a socialist mindset. Making money is not evil. Taxes are often excessive compared to the benefits to society due to bureaucracy at the government.

⭐Brillian ideas from the writer, good research and excellent writing. We will have to wait probably another few decades before any major changes will appear. I highly recommend it.

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