The Hidden Wealth of Nations: The Scourge of Tax Havens (2015) by Gabriel Zucman @gabriel_zucman
https://www.goodreads.com/book/show/25245967
“Main conclusion of my investigation is that, despite some progress in curtailing it in recent years, tax evasion is doing just fine. There has never been as much wealth in tax havens as today. On a global scale, 8% of the financial wealth of households is held in tax havens.” p3
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.
For a customer, the main reason to deposit securities in a Swiss bank is and always has been for tax evasion. p17
Figure 1: The wealth of Europeans in tax havens (% of the financial holdings of European households).
All graphs and data available at ⤵️
Majority of 🇨🇭 bank customers are Europeans, who control their assets through trusts & shell corporations domiciled in the British Virgin Islands 🇻🇬; same level of anonymity as in time of numbered accounts. Favorite investment is in 🇱🇺 funds, on which they pay absolutely no tax
Total amount of private offshore wealth reaches $7.6 trillion, $1.5 trillion in the form of more or less "dormant,” low-yield bank deposits, and $6.1 trillion invested in stocks, bonds, and mutual funds.
This equals a total of 8% of the global financial wealth of households.
Figure 4: The global cost of offshore tax evasion (2014). In 2014 fraud through unre- ported offshore accounts cost about $190 billion to governments around the world.
Offshore wealth and tax evasion: regional estimates (2014) (Europe and developing countries are hit particularly hard by offshore tax evasion.)
an important lesson: a partial fight against tax havens is actually counterproductive because it increases the incentive of the remaining havens not to cooperate; to be effective, a fight against tax evasion has to be truly global.
p61-62
FACTA teaches us important lesson: apparently, tax havens can be forced to cooperate if threatened with large-enough penalties (30% tax on dividend & interest in US)
(…)
But the more havens that agree to cooperate, the bigger the incentives for the remaining ones not to do so.
Financial secrecy -like greenhouse gas emissions- has a costly impact on the entire world, which tax havens choose to ignore. In economic lingo, it is a matter of negative externality.
Solution by economist Arthur Pigou: a tax equal to the losses incurred by foreign countries.
Today, without its financial industry, the Grand Duchy 🇱🇺 would be nothing
Transparency will cost 🇱🇺 a lot (at least 30% of the GDP), because the financial sector in Luxembourg literally lives off of the accounting manipulation of multinationals and the fraud of individuals p91
Plan of action:
🔹 sanctions against uncooperative territories
🔹 global financial register
🔹 global tax of 0.1% on wealth witheld at the source
primary advantage: a global tax at the source would greatly reduce the use of shell corporations, trusts, foundations, names-only, and all imaginable techniques for dissimulation. p101
To turn the page on large-scale fraud, the battle that must be fought is not just a battle between governments. It is above all a battle of citizens against the false inevitability of tax evasion and the impotence of nations.
p116
Oorspronkelijk getweet door Wilte Zijlstra (@wilte) op 23 maart 2023.
wilte 