La richesse cachée des nations - Enquête sur les paradis fiscaux

by Gabriel Zucman

Zurich, Hong Kong, les Bahamas, les îles Caïmans, le Luxembourg... Ces noms évocateurs dissimulent une sinistre réalité : la fraude fiscale d'une minorité d'ultra-riches au détriment de l'immense majorité. Grâce à une méthode inédite, l'auteur a pu évaluer l'ampleur du phénomène : 7 900 milliards d'euros, soit 8% du patrimoine financier des ménages, sont détenus dans les paradis fiscaux. C'est la première fois que les circuits de l'évasion sont ainsi disséqués en toute clarté, sur la base d'une enquête économique couvrant plus d'un siècle de données et les pays du monde entier. Mais ce livre ne se contente pas de chiffrer le scandale. Il propose aussi un plan d'action cohérent et réaliste pour lutter contre l'opacité financière : mettre en oeuvre des sanctions commerciales et élaborer un cadastre financier à l'échelle mondiale. Les paradis fiscaux sont au coeur de la crise économique et démocratique, mais les nations ont la possibilité de réagir : aucun territoire ne peut s'opposer à la volonté commune des Etats-Unis et des grands pays de l'Union européenne.

Genres: Economics, Nonfiction, Politics, Finance, Business, Law, Political Science

144 pages, Paperback

First published September 22, 2015

Reviews

[Mehrsa · Rating 4 out of 5]

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.

[Patrick F · Rating 5 out of 5]

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.

[Rashi Chandok · Rating 5 out of 5]

We are all aware of tax havens and the problems they pose to the global economy but if you are interested in finding the solutions to this phenomenon, then give this book by Gabriel Zucman a read. A short and informative book, it contains 3 things - a brief history of tax havens, the impact of financial opacity in today’s world economy, and a realistic course of action for change.

This is a very solution-oriented book on the issue of tax havens. With ample examples and relatable explanations, the book makes it very easy for the layman to grasp the issue at heart and understand the probable solutions which can improve this situation. I would recommend anyone with an interest in this topic to pick up this book for a well-informed read.

For a detailed review, visit - https://www.cmpltime.com/post/book-re...

[Meghan · Rating 3 out of 5]

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.

[Martin · Rating 5 out of 5]

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

[Bob Anderson · Rating 5 out of 5]

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.

[Tom Shannon · Rating 3 out of 5]

Although it was good to get a sense of the history of tax avoidance and how corporations and the rich could go through Luxembourg and Switzerland to pay less than they should, I still felt that the info was a bit dated. I read another book by him that was written four years later where he had already updated some of the stories from his first book, I guess I just read them in the wrong order.

[Siah · Rating 5 out of 5]

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.

[Amber · Rating 4 out of 5]

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.

[Nils · Rating 4 out of 5]

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.

[R.J. Gilmour · Rating 5 out of 5]

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.

[howl of minerva]

Nice review/summary from Cass Sunstein in the NYRB.

http://www.nybooks.com/articles/2016/...

[Laurent Michiels · Rating 5 out of 5]

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.

[Omar Ali · Rating 4 out of 5]

Decent book but outdated now

[Filipa · Rating 3 out of 5]

Sinto que precisava de ter mais uns conhecimentos de economia para acompanhar melhor o livro, mas mesmo assim percebi bem o ponto. É um livro qb antigo, nem quero imaginar o dinheiro que se perde para offshores nesta época de Bezos e Musks.

[Billie Pritchett · Rating 4 out of 5]

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.

[Gruia · Rating 5 out of 5]

Se citește ca un articol de ziar, scurt, clar și concis. Mecanismele eludării taxelor sunt foarte simple, iar demistificarea este binevenită. Rămâne în aer problema concurenței fiscale dintre națiuni, care trebuie să existe, însă în acest moment este puternic denaturată de existența paradisurilor fiscale.

Textul conține scăpări la editare, inclusiv de sens. Ajută că traducerea din franceză în română nu este deraiată de infuzia culturală a limbii engleze, rezultând o expunere mult mai naturală și precisă în limba română. Fondul latin și extragerile din franceză din vremea creării românei moderne se pretează mai facil translației. Așa se simte mai puțin lipsa de cultură de specialitate a traducătorilor, de cele mai multe ori studenți plătiți în semințe de floarea-soarelui.

[Dschreiber · Rating 5 out of 5]

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.”

[Nathan Rose · Rating 4 out of 5]

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.

[Harry Fox]

If you are keen to learn about the global class warfare that is taking place, but are intimidated by a tome like Piketty's 'Capital in the 21st Century', then this is a fantastic place to start. I would recommend most people to give this a go, because it is short, concise, well explained, and pretty uncontroversial: even if you don't want to get embroiled in the conversation about the rights and wrongs of inequality, that everyone should pay their tax within the spirit of the law is commonly agreed upon.

This book presents its data and theses in a very digestible way and outlines how the governments of today could solve the problems of tax evasion within a few years, in some places cutting the tax bill owed by 'normal' people by tens of percentage points. As the author points out in the conclusion, (forgive me for cutting from the text) "The profits go to Bermuda, but the factories do not... Europe is stealing from itself."

What remains to ask of a 13 year-old book which outlines concrete, technically feasible solutions to a problem which hurts all of us and could be solved tomorrow? Why do our governments continue to allow the super-rich and multinational coorportations to get away with tax evasion into the mid-2020s?

[Emma · Rating 5 out of 5]

The Hidden Wealth of Nations: The Scourge of Tax Havens was a very concise, well-reasoned look at the structures that allow tax havens to exist and what should be done to reform them. I appreciated that Zucman's arguments are structured in such a way that even as a non-economist, they were easy to follow. The Hidden Wealth of Nations was an incredibly interesting read and I'm looking forward to reading more of Zucman's work.

[Jaden Block · Rating 5 out of 5]

Succinct and convincing book about tax havens, tax evasion, and the importance of international cooperation.

[madzia :P · Rating 4 out of 5]

zgadzam sie z innymi, dane troche out dated, i tez wszystko troche oczywiste, ale ciesze sie ze przeczytalam

[Laura · Rating 3 out of 5]

Très intéressant mais assez dense et compliqué je trouve pour quelqu’un qui s’y connaît pas ou peu

[Elliot Scott · Rating 4 out of 5]

A very interesting take on tax havens and attempt to quantify lost revenue for global tax authorities using the most reliable data available to the author (mostly SNB reports). Some in the industry would say that lost revenue to governments is revenue gained for other actors in the world economy …

Could do with the other perspective - but I guess there are other books for that! Up next…

[Pedro L. Fragoso · Rating 5 out of 5]

“If you are interested in inequality, global justice, and the future of democracy, then you should definitely read this book. The Hidden Wealth of Nations by Gabriel Zucman is probably the best book that has ever been written on tax havens and what we can do about them. It is nontechnical and lively, and it achieves three different goals in a very concise and efficient manner.” (From the Foreword by Thomas Piketty.)

This is an exceptionally concise, impeccably structured, and brilliantly reasoned piece of intellectual excellence—a seminal work, if ever there was one. Admittedly, it took me nearly ten years to finally tackle it, which is rather embarrassing, considering that reading it is mandatory.

The Missing Wealth of Nations: “On the basis of a real return of 5% and taking into account the tax rates in countries around the world, tax evasion on the investment income earned on offshore accounts reached $125 billion in 2014. I am adding to this figure two other forms of wealth-related evasion: tax fraud on inheritances and on the stock of wealth. Around 3% of the assets held in tax havens changes hands each year, and these large estates should on average be taxed at a rate of 32% (with important variations among countries, some having completely given up taxing inheritances). Thus there is the substantial loss of $55 billion per year. Some countries do have annual wealth taxes—such as the solidarity tax on wealth in France—and thus undergo a third loss (on the order of $10 billion). In total, due to tax havens, the loss to government coffers rises to $190 billion per year. These costs, calculated on the basis of conservative hypotheses, include only one type of fraud, that on wealth and the income that wealth generates. A part of the money that lands in Switzerland and elsewhere comes from activities that are themselves not declared—black-market work, drug trafficking, bribes, false billing, and others. I do not factor in the losses caused by these activities and focus only on those that come out of the dissimulation of wealth, even though the two types of losses cannot be dissociated: the certainty of being able to hide the profits of their crime can only encourage criminals.”

One of the unexpectedly effective things Zucman does is to name the criminals and fraudsters for what they are—namely, much of the ultra-wealthy, alongside banks, financial institutions, and even certain countries (or “countries,” as he pointedly fashions places like Luxembourg), which have been transformed into “platforms” for helping to hide wealth. He also excels at explaining that this concealment of wealth is, in fact, a problem that could be swiftly resolved—if only there were the political will to do so. But that will is absent, of course, precisely because the mechanisms of power have been captured by the very same rich and powerful interests.

“Collecting more tax is certainty not a goal in itself, especially in countries like France, where taxes are already high. If the struggle against fraud is essential, it is because it would make it possible to lower the tax that is imposed on the vast majority of taxpayers—those who do not have wealth to hide and benefit little or not at all by tax loopholes—and would contribute to reestablishing the balance of public finances, with the added benefits of more growth and social justice. This issue is again particularly relevant for Europe, where many countries are entrapped in the spiral of austerity. Growth has tended to be anemic since the financial crisis of 2008–9, pushing the ratio of public debt to GDP up; in response, governments have tended to slash spending, which has depressed demand, further reducing growth and increasing debt. Battling offshore tax havens would help reverse this deadly spiral. Greece wouldn’t have to impose as much austerity on its citizens to satisfy the demands of European authorities if the government could bring its elites to heel. France would have more leeway to stimulate its economy without upsetting the Germans. Imagine, for instance, that French hidden wealth suddenly becomes taxable. Any form of amnesty for defrauders would be out of the question, as it would be unacceptable for the law not to be applied to the rich and powerful. Ideally, the tax authority should treat each case on its own merits, establish fines according to legislation (in function of the amount of tax owed, the duration of the fraud, et cetera) and carry out any necessary legal actions. In many cases, this might result in total levies (past taxes owed, penalties, fines) of 100% or close to 100% of the total amount of wealth previously hidden. Spain has recently adopted a law applying sanctions potentially even higher than 100% of hidden assets—in addition to losing their accounts, the defrauders could have their house seized, for example.”

What to Do?: “Imposing trade tariffs on uncooperative tax havens is well-founded in economic reasoning. Each year financial secrecy—the lack of effective exchange of information between offshore banks and foreign authorities—deprives governments around the world of about $200 billion. It’s important to understand that we’re not talking about tax competition, but of theft pure and simple: Switzerland, Luxembourg, or the Cayman Islands offer some taxpayers who wish to do so the possibility of stealing from their governments. It is their choice, but there is no reason that the United States, Europe, or developing countries should pay the price for it. 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. (…) In any event, there is no progress possible without specific threats. The great majority of Swiss citizens and Swiss companies have nothing to lose with full financial transparency and would certainly prefer that offshore tax evasion disappears rather than see their country regularly singled out. But bankers have a political influence that far exceeds their true economic weight, so that, without threats of reprisals, there is good reason to fear that they will succeed in maintaining a form of status quo—for instance, abandoning a portion of their clientele, those who do not have the means to hide assets in trusts, while at the same time concentrating on the greatest wealth. (…) The trade of sovereignty knows no limits. Everything is bought; everything is negotiable. It has attracted thousands of investment funds, the holdings of multinational groups, shell companies, and private banks. The installation of companies, in turn, has brought workers in finance, auditing, and consulting. There are currently more than 150,000 people who cross the border twice every day, half from France, a quarter each from Belgium and Germany. Luxembourg is not the only country that has sold its sovereignty, far from it. Many microstates have given in to the temptation.”

Punishment and Control: “Now that we have analyzed the first element in a plan of action—sanctions against uncooperative territories—let’s look at the second, the creation of tools for verification. When tax havens agree to cooperate, how can we ensure that they do so in practice? (…) The primary objective, and one of the central propositions formulated in this book, is to create a global financial register. Quite simply, it would be a register recording who owns all the financial securities in circulation, stocks, bonds, and shares of mutual funds throughout the world. A register of this type is useful because it would enable tax authorities to check that banks, onshore and above all offshore, are in fact transmitting all of the data they have available. Without a register of this type, Swiss bankers will always be able to claim that they don’t have any US or UK clients and can continue to communicate very little information to the IRS or HMRC. That is what history teaches us: from the large-scale falsification of bank documents by Swiss establishments in 1945, to the fiasco of the savings tax directive and of the “qualified intermediary” program in the United States, everything points to the need for verification tools that do not exclusively rely on the goodwill of offshore bankers. Without concrete ways to verify that bankers duly transmit the information they have about their customers, wealthy tax dodgers may be able to hide in all impunity an ever-rising portion of their wealth. But the goal of the register extends beyond curbing tax evasion: a better accounting of wealth—not only real assets but also financial claims—would do much good in the fight against money laundering, bribery, and the financing of terrorism, and it would help better monitor financial stability. A financial register is a concrete embodiment of the notion of financial transparency. (…) A global financial register is in no way utopian, because similar registers already exist—but they are scattered and under the management of private companies. The goal is to combine them in order to create a global register that is used for the public good. (…) Finally, a coordinated global tax at the source, combined with the financial register described above, would give states that want it the possibility of creating their own tax on wealth, with a wide base and at a progressive rate, without having to fear evasion. In many countries, it is precisely such fears that in the last few years have led to the elimination of the existing taxes on wealth. But this doesn’t have to be the case: nations can recover the sovereignty that has been stolen from them, and they can act against the rise of inequality if they wish.”

The Tax Avoidance of Multinational Corporations: “The reason for the current failure is that the corporate tax is based on a fiction, the idea that one can establish the profits earned by each multinational subsidiary by subsidiary. But this fiction is no longer tenable today, because multinational groups, advised by great auditing and consulting firms, are in practice free to move their profits wherever they want, which is usually wherever it is taxed the least; and large countries have themselves mostly given up taxing the profits booked outside of their territory.”

Conclusion. Written by me: Ultimately, I’m grudgingly convinced. I do have a problem with all these shackles, which is the extinguishing of liberty in the World. The compliance of financial institutions on the less rich and the less powerful become ever more burdensome and the lack of privacy subjects people to increasingly unbearable consequences, namely because of political nonconformity, even in the context of supposedly democracies (try to say that Palestinians should have the same human rights than anybody else in contemporary German, US or the UK, among other Western countries… and see what happens). So, it is my fear that the ultimate price society will pay for the transparency necessary to catch the hidden wealth of the ultra-wealthy and multinational corporations will be truly unbearable, and they will manage to gain from it and continue to evade the law and accountability. But the alternative is also unbearable. This book is one decade older already and if anything, the wealth of nations gets ever more pilfered and hidden. The election of Donald Trump in the United States has been disastrous in this regard, with billionaires taking control as never before. This is among the most serious problems we face as a civilization, there are no easy solutions, probably there are no ultimate solutions at all, but something needs to be done about the current state of affairs. No good news.

Conclusion. Variation 1of2 (AI revision/edition): Ultimately, I find myself grudgingly convinced. Still, I can't ignore the troubling implications of these measures—the slow suffocation of individual liberty worldwide. For ordinary people, particularly those without great wealth or power, compliance demands grow ever more oppressive, while the erosion of privacy exposes them to increasingly harsh consequences, especially for political nonconformity—even within so-called democracies. (Just try stating that Palestinians deserve the same human rights as anyone else in present-day Germany, the US, or the UK, among other Western countries, and witness the fallout.) My deepest fear is that the price society will pay for the transparency required to expose the hidden fortunes of the ultra-wealthy and multinational corporations will ultimately prove unbearable—and that, in the end, these same elites will find ways to benefit from the system, evading both law and accountability as they always have. Yet the alternative is no less unbearable. This book is already a decade old, and if anything, the looting and concealment of national wealth has only worsened. The election of Donald Trump in the United States marked a particularly disastrous turning point, ushering in an era of billionaire dominance like never before. This is one of the gravest challenges facing civilization today. There are no easy answers—perhaps no definitive solutions at all—but the current state of affairs demands action. There is, alas, little cause for optimism.

Conclusion. Variation 2of2 (AI revision/edition): Ultimately, I am grudgingly convinced. And yet, the cost of these measures haunts—the slow, relentless suffocation of what little remains of personal freedom in the world. For those without vast fortunes or influence, the burden of compliance grows heavier by the year, while privacy disintegrates, leaving individuals increasingly exposed to brutal consequences for political nonconformity—even within the hollowed shells of so-called democracies. (Say aloud that Palestinians deserve the same human rights as anyone else in today’s Germany, the US, or the UK, and watch how quickly the mask slips.) What I fear most is that the demand for transparency, ostensibly to corner the wealth of the ultra-rich and multinational powers, will end by crushing everyone else instead. The powerful will adapt, as they always do. They will slip through the cracks they helped design, thriving as the rest are suffocated by the machinery meant to restrain them. And yet the alternative is just as intolerable. A decade has passed since this book was published, and the plunder has only accelerated. The election of Donald Trump in the United States was not an aberration but a milestone—the open handover of the state to billionaires and their enablers. This is no longer just a crisis. It is a slow collapse. There are no solutions—at least none that promise deliverance. But to do nothing is to surrender entirely. In the end, there is no good news. Only the bleak certainty that the worst is still ahead.

[Amir Hassan · Rating 5 out of 5]

A concise description of how tax havens deprive countries of their taxes, and practical approaches on how to solve the problem

[Andrew · Rating 3 out of 5]

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.

[Helen · Rating 3 out of 5]

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.

[Laurent Franckx · Rating 4 out of 5]

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.