Hidden Wealth of Nations
The Scourge of Tax Havens
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.
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.
Reviews
"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"
"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
"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
"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
"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
"One of the most thorough books on the topic" – Le Monde
