Review of Gabriel Zucman, The Hidden Wealth of Nations: The Scourge of Tax Havens (U. Chicago Press, 2015)
5 Pages Posted: 22 Sep 2015
Date Written: September 21, 2015
Abstract
Tax havens cost the world’s governments hundreds of billions of dollars a year, promote corruption, and undermine the rule of law. They are part of a larger worrisome pattern in which the world’s corporations outrun the governing capacity of states. A tax haven is a nation that refuses to cooperate with major countries in order to lure multinational corporations and investors to nominally book transactions in its locale. These transactions can be outright illegal, or borderline, but beyond the reach of legitimate tax authorities.
Gabriel 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.
Zucman makes three crucial contributions. First, he offers an absorbing account of how tax havens came into being in the period between the two world wars, and how they became much more important after exchange controls were relaxed in the 1980s. Second, Zucman delivers a far-reaching and rigorous quantitative evaluation of the scale and dynamics of tax havens in today’s global economy. And third, Zucman proposes remedies.
Keywords: tax havens, tax competition, tax evasion
JEL Classification: H26
Suggested Citation: Suggested Citation