Home Bookend - Where reading meets review The Hidden Wealth of Nations: The Scourge of Tax Havens by Gabriel Zucman, Teresa Lavender Fagan (Translation), Thomas Piketty (Foreword)

The Hidden Wealth of Nations: The Scourge of Tax Havens by Gabriel Zucman, Teresa Lavender Fagan (Translation), Thomas Piketty (Foreword)

by Venky


Gabriel Zucman issues a timely wake up call for policy makers, corporate chieftains and politicians alike to remedy the devious practice of employing tax havens and offshore financing hubs, that not only aid and abet tax evasion, but also destroy the very rubric of economic stability. While there might be a complete absence of moral compass characterising the funneling of funds from high tax paying jurisdictions to low or non existent tax shelters located in exotic locales across the globe, the ramifications of such tax planning activities are real.

With the help of published data and reasonable estimates, Zuckman pegs the total wealth stashed away in off shore tax heavens at 8% of the total global financial wealth, a percentage that translates into a whopping sum of US$7.6 trillion. These funds if subjected to the appropriate amount of taxes would have yielded revenues to the tune of US$200 billion. Zucman in particular concentrates on two tried and tested centers for storing laundered money; the Swiss banks operating with impunity in the jurisdiction of Switzerland, and the Grand Duchy of Luxembourg, a country whose size is tangentially non-linear to the role played by it as a custodian of funds that have escaped the legitimate ambit of taxation. This fact is corroborated by the recent sensation caused by the “Lux Leaks” episode where hundreds of schemes offered by the Government of Luxembourg to enable companies evade taxation was brought to light, courtesy two whistle blowers from Pricewaterhouse Coopers, one of the “Big 4” accounting and consulting firms which was responsible for constructing such schemes at the outset.

After identifying the perils of tax evasion, Zucman proposes a set of workable solutions to stem the rot of money laundering. These measures are punitive as well as radical. Imposing a tariff of 30% on all imports from Switzerland, mulling the possibility of ceding Luxembourg from the European Union and the maintenance of a Global Registry that records the ownership of every stock and bond are some of the measures advocated in the book to anhilate the scourge of tax havens. These measures would supplement the already existing means such as the FATCA compliance instituted by the Obama Administration and the Base Erosion Profit Shifting (“BEPS”) Charter formulated by the OECD.

The scourge of tax havens is very real and extensively damaging. Politicians across the globe would do well to read this wonderful albeit small book by Gabriel Zucman which would greatly assist them in their endeavour to combat the erosion of tax base and the blatant shifting of profits.

“The Hidden Wealth of Nations..” – Beware Google; Watch out Apple; and Be very afraid Starbucks!

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