The Hidden Wealth of Nations summary

You may have heard about the financial crisis in Greece, which had racked up $350 billion in public debt. That’s a disturbingly large sum. Even more disturbing, however, is the fact that, in 2014, $7.6 trillion of the world’s money was being kept in tax havens. In other words, eight percent of our global wealth was hidden away.

Thought hidden, we can nonetheless track this amount through recorded assets and liabilities.

If you’re wondering how these tax havens affect the world, take a look at Greece’s $350 billion debt and consider the fact that 4.5 percent of the nation’s wealth was being tucked away in foreign banks.

It is estimated that, in 2014, tax havens cost world economies an estimated $200 billion in revenue. Even though that figure represents around one percent of the world’s total government revenue, these losses still have enormous effects.

We’ve seen the damages that tax havens can cause. So what can be done? A number of initiatives have sprung up; unfortunately, however, most have been ineffective at best and complete failures at worst.

Essentially, most attempts at combating tax havens are simply not strong enough.

So where does the fight against tax havens go from here? Can nations learn from past mistakes as well as take cues from plans that show promise?

The author suggests a twofold plan of action.

While the measures enumerated in the previous blink would be big victories in the battle against personal tax evasion, preventing corporations from sheltering their money is another matter. Why is it so hard to do away with corporate tax evasion? Well, most of the time, it’s perfectly legal.

As a matter of fact, multinational corporations have a number of ways to avoid paying taxes.

The key message in this book:

On average, tax evasion costs global governments an estimated $200 billion per year. Approximately $7.6 trillion is being stored in offshore tax havens, accounting for eight percent of global household wealth. These practices harm society and add to increasing economic inequality. So far, initiatives to shut down tax havens have been unsuccessful, but nations could join forces and create effective and forceful measures and end the scourge of tax havens.