Tax havens, banking secrecy, evade tax, OECD Organisation for Economic Cooperation and Development, FACTA Foreign Account Tax Compliance Act, CRS Common Reporting Standard, financing of terrorism, financial security, banking transparency
Gabriel Zucman's The Missing Wealth of Nations is built around the solution to the following empirical puzzle: official statistics show that, at the global level, national liabilities exceed assets. In theory, it should not be possible, as a liability recorded in one place must be equalled by an asset recorded in another. Zucman explains that this gap is an illusion created by the activities of tax havens and countries with strict bank secrecy rules, such as Switzerland or Luxembourg. He uses the inconsistency to estimate that $7.6 trillion are held offshore.
[...] These are shares in a publicly-traded company in which a small group of shareholders control the majority of the shares and are not traded on an open market. The Reserve simply computes their value by subtracting 25% to a company's self-reported data (Conor, 2016). However, as Zucman explains, the goal of the paper is not to provide an exact figure, rather a sense of the magnitude at stake. IV. Political Implications for the United States - Joining the OECD's Common Reporting Standard (CRS) In 2010 the U.S. [...]
[...] However, the U.S. is not one of them. The rationale behind this choice was that FATCA and CRS achieve the same purpose. However, under CRS tax information flows are reciprocal whereas, under FATCA, the IRS only receives information but does not provide it to foreign institutions. Other countries comply with FATCA because the U.S. Treasury Department withholds a 30% tax on U.S. source income for financial institutions which do not comply. As more and more countries join CRS and FATCA, the U.S. [...]
[...] As a matter of accounting, this would mean that there would need to have been an offsetting error in the current account deficit. Zucman implies that this error could come from the U.S. underestimating its exports and thus overestimating its trade and current account deficits. This assumption can be tested by examining whether other governments are reporting substantially different import values from the U.S. than the export values the U.S. reports to those countries. However, for the years 2001-2008, studied by Zucman, the Global Trade Atlas database does not report significant discrepancies between the U.S. [...]
[...] The Missing Wealth of Nations - Gabriel Zucman (2013) - The magnitude of the hidden offshore wealth Executive summary Published in 2013, the article The Missing Wealth of Nations, estimates unreported wealth by individuals hidden in offshore tax havens at roughly $7.6 trillion, or of the world's financial wealth. These findings underscore the importance of multilateral initiative in the fight against individual tax evasion via offshore tax havens. Banking transparency policies are successful in reducing tax evasion and mitigating its socio-political consequences. [...]
[...] London: Palgrave Macmillan. "Towards Global Tax Cooperation report to the 2000 ministerial council meeting and recommendation by the committee on fiscal affairs", Oecd.Org https://www.oecd.org/ctp/harmful/2090192.pdf. Accessed 29 Mar 2021. "Transparency and Tax Evasion: Evidence from the Foreign Account Tax Compliance Act (FATCA)." Wouter Lips Great powers in global tax governance: a comparison of the US role in the CRS and BEPS, Globalizations, (2019), 16:1, 104-119, DOI: 10.1080/14747731.2018.1496558 Zucman Gabriel, et al. The Hidden Wealth of Nations: The Scourge of Tax Havens. [...]
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