Taxes

Tax-Haven Crackdown Proves a Bust, But Governments Plan To Try Again

People are better at hiding taxes than officials are at ferreting them out

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After the financial crisis—and the demands it placed on government balance sheets—a 2009 summit of the G20 economies decided to do something about the world's gigantic tax-avoidance problem. According to Britain's Tax Justice Network, at least $21 trillion and as much as $32 trillion of "unreported private wealth" is being held in tax havens worldwide. The summit launched more than 300 international treaties to force countries acting as tax havens to share information about cross-border bank activity. …

But when economists at the University of Copenhagen and the Paris School of Economics analyzed the results of the treaties (PDF) earlier this year, they found little change in the funds deposited in tax havens. Mostly, the illicit money flowed from European tax havens like Jersey, Luxembourg and Switzerland, which were more likely to sign new treaties, to tax havens that weren't, like Singapore, Hong Kong and the Cayman Islands. Some world historic effort.

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