Tax Havens

50 Things That Made the Modern Economy

BBC

Business

4.8 • 2.6K Ratings

🗓️ 17 June 2017

⏱️ 9 minutes

🔗️ Recording | iTunes | RSS

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Summary

The economist Gabriel Zucman is the inventor of an ingenious way to estimate the amount of wealth hidden in the offshore banking system. In theory, if you add up the assets and liabilities reported by every global financial centre, the books should balance. But they don’t. Each individual centre tends to report more liabilities than assets. Zucman crunched the numbers and found that, globally, total liabilities were eight percent higher than total assets. That suggests at least eight percent of the world’s wealth is illegally unreported. Other methods have come up with even higher estimates. As Tim Harford explains, that makes the tax haven a very significant feature of the modern economy. Editors: Richard Knight and Richard Vadon Producer: Ben Crighton (Image: Huts along tropical beach, Credit: DonLand/Shutterstock)

Transcript

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0:00.0	50 Things That Made The Modern Economy With Tim Harford
0:19.8	Would you like to pay less tax?
0:22.2	One way is to make a sandwich, specifically a double Irish Dutch sandwich.
0:27.5	You set up a company in Bermuda and sell it your intellectual property.
0:32.8	Then it sets up a subsidiary in Ireland.
0:35.4	Now set up another company in Ireland.
0:37.3	It builds your European operations for amounts resembling their profits.
0:40.9	Now, starter company in the Netherlands have your second Irish company
0:44.3	send money to your Dutch company which immediately sends it back to your first Irish company.
0:47.9	You know, the one headquartered in Bermuda.
0:50.8	Are you bored and confused yet?
0:53.9	If so, that's part of the point.
0:56.0	Tax havens depend on making it at best very difficult to get your head around financial flows
1:01.8	at worst impossible to find out any facts.
1:07.0	Accounting techniques that make your brain hurt enable multinational such as Google, eBay
1:12.0	and IKEA to minimise their tax bills completely legally.
1:16.8	You can see why people get upset about this.
1:19.1	Taxes are a bit like membership fees for a club.
1:21.7	It feels unfair to dodge the fees but still expect to benefit from the services the club provides its members,
1:28.2	defence, police, roads, sewers, education and so on.
1:33.4	But tax havens haven't always had such a bad image.
1:36.7	Sometimes they functioned like any other safe haven,
	...

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