Academic journal article Journal of International Affairs

Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens

Academic journal article Journal of International Affairs

Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens

Article excerpt

TREASURE ISLANDS: UNCOVERING THE DAMAGE OF OFFSHORE BANKING AND TAX HAVENS

Nicholas Shaxson

(London: The Bodely Head, 2011), 329 pages.

For decades, criminals of all stripes--from gunrunners to money launderers--have stashed their accounting books in a murky, global, offshore library. For example, mob boss Meyer Lansky used banks in Switzerland, Cuba, and the Bahamas to hide mafia money. The Colombian Medellin cartel used the Cayman Islands' confidentiality rules to protect its cocaine trade. Such offshore sandboxes are preferred by wealthy elites and even some too-big-to-fail banks for similar reasons: low taxes and strong secrecy rights. Treasure Islands, Nicholas Shaxson's readable take on the offshore financial network, takes a broad lens to dubious tax evasion and the associated public complacency. It also stops to occasionally acknowledge the advantages that a half century of international deregulation has handed to contemporary transnational criminals.

Shaxson, who was formerly with the Economist and Thomson Reuters, argues that international tax competition fosters a race to lower tax brackets, where the wealthy pay less and the poor are left to manage society's tab. But set aside for a moment the offshore system's less obvious externalities, such as the erosion of public trust in government or its role in the draining of Africa's natural resource wealth. Consider instead the more stereotypical types of organized crime highlighted by the Palermo Convention: drug trafficking, money laundering, arms trade, human trafficking, or the trade in endangered species. …

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