Costs of tax evasion/avoidance

According to The Hidden Wealth of Nations, a recent book by University of California, Berkeley economist Gabriel Zucman, the answer is that tax evasion costs governments approximately $200 billion per year.

Zucman also estimates that tax avoidance by U.S. corporations — which, unlike tax evasion, is generally carried out in the open and is technically legal — costs governments an additional $130 billion per year. (European and Asian corporations have the same incentives to avoid taxes, but there is not enough data to estimate its scale.) …

Zucman’s estimates on tax evasion and avoidance are straightforward.

First, he conservatively calculates that, as of 2014, at least $7.6 trillion of the world’s financial wealth — or about 8 percent of the world’s total financial wealth of $95.5 trillion — was “missing.”

His reasoning is that the world’s assets should be an exact mirror image of its liabilities, but are not. If the U.S. sells $1,000 in government bonds to a foreigner, that $1,000 liability for the U.S. should show up as $1,000 in assets for the foreigner’s country. However, countries’ national balance sheets record much more in liabilities than assets.

Here’s the Price Countries Pay for Tax Evasion Exposed in Panama Papers Jon Schwarz