Calling for New Global Rules, Economists Decry Financially Useless Tax Havens

Hundreds of top economists on Monday released a letter stating that tax havens hurt the global poor and have no economic justification, urging world leaders to abolish offshore secrecy.

“The existence of tax havens does not add to overall global wealth or well-being; they serve no useful economic purpose,” the letter reads. “Whilst these jurisdictions undoubtedly benefit some rich individuals and multinational corporations, this benefit is at the expense of others, and they therefore serve to increase inequality.”

Winnie Byanyima, executive director of Oxfam International, which helped organize the letter, warned that “millions of the world’s poorest people will continue to be the biggest victims of tax dodging until governments act together to tackle tax havens.”

The letter—signed by Capital in the Twenty-First Century author Thomas Piketty, economics Nobel Prize-winner Angus Dean, and Nora Lustig, professor of Latin American Economics at Tulane University, among others—comes just ahead of an anti-corruption summit set to begin this week in London, where UK Prime Minister David Cameron remains under public scrutiny for his own connection to offshore banking activities exposed in the Panama Papers leak last month.

The economists are demanding governments agree to new global rules that would require companies to publicly report taxable activities in every country where they operate.

“Tax havens do not just happen…..These havens are the deliberate choice of major governments, especially the United Kingdom and the United States, in partnership with major financial, accounting, and legal institutions that move the money,” said Jeff Sachs, another signatory and director of Columbia University’s Earth Institute.

The letter continues: “The secrecy provided by tax havens fuels corruption and undermines countries’ abilities to collect their fair share of taxes. While all countries are hit by tax dodging, poor countries are proportionately the biggest losers, missing out on at least $170 billion of taxes annually as a result.”