Financial Transparency Coalition

There is an old proverb that goes something like this: “one finger cannot lift a pebble.” And while reducing cross-border tax evasion is not like lifting pebble—it’s more like hauling a boulder—it is true that it cannot be achieved unilaterally. No single country can stop, stem, or slow offshore tax evasion by its own citizens without the help of at least one other nation. This is true by definition. Historically much of the bilateral cooperation on tax evasion has been less than amicable. That is changing. Increasingly, we are seeing that the cooperation in matters of tax between nations—particularly wealthy...

Under the standard economic theory of crime, compliance with laws is a mix of two important factors. One: the penalty that results if the offender is caught and 2: the probability of the offender getting caught in the first place. If the fine is proportional to the crime, but the probability of being caught is almost certain, few will risk it. In the same way, if the probability of being caught is low, but the penalty is very high, again few will risk it. Gary Becker—the libertarian economist who wrote Crime and Punishment: An Economic Approach, an...

The US Conference of Catholic Bishops submitted a letter to the G8 Heads of State on Tuesday, urging them to fight poverty by addressing tax evasion and financial transparency. It reads, "The G8’s emphasis on transparency is critical. Human dignity demands truth, and democracy requires transparency. With more and better information, civil societies, including faith-based organizations, can hold their governments accountable and help insure that resources reduce poverty and improve the health of the whole society."

There is a very important project in the new US budget proposal for financial year 2014 supported by the Obama administration. If this proposal is carried through into law (or regulation), the odds for a truly effective global system of automatic information exchange on tax data about the wealthiest citizens would dramatically increase. Alex Cobham has identified the issue (see here) and the original text of the proposal can be found on page 202, of this pdf document.