The biggest scandal in the Panama Papers leak, which revealed that political leaders around the world were hiding money in offshore accounts, isn't about corruption or organized crime.
The 11.5 million files stolen from the Panamanian law firm Mossack Fonseca revealed just how unequal the world is.
The economist Gabriel Zucman estimated in his 2015 book, The Hidden Wealth of Nations, that worldwide more than $7.5 trillion is squirreled away in offshore tax havens — 8 percent of the world's financial wealth. While some of it is properly declared to world governments, about 80 percent, or $6 trillion, is never taxed at all.
Zucman, an assistant professor of economics at the University of California Berkeley, argues that this tax avoidance worsens the vast global gap in wealth and income between the rich and the poor. Hiding vast sums of wealth from taxation makes it easier for the rich to stay rich and avoid tax policies meant to help the poor. Offshore accounts also make it harder for everyone else to get rich, because they're paying higher taxes to make up for the tax dollars the wealthy don't pay when they shelter their assets overseas.
"If we want to deal with rising inequality seriously, then we need to make these forms of tax dodging much, much more limited," Zucman told me in an interview.
We discussed how Zucman totaled up that $8 trillion number by solving a puzzling mystery in global economics, the disturbing lessons from the Panama Papers, and the drastic steps toward transparency Zucman argues are necessary in order to stop tax evasion.
The transcript of our conversation follows, edited and rearranged for length and clarity….Vox
A top expert on tax havens explains why the Panama Papers barely scratch the surface
Libby Nelson interviews Gabriel Zucman, an assistant professor of economics at the University of California Berkeley