Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens Paperback – September 4, 2012

Before I get into my review, I wanted to point out that for someone without a lot of financial knowledge, this could be a very difficult book to read. I have a college degree in accounting, did some graduate work in tax, and worked for one of the big four accounting firms for a year in their international tax consulting department. I quit working for them and left the field entirely after I realized in vague generalities what they were doing, which was one of the reasons I was so interested in this book. The international system Shaxson describes coincides perfectly with what I saw in the accounting firm I worked for, and some of the specific techniques he describes correspond exactly to the tax structures I used to see discussed in trainings and other meetings. Given that background, I found this book incredibly engrossing and informative, but if you have low financial literacy, you may have a tough time with it. However, it is incredibly well written, uses a minimum of jargon, and tries its hardest to break down complex tax and financial concepts into lay terms.Treasure Islands does a really incredible job in shedding light on an arcane, complex international financial system that has evolved mainly over the past 100 years. Like most people, when I heard the term tax haven, I would think of a few rogue Caribbean islands who helped a few rich people and crime lords launder money or hide it from taxation. Shaxson turns that conception on its head. While the term tax haven sounds like it specifically refers to taxes, Shaxon defines it more broadly: "Tax havens can be loosely described as a jurisdiction that seeks to attract money by offering politically stable facilities to help people or business entities get around the laws, rules, and regulations of jurisdictions elsewhere."Using that definition, Shaxson aggregates the international network of such jurisdictions under the label "the offshore system". In this book, he investigates the three main components of the offshore system, which may surprise you. While the small island states are integral fortifications of the offshore system, the main poles are actually the United States, London, and a grouping of states in continental Europe (mainly Luxembourg, Switzerland, Lichtenstein, and the Netherlands). Considering that about one half of world trade passes through tax havens, they are integral to the current global system. Also, while terrorists and crime lords are significant users of the offshore system, the primary beneficiary and architect is the financial services industry. The bankers on Wall Street and in London have constructed a system to help them undermine democracy, drastically boost profits, destabilize the global markets, shape international regulation to their liking, and evade taxes, and this very same infrastructure enables the financing of international terrorism, corrupt third world rulers, and greatly facilitates the illegal drug trade. One key takeaway from the book is that all of these phenomena have their roots in the same underlying financial network, and none of them can be addressed without confronting the offshore system.The main services that tax havens provides are secrecy, tax evasion, and freedom from unwanted regulation. A very important consequence of such a system is the creation of a race to the bottom in terms of regulatory environments. Shaxson examines this process both in the United States and internationally. While the US is an international tax haven (offering secrecy to foreign donors, allowing banks to accept proceeds from criminal activities as long as they were committed abroad, offering tax breaks to foreign investors), there is also a tax haven network at the state level. States such as South Dakota and Delaware, in an effort to attract corporations to incorporate in their states, abolished interest rate caps, giving birth to the credit card industry in the 80s. Delaware also has a long history of offering the most permissive rules of corporate governance, giving maximum power to corporate managers. Barack Obama criticized the Caymans, where he alleged that there was a building where 12,000 corporations supposedly had business offices. Well, there is an office building in Delaware with about 219,000.Internationally, the offshore system allows banks to exercise this deregulatory leverage at the national level. The city of London, which has long maintained an extremely lax regulatory environment for fascinating historical reasons detailed in the book, began attracting massive amounts of business from US banks chafing under the Bretton Woods system of capital controls and Glass Steagall regulations separating commercial and investment banking. London had no such controls, so US banks were able to begin doing business there and use the threat to relocate to London to eventually force the US to deregulate in the late 90s and 2000s. As we know, this was a crucial development in setting the stage for the financial crisis of 2008. In addition, the unregulated markets that were based in London allowed banks to set up investment vehicles that were free of reserve requirements, allowing them to issue massive amounts of debt.A final theme discussed in the book is the devastating effects of the offshore system on poor countries. For every one dollar of foreign aid that has flowed into developing countries over the past 30 or so years, TEN dollars have left the country and into the offshore system, building the portfolios and secret accounts of corrupt ruling elites. The offshore system creates a neocolonial dynamic where western countries back corrupt leaders and their allies, and provide the international financial infrastructure for these corrupt elites to steal their country's wealth and hide it abroad, free of tax. As pernicious as that is, the real consequence to that is that poor populations are saddled with the debt (the proceeds of which the rulers stole), which then of course requires the IMF to come in and radically undermine democracy by imposing harsh structual adjustment programs that mainly benefit rich investor countries and cause great pain to average people.In summary, this book details the most important aspect of the global economy that you probably never knew existed. If you are interested in understanding poverty, inequality, development economics, international terrorism and the drug trade, and how corporations have amassed such great political power, you are missing a huge piece of the puzzle if you don't read Shaxson's epic work.

I didn't find the message of this book particularly difficult to understand as one previous reviewer mentioned, but I do agree with them in that Nicholas Shaxson has made a topic accessible even though it is often considered "too complicated" to seriously examine. The average person probably has a sense that the whole tax system is unfair, but what is often rendered obfuscating are the taxes applied to corporations and the "offshoring" system that has distorted the deregulation of the world economy. What Shaxson does so well is to tie together the concepts of national taxing power, offshore tax havens, a mini-history of tax regulation and corporate tax/profit strategies into a relatively visible whole. It is not a pretty picture.Although I think that this book has a political agenda(His organizatin, the Tax Justice Network is intimately involved in changing the status of tax havens), that is exactly what I find redeeming about his book. This topic rarely gets seen enough through normal political channels and is usually dismissed as too arcane or boring to look at more closely. Shaxson dismisses this notion and passionately argues how the whole system could be transformed through better global cooperation. More democratically agreed upon tax laws and accountability are at the top of the agenda. The "race to the bottom" for the least taxes and regulation are led by offshore havens such as Jersey and the Caymans, US States such as Delaware and South Dakota, and to the ultimate onshore that has become offshore within London itself, the Corporation of London or "The City" as it is often known. The author, born in one of the world's ultimate tax havens for years, Africa, does not like the system he has seen develop there and hopes to prevent the rest of the world from becoming more like that. His country of birth, Malawi, is still one of the poorest countries in the world.I didn't read this book from an academic perspective (ie needing to understand the details about everything inside), but I think I understand enough about how the system works to have a more informed discussion with others and to better understand events in the news as I see them unfolding. This is the kind of book that everyone should be reading, talking about and acting upon. Organizations like the Tax Justice Network and Global Witness provide guidance for future action. Indexes like the Global Financial Integrity Index (measuring corruption) provide a more sobering view of developed countries system of politics than the standard tables (usually providing a broad separation between developed and developing countries when it comes to corruption). This index provides a more holistic view of the how corruption happens, taking into account the effects of unaccountable capital flows, their beneficiaries and the places that make them go. Proposed law amendments such as the White House Interstate Lending Amendment provide an issue to rally around as well as a direction to keep looking, regardless of the comprises that are made in the meantime.It is a fine book in my estimation and perhaps one of the most important to be written since the 2008 financial crisis has shown the widening cracks in the global financial system that ties together our fragile global economy.

This 260 page book is a description of Offshore Tax Havens, based on the author's extensive investigations on behalf of The Tax Justice Network (an expert-led investigative group focused on the international harmful impacts of tax avoidance, tax competition and tax havens). This book proves that the City of London is the originator and still the center of the world's offshore banking: co-ordinating tax avoidance and money-laundering activities on a global scale. The author describes How and Why this major change happened and the key role this played in the recent Financial Crises. These new banking arrangements have facilitated both crime and the viability of nation states around the world. Not only have they lowered the standard of living of most working people in the developed countries but they have deepened the poverty of undeveloped countries. This book details a level of corruption that spans the world of international banking to an almost incredible degree.There seems to have arisen an implicit professional conspiracy involving lawyers, bankers and accountants, due to a common attitude of greed and selfishness. Offshore Banking is the last refuge of the medieval aristocrats, who believe only they deserve any real rewards. Few experts, including most economists, are unaware of the methods and negative impacts of offshore banking. The author's recommendations are repeated because this tragic situation is fixable: but it will need political will. This review helps to expose these criminal activities to a wider audience to hopefully end this world-wide EVIL. Many readers will try to skip reading this review, believing one must be an economist or accountant to understand or such international banking activities do not impact them. They are wrong on both counts, both the book (and this review are written for the general reader) because these activities are so global that they impact everyone on the planet, as the recent crises demonstrated.

Very thoroughly detailed book that delves deep into the tax havens and the offshore system in general. Some very interesting characters brought into light. The last couple chapters of the book for me was a bit dry, not because of the content (which is phenomenal), but due to the dry nature of factual evidence after reading it repeatedly over time. It’s an amazing book and a must read in order to know more about the way the world works. For further visual representation of the what the book is focusing upon, one can watch the laundromat on Netflix.

This book is about people buying things which makes Mr Shaxson uneasy. People buy citizenship, residency, secrecy and even entire sovereign states [p.45] for nefarious purposes. Where we all live has, to them, become merely a 'country of convenience' much like a flag of convenience is to a ship. What was once the preserve of only ruling families and ancient dynasties - is now available to a new larger international financial aristocracy. Kleptocrats and Plutocrats of the world need somewhere to stash the cash, get the best schools for their children and good air links to the rest of the world. There is nothing new about any of this but as the world gets wealthier and smaller - the international financial aristocracy has more and more money to protect and preserve & these new people come into contact with local populations who get to glimpse a fairy tale tax-free jet set world which, to them, is almost unimaginable. I have two friends who live like this and have chosen to live in London - one an Arab, the other a Russian. So I have no doubt that this book is all true and totally fascinating.My view would be that these people, although they don't pay much tax like you or I, spend a fortune on homes, education, fancy cars, going out, household staff etc etc They DO contribute considerably to the country of convenience. This is why countries compete to attract these people much like some families compete to host wealthy international students. I think the author needs to relax about things - the world has never been different and to pretend it has - is to be a bit of a silly schoolboy.I am enjoying the book but the evasion of corporate tax is important. Corporations give people stable jobs. They collect income taxes and sales taxes at no charge to society. That is a miracle. They also pay business rates & give to charity. Companies should not have to pay any more taxes so I am glad to see they use transfer pricing. The assumption that the state has an unlimited claim on the profits of a private company is essentially how dictatorships are governed; North Korea, Nazi Germany, China, Russia, Narco-states etc etc. I think we should be relieved that The City's spider web remains the no.1 place for laundering dirty money - at least British intelligence will have some chance of seeing what is coming if it can rummage through the laundry bins on Grand Cayman. I look forward to reading more of the book and developing my view of it - at the moment the underlying premise seems a little naive but it is superbly written so I am giving Mr S a fair hearing & I do believe the Kleptocrats who buy London properties should be told to leave the UK and the money form the sale of their homes returned to their countries of origin. The offshore world should remain offshore - The City has meant an overvalued pound for many years - we'd be better off without it. Its effects are pernicious - you have essentially leased out London as a playground for the international elite - there are very few British people who can afford to live in London nowadays.

C'est impressionnant! les paradis fiscaux comme vous ne les avez jamais imaginés! ou comment on vole les états, on spolie le citoyen, et on fait exploser les dettes.Faisons un rêve, imaginons qu'il n'y ait plus de paradis fiscaux, plus de dettes, des états plus riches, des services publiques des vrais....

The content is great. The author is great. And the book is great.The only flaw is the style is very heavy. The author makes a big mess by moments making it a bit tedious. That's why i don't give it 5 stars. Because of the structure within each chapter. The general structure of the book is very well worked.Apart from that, the content, the research and the explanations are excellent. Awsome. If you really want to know about the offshore industry, and the purposes its serves... nothing compare to this book.