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Cost of Tax Havens

Tax havens collectively cost governments between $500 billion and $600 billion a year in lost corporate tax revenue, through legal and not-so-legal means. Of that lost revenue, low-income economies account for some $200 billion—a larger hit as a percentage of GDP than advanced economies and more than the $150 billion or so they receive each year in foreign development assistance. Financial flows seeking secrecy or fleeing corporate taxes seem likely to be exactly the kind that exacerbates the finance curse, worsening inequality, increasing vulnerability to crises, and dealing unquantifiable political damage as secrecy-shrouded capital infiltrates Western political systems. And as financial capital flows from poorer countries to rich-world tax havens, labour migration will follow, and these countries are left economically and politically weak to exercise their sovereignty.