Tax Havens Can Be Surprisingly Close to Home

The term “tax haven” typically conjures up images of exotic islands scattered around the globe. But new research suggests that if governments want to recover some of the revenue that disappears into such places, they don’t need to play an international shell game. Rather, they can focus on a handful of well-developed countries, including the U.K., the Netherlands and Switzerland.

Nations lose hundreds of billions of dollars every year through tax evasion and avoidance facilitated by havens. Gabriel Zucman, an economist at the University of California, Berkeley, has estimated that as of 2013, about 10 percent of the world’s financial wealth -- more than $6 trillion – was held in such locales. With their economies and public finances suffering, governments have sought to crack down, but it hasn’t been easy: Since the U.S. adopted the Foreign Account Tax Compliance Act in 2010, the amount of funds held in tax havens has actually increased.