123 Pages Posted: 4 Nov 2013 Last revised: 6 Jun 2014
Date Written: October 20, 2013
Allegations by political leaders and others that offshore financial centers enable multinational enterprise to avoid paying a “fair” amount of tax — and that they enable wealthy individuals to evade paying any tax, much of it on ill gotten gains — are once again garnering headlines and inspiring government action. One of the most prominent commentators on these topics, The Tax Justice Network, has recently claimed that thanks to the services of tax havens $21-$32 trillion of wealth of questionable origin remains hidden and untaxed, and that such abuse must be stopped through greater regulation. In this paper we argue that such claims rest on poor data and analysis, and on mistakes about how financial transactions, international taxation, and anti-money laundering rules actually work. We further argue that demands for more regulation without considering cost and effectiveness rely on a belief that international financial transactions are assumed illegitimate unless tightly controlled, rather than primarily reflecting the normal, legitimate workings of an efficient market.
Keywords: tax justice, money laundering, anti-money laundering, capital flows, tax evasion, offshore financial centers
Suggested Citation: Suggested Citation
Gordon, Richard K. and Morriss, Andrew P., Moving Money: International Financial Flows, Taxes, & Money Laundering (October 20, 2013). Hastings International and Comparative Law Review, Vol. 37, No. 1 - Winter 2014; U of Alabama Legal Studies Research Paper No. 2348144; Case Legal Studies Research Paper No. 2013-21. Available at SSRN: https://ssrn.com/abstract=2348144