Books in brief: Dirty Secrets by Richard Murphy

"Murphy’s solution, one he has expounded before, is 'unitary taxation' across the world"
February 13, 2017
Dirty Secrets: How Tax Havens Destroy the Economy by Richard Murphy (Verso, £12.99)

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Spirited and resolute, Richard Murphy has for decades been a leading voice on the left arguing for international tax reform. He fizzes with ideas about how policy-makers should organise policies on an international scale—and his target is invariably tax havens.

His latest book, Dirty Secrets: How Tax Havens Destroy the Economy, argues that if we manage to stamp out tax havens, the rewards will be bountiful: inequality will fall, and so too the cost of capital. Regulation, markets and even democracy will function better.

Possibly at the publisher’s behest, the book is cast as a response to last year’s Panama Papers scandal, the biggest ever leak of secret offshore data. But its scope is far wider. The threat posed to the global economy is bigger than the grubby dealings of individuals hiding assets or evading tax. It extends, Murphy explains, to other non-criminal—but equally pernicious—behaviours, not least through currently legal tax avoidance.

Dirty Secrets rattles through 20 years of tax reform efforts, focusing on moves by the OECD and the EU. Each one is judged a flop—and the cost to the global economy, especially developing nations, has been huge. Murphy’s solution, one he has expounded before, is “unitary taxation” across the world. This would strip corporations of the power to artificially shift profits across borders in order to lower tax. Instead, a set formula would ensure that groups pay tax according to wherever their economic activity takes place. And tax havens will be no more.