Murphy’s book aggressively attacks the world’s tax havens—or “secrecy jurisdictions,” as he calls them. Their most corrosive effect, in his judgment, is not to allow individuals (including criminals) and corporations to avoid or evade taxes, although that is important. Rather, the worst thing about tax havens is the way in which they prevent the kind of transparency in transactions that any well-functioning market requires. Tax havens also erode trust in democratic governments, which have proved unable or unwilling to enforce their own laws and regulations. Murphy and his colleagues at the nonprofit Tax Justice Network have helpfully ranked 92 jurisdictions according to what each one provides in terms of financial secrecy—which should not be confused with legally protected financial privacy, which does not harm other members of society. Vanuatu and Samoa are the most secretive places, but the most important tax havens are Switzerland and Hong Kong. The United States does not fare particularly well in this ranking; laws pertaining to corporations and trusts are mainly enforced at the state level, and a number of states use relatively lax rules to attract firms and capital. If secrecy jurisdictions were curtailed, the world would be a much better place, Murphy contends: democracies would be stronger, and markets more efficient.
Reid makes the case for a complete overall of the U.S. income tax system akin to the ones that Washington carried out in 1922, 1954, and 1986. He favors lower but more progressive rates and the elimination of all deductions and exemptions. The book makes a great contribution to this subject with useful and informative comparisons of tax systems in the United States with the usually better ones found in other rich countries. As Reid writes, the American systems are archaic, too complex, and too difficult to comply with, and they invite “convoluted and pernicious strategies” for avoiding payment.