"Pay my troops no mind; they're just on a fact-finding mission."

20+ Trillion Dollars Hidden From Taxes In Offshore Accounts

The richlists (forbes, ect…) can’t confirm how much wealth exists, or who is really the wealthiest. Not even the rich men themselves with an army of accountants can figure out exactly how much they are worth. So any study claiming to trace invisible money has to be taken with a titanic grain of salt. I’m sure some drug money is mixed in there as well, even US banks have got caught taking some of that in.
A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.He shows that at least £13tn – perhaps up to £20tn – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, “protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy”. According to Henry’s research, the top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than £4tn in 2010, a sharp rise from £1.5tn five years earlier.

The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.

Oil-rich states with an internationally mobile elite have been especially prone to watching their wealth disappear into offshore bank accounts instead of being invested at home, the research suggests. Once the returns on investing the hidden assets is included, almost £500bn has left Russia since the early 1990s when its economy was opened up. Saudi Arabia has seen £197bn flood out since the mid-1970s, and Nigeria £196bn.

“The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments,” the report says.

The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry’s calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world’s population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.

“These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people,” said John Christensen of the Tax Justice Network. “People on the street have no illusions about how unfair the situation has become.”

TUC general secretary Brendan Barber said: “Countries around the world are under intense pressure to reduce their deficits and governments cannot afford to let so much wealth slip past into tax havens.

“Closing down the tax loopholes exploited by multinationals and the super-rich to avoid paying their fair share will reduce the deficit. This way the government can focus on stimulating the economy, rather than squeezing the life out of it with cuts and tax rises for the 99% of people who aren’t rich enough to avoid paying their taxes.”

Assuming the £13tn mountain of assets earned an average 3% a year for its owners, and governments were able to tax that income at 30%, it would generate a bumper £121bn in revenues – more than rich countries spend on aid to the developing world each year.

Groups such as UK Uncut have focused attention on the paltry tax bills of some highly wealthy individuals, such as Topshop owner Sir Philip Green, with campaigners at one recent protest shouting: “Where did all the money go? He took it off to Monaco!” Much of Green’s retail empire is owned by his wife, Tina, who lives in the low-tax principality.

A spokeswoman for UK Uncut said: “People like Philip Green use public services – they need the streets to be cleaned, people need public transport to get to their shops – but they don’t want to pay for it.”

Leaders of G20 countries have repeatedly pledged to close down tax havens since the financial crisis of 2008, when the secrecy shrouding parts of the banking system was widely seen as exacerbating instability. But many countries still refuse to make details of individuals’ financial worth available to the tax authorities in their home countries as a matter of course. Tax Justice Network would like to see this kind of exchange of information become standard practice, to prevent rich individuals playing off one jurisdiction against another.

“The very existence of the global offshore industry, and the tax-free status of the enormous sums invested by their wealthy clients, is predicated on secrecy,” said Henry.

See previous:

3 responses to “20+ Trillion Dollars Hidden From Taxes In Offshore Accounts

  1. Lushfun July 22, 2012 at 7:06 am

    I think its’ taxed at source at least once the problem is it gets shifted offshore so it cannot be re-taxed again over and over again. Problem with attempting to ferret out tax havens is that most of them hold capital that is recycled globally and is in essence working capital for quiet a few companies that invest it when they see things align. Granted a lot of tax escapism also occurs but not without good cause.

    I ll give you some food for thought, Lindtt if you look them up the swiss choco company had about half a billion in cash sitting around, they are listed etc… but if they kept it in countries they operate in like Italy or USA they wouldn’t be able to shift new production plants and build them out like they did in New Hampshire a few years back. Quiet a few companies that are really international that owned by few people use offshore as insurance against being expropriated by law change dynamics in their countries. Generally they have a history of being right, like the Bacardi family whom kept things offshore from the time they fled Cuba and actually kept most of their brands except few. The reality is if Cuba taxed them and expropriated those things if they didn’t go offshore most of it would be worthless or sold for pennies to external investors anyways in the future.

    The true reality is ownership of capital… is it really yours after you pay taxes on it or does it force you to stay in that country to use it only there and its not really transferable and applicable as you see fit. If it is the latter than no point in earning it in the first place. Those 121 billion pounds divided among various countries would provide at most a few days deficit spending via their respective money wasting governments.

    • Eric Patton July 22, 2012 at 2:40 pm

      I generally agree with the principle that the capital should be yours. Ikea, Google, Microsoft, ect… all use these types of structures to cut down on taxes and make sure that unraveling their accounts would be a jurisdictional nightmare.

      I’m not concerned with the chocolate makers or technology firms, more like those who use violence to rig their markets in their favor, getting them hundreds of millions or even billions of dollars. It’s the people who didn’t really earn their wealth so much as take it, it skews heavily towards countries with lots of natural resources. I count drug cartels in this category as well.

      Of course there is also a section of the financial elite who are making money rigging markets too. When these people have lots of money, the only limit to the damage they can cause is their lack of foresight. They are usually only smart enough to think of stealing everything from their people and then leaving, they usually don’t take it any further than that.

  2. Eric Patton July 22, 2012 at 3:21 pm

    Also, I’m still waiting to read the actual report.

    I’d like to know how you go about estimating and tracking invisible money.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: