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Intro: "A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary $21 trillion of wealth offshore - as much as the American and Japanese GDPs put together - according to research commissioned by the campaign group Tax Justice Network."

The Cayman Islands: A favorite haven from the taxman for the global elite. (photo: David Doubilet/National Geographic/Getty Images)
The Cayman Islands: A favorite haven from the taxman for the global elite. (photo: David Doubilet/National Geographic/Getty Images)



$21 Trillion Hoard Hidden From Taxman by Global Elite

By Heather Stewart, Guardian UK

23 July 12

 

  • Study estimates staggering size of offshore economy

  • Private banks help wealthiest to move cash into havens

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.

 

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+33 # paulrevere 2012-07-23 07:41
It's interesting to note the depth and span of human greed. 92,000 individuals on this planet are so bound in greed and power that they are willing to sit and watch billions starve, hundreds of millions die in wars and conflicts each year and they CONTINUE to accumulate.

I'd speculate that those 92,000 and perhaps a million of their cohorts probably have an internal psychology and within their society an ethic and morality as different from WETHEPEOPLE, planet wide, as night is from day, male is from female.

We all need to consider that little idea as we sally forth in attempts to bring justice and level OUR playing field...these folks may as well be from another galaxy as they seem to be vested with our very souls at this point in world history.

Talk about unconscionable, irrational, beyond the pale, sociopathic, arrogant and to NOT BE TOLERATED!!
 
 
+5 # brux 2012-07-23 07:54
So, we have to figure out a way to stop it, but I think billions seem to think there's not hope and it's the only game in town so they enjoy their own level of criminality and hope for more. We have a planet that as some Christians I know have quaintly said is under the rule of Satan … so how do we fix it, if we do not believe in Satan?
 
 
+4 # paulrevere 2012-07-23 09:05
Imho, the supernatural idea of Satan the Sultan of Evil deeds is only a discription of an emotional/psych ological aspect of human nature...ever hear the admonition 'we all have a bit of the devil in us'?...and it's opposite 'we all have the light, of the Spirit/Jesus/G_ d within us'?

It seems that a level of ability to trust within certain social and interpersonal parameters has to be established...w hich is what religion and general spiritual pursuits are there for.

How and why the corruption seeps into much of that is surely the conundrum...

The illusion is that economics spread more evenly would set the stage for establishing a higher level of human integrity and interaction...d unno on that one, as I can't cite personal or historical experience on that for any large social group.
 
 
+4 # brux 2012-07-23 16:09
> The illusion is that economics spread more evenly would set the stage for establishing a higher level of human integrity and interaction

Well, its opposite system now that is one of oppressing, starving, under-education , criminalizing, under-nourishin g, under-shelterin g, stressing out, noise exposure, chemical exposure, and all the other ways we undermine certain segments of the population to devalue their political participation is certainly not helping anything.

Every human being in this planet deserves some share of what is in the human domain and a right to enjoy nature, participate in the economy, and enjoy the fruits of what humanity has built in 2000 years, and its about time to raise the lower level for everyone when the cost is miniscule and painless for the very rich and us in the developed world.
 
 
+10 # brux 2012-07-23 07:47
I have been saying this as a thought experiment for ages … money when it is outside the local economy of you and me working and buying things we need has been corrupted.

The idea of money is not what we think it is.

We tend to think of a dollar as a dollar like you and me EARNED, but lots of this money is either ripped-off or black-market money.

When you spend your money with someone or something you empower them, you allow them to grow, you feed them and nuture them - and they may be evil MOF'ers like the Kochs, you have no idea the way money and corporations are today - and it is so important for evil to be anonymous in order to thrive.

Pretty soon we will see quasi-states appear where things like slavery or breeding humans will be legal, and unless the civilized nations of the world start to take action and work together they will be fractured and broken down by evil criminals or just all of our own worst natures.
 
 
+11 # dkonstruction 2012-07-23 07:53
We need a new "offense" for financial crimes of this magnitude whether it's for selling fraudulent mortgages, manipulating LIBOR or dodging taxes. Amazingly (or maybe not), Larry Kudlow on CNBC described the LIBOR scandal as a "victimles crime." Stealing billions from individuals, not to mention towns, cities, states, pension funds, etc., is hardly a "victimless crime." In fact, if we include the closing of public hospitals due to "lack of funds" these crimes should include murder since surely people have died who otherwise wouldn't have due to these closures.

These crimes should be considered "Financial Crimes Against Humanity" and the perpetrators should be brought before the International Court (alongside the "dictators" that in many cases they helped to prop up) and their assets and businesses seized. Merely going after individual traders or executives is hardly sufficient and the fines that have so far been levied amount to little more than a tiny cost of doing business such that the benefits of committing the crimes in the first place far outweigh the penalties begin given out.
 
 
+4 # paulrevere 2012-07-23 09:07
Kudlow is so often dispicable in his take that I turned him off a decade and a half ago...sick puppy, that one...hand in hand with...oh, never mind, there are just too many to do the litany.
 
 
+16 # Old Man 2012-07-23 08:12
And they say there isn't any class warfare.
These are the people that cheat at every thing they do. They don't think they should have to pay taxes.
These job creator are not creating anything but wealth for themselves and cheating while doing it.
It's time we bring them to justice.
 
 
+8 # tswhiskers 2012-07-23 08:26
$21 trillion now parked offshore so its owners can avoid paying taxes on it. And this is in addition to all the loopholes and perks and God knows what other goodies existing within the U.S. tax code. Yes, I am disgusted and furious with Mitt et al. If he and the rest were paying their proper taxes Soc. Sec. and Medicare/Medica id would probably be solvent and healthy. Paulrevere and Dkonstruction have the right of it. Can it be imagined how thousands or millions of lives around the planet would improved if the supergreedy of the world simply paid their current tax bills honestly? How many billions are enough? How many millions can one spend on homes, yachts, wine, women and song before there is nothing left to spend it on? I truly think that many of the bloated wealthy in the world must be mentally ill because they do not create anything with it; they simply hoard it. But I forget the importance of politics. I'm sure many of them give loads to the U.S. and other political systems just to make sure that they can keep on making and hoarding it. In the late 19th and early 20th cents. Americans, incl. children, worked 12-14 hours a day for almost nothing. Nowadays it is much the same: people working 12-14 hours at multiple jobs for min. wage if they can get it. I think it was the current governor of Maine who has tried to repeal child labor laws in that state because there is absolutely no reason why they should not work. Please correct me if I am wrong.
 
 
+6 # paulrevere 2012-07-23 09:10
'the importance of politics'and POWER...most of these, if not all of these sociopaths are males and power comes with great wealth...seduct ion of the ego.
 
 
+6 # mdhome 2012-07-23 10:46
That is where Mitts money is and his tax returns will show a bit of it, These people are the real unAmericans and not the "job creators".
 
 
+12 # BradFromSalem 2012-07-23 08:47
If only Congress had the desire and the will this is easy to fix.

You have 1 year to declare your offshore cash reserves and pay the full taxes due. After 1 year, 100% of the holdings belong to the US Treasury. Thereafter, any offshore holdings are taxed twice their on-shore amount.

Go ahead and move your sorry butt to one of those havens. Taxes due on the money you take with you are triple their on-shore amount.

And of course, all income is taxed as earned income from hard work, no more discounts for being a so-called investor.

Everyone gets this, rich and poor, Progressive, Occupier and Tea Party. Except for the fools that do what the banksters tell them to do.


If only Congress had the desire...
 
 
+7 # angelfish 2012-07-23 09:21
It's cold comfort to see that Romney is NOT alone in hiding his wealth Off Shore. Their rapacious greed is truly astounding as is the size of their cojones! WHY don't we elect HONORABLE, sensible men and women to our Congress? It's plainly evident that the majority currently there are arm in arm with the worst offenders! Hopefully, Come this Election Day the pendulum will begin to swing back and we can be rid of the "ME FIRSTers" once and for all! Never, EVER vote ReTHUGlican! The People, UNITED, will NEVER be defeated!
 
 
+5 # tswhiskers 2012-07-23 10:01
Unfortunately honorable, sensible men and women usually don't have the egos or the mental drive to want to be in public office. Therefore we elect those who do have the ego and the drive to withstand the exhaustion of election campaigns and officeholding. Every once in a blue moon we luck out and get a Lincoln or 2 Roosevelts who can change the country or hold it together in crucial moments. We have been greatly blessed in the past. However this seems to be the day of greedy and election-consci ous mediocrities. Even Obama, though he seems more humane than the Reps., is not really special except for his skin color given the behavior of Dems in the past.
 
 
+1 # angelfish 2012-07-24 08:02
Quoting tswhiskers:
Unfortunately honorable, sensible men and women usually don't have the egos or the mental drive to want to be in public office. Therefore we elect those who do have the ego and the drive to withstand the exhaustion of election campaigns and officeholding. Every once in a blue moon we luck out and get a Lincoln or 2 Roosevelts who can change the country or hold it together in crucial moments. We have been greatly blessed in the past. However this seems to be the day of greedy and election-conscious mediocrities. Even Obama, though he seems more humane than the Reps., is not really special except for his skin color given the behavior of Dems in the past.

That is why we MUST support Elizabeth Warren, Bernie Sanders, Alan Grayson and others who DO have the "egos and Mental drive" To Fight like hell for ALL of us!
 
 
+6 # jlg 2012-07-23 09:56
And then there's the other side of this coin - how the IRS hound the small business owners into bankruptcy, when you'd have thought that help in getting your taxes straight would be the first step - seems like cutting off your nose to spite your face, 'coz how can we pay taxes when our business is gone? Failure rate of small business in SW Oregon is betwee 80 and 90% - any correlation here?
 
 
+1 # AndreM5 2012-07-23 17:54
There is NO correlation there. First, Obama has cut taxes for small businesses to the lowest level. Second, small business has ALWAYS had a high failure rate and your 80-90% is about right in my city for the past 50 years. No doubt the recession has made this number skyrocket but as an avg it is always high. Ever notice how many restaurants fail in their first year? Almost all of them.
 
 
+11 # jwb110 2012-07-23 10:54
Amend the Constitution to exclude citizens who keep offshore funds from running for office. Just like not being a natural born citizen, it represents a conflict of interest with the potential of offering another country preferencial treatment to secure an officer of the State's personal wealth or the wealth of his or her friends.
Hiding money from your own nation in order to not pay taxes to the county of your origin violates the "Sempre Fi" to the Republic.
 
 
+5 # brux 2012-07-23 12:23
Fantastic idea … like 99.99999% of all other amendments to the Constitution there is no chance for it.

We are stuck, the majority of people need to realize who they are and inventory whatever power they still have left and use it to overthrow this blasphemous corruption of America by money - and mostly money from criminals with plenty of time to think about how to make more and how to use it.

Why does Mexico still have all the violence it does, do we think this would happen if America did not want it to happen? Or any number of things.

When you have a lot of money and you are corrupt and powermad you seek to change everything in the world to paid in money - that is the new war, that is the new slavery, that is the new oppression - capital corruption - capitalism corruption.
 
 
0 # paulrevere 2012-07-23 17:09
On Mexico, I would add that all that violence and drug lord flailing also helps keep the 32 families who own 80% of it all right there in their Citations headin' for the Ritz.
 
 
+6 # jrs 2012-07-23 11:58
Honorable, sensible men and women don't run for office because they don't have the millions of dollars required to mount a campaign. They also spend their time doing the jobs that they're paid to do instead of spending two years running around the country denouncing each other. As long as we're talking about overhauling systems, we should also completely revise the election process - limit the amount of time (the Brits do it in six weeks)and money spent.
 
 
0 # barbaratodish 2012-07-23 13:43
The real amount of money may remain hidden like the "dark figure of (unreported)cri me"! Whatever the amount is, it may and probably is matched by a similar amount (it also may be more or less) in the "shadow" or grey economy, or one-off, etc., economy!
 
 
0 # freeportguy 2012-07-23 14:56
As far as patriotism goes, tell me what you DO and I'll tell you what you believe in...
 
 
0 # paulrevere 2012-07-23 17:10
Ha!...tech start-up entrepreneur... get at it.
 
 
+1 # pernsey 2012-07-24 04:03
I have noticed most poor republicans I talk to, will almost always, inherently stick up for and back the rich people. This is what the brainwashing with Fox News does to people, why would people that live on $11,000 a year vote republican? I really dont get it?

Poor people are held accountable while the rich arent. The gap is widening, pretty soon this country is going to be considered third world and the drones will still be voting republican...I just really dont get it. You have to really believe every republican lie, to continue to vote for them while they openly just stand for the rich.

I know people on every public assistance program coming down the pike...food stamps, wic, medicaid/medica re, gov assistance to go to college, and yet they vote republican...th ese rich people can afford the mass brainwashing and its so sad to see people who really need help duped by the rightwing because of buzz issues and catch phrases that the GOP neither believe in or stand for. Whatever keeps the votes coming in, and mainstream media props it all up...so sad and yet so incomprehensibl e at the same time.

As far as Im concerned, these rich people are tax evaders and should be gone after by the IRS like any of us poor people would if we tried to hide money to avoid paying taxes...but you know that aint gonna happen. There are 2 sets of rules, rich people rules and then the rest of us.
 
 
0 # Bodiotoo 2012-07-24 12:23
How about listing the Amricans that are part of the 92,000...and thier addresses too.
 
 
0 # billeeboy 2012-07-27 08:33
In the scope of things 92,000 isn't so many. Presumably they know each other and congregate..... ..it would likely take many fewer than 92,000 of Obama's drones to end this problem........ ..
 
 
0 # fliteshare 2012-07-28 08:56
Eventually EVERYTHING will be owned by one person.
 

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