The Rich Have Hidden $21 Trillion In Global Tax Havens

By on July 26, 2012 in News 12

Wealth inequality between the super-rich and everyone else has been vastly underestimated, the Guardian reports:

The world’s super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy.

James Henry, a former chief economist at consultancy McKinsey and an expert on tax havens, has conducted groundbreaking new research for the Tax Justice Network campaign group – sifting through data from the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to construct an alarming picture that shows capital flooding out of countries across the world and disappearing into the cracks in the financial system.

“These estimates reveal a staggering failure,” says John Christensen of the Tax Justice Network. “Inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people.

“This new data shows the exact opposite has happened: for three decades extraordinary wealth has been cascading into the offshore accounts of a tiny number of super-rich.”

The sheer scale of the hidden assets held by the super-rich also suggests that standard measures of inequality, which tend to rely on surveys of household income or wealth in individual countries, radically underestimate the true gap between rich and poor.

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  • Liam_McGonagle

    There’s your paradox for you.  If these oligarchs want to preserve even the semblance of liquidity to their holdings, they won’t be able to put them completely outside of detection by tax authorities.

    The question now is one of the will to do something about it, straight up.  In the short term at least there will be some sadly desultory bickering among nations for “competitive advantage” in the offshore tax evasion market–I’m talkin’ ’bout you, Ireland.

    But sooner or later the simple fact that tax evasion hurts everyone will become unavoidable.  It’s only a matter of a generation or two.

    • charlieprimero

       Tax evasion only “hurts everyone” if you suffer from the delusion that the purpose of government is to benefit everyone.

      Get real.  You’ll be happier in the long run.  I promise.

      • Liam_McGonagle

        Well, we’re gonna have government one way or the other–either we get to vote for them (and maybe possibly have some influence over their behavior), or suffer under a tyrannical corporate warlord who doesn’t even have to pretend to give a sh*t about what we think.

        It strikes me as more than a little naive to think that, in the absence of coordinated collective action, Magic Jebus is going to sweep down from the clouds and provide everyone with a pet unicorn and a new iPad.

        • charlieprimero

          Imagine a system where you directly vote for/against every restriction that pertains to you all day, every day instead electing some corrupt corporate shill every two years and hoping for the best.

          Imagine a system where collectives dynamically form minute-to-minute to organize society exactly however people want it to be.

          Set aside your prejudices and give Voluntaryism a fair study.

          It’s the only rational, moral way.

          • Liam_McGonagle

            Nice idea, but it’ll need a few centuries to incubate.

            As events of the last few years should amply demonstrate, people are not too proficient at identifying “every restriction that pertains” to them on the type of microscopic level that would allow them to vote all day, every day.

            More direct participation definitely is the answer, but that’ll require a level of economic and educational equality whose only reasonable precedents–as imperfect as they may be–lie in progressive taxation and government provision of essential social services.

            Not every last conceivable social service, mind you, but broad, basic ones like medical care, social safety nets.

            The corruption which you accurately perceive with the incompetence of those services’ administration will not be eliminated by eliminating the services–that merely provides the corrupt with even more anonimity from which to enact their crimes.

            The core problems are transparency and moral engagement, not the mere existence of an organized administration. 

          • charlieprimero

            People are extremely proficient at minutely voting how they want their lives to be.  They do it hundreds of times per day with every penny spent, and every minute of attention given or withheld.

            It’s true that plantation slaves lacked the skills to manage their own lives well.  This was not a good argument against emancipating them.

            Nor was the fact that African-American slaves getting emancipation took over two hundred years a good argument against supporting the idea and working towards it.

            If you want people to be happy, competent, peaceful entities, 20th century history demonstrates that more Taxation and more Government lead to the exact opposite. 

            Run to its logical conclusion, that system has always led to an ultra-wealthy elite 1% violently ruling over an impoverished underclass 99%.

            Witness:  Soviet Union 1989, America 2012, Cambodia 1973, China 2010, and on and on and on and on.

            Voluntaryism is the most moral and most rational way.

          • Liam_McGonagle

            I get the impression that you believe that I am opposed to your agenda, which could not be further from the truth.

            I’m just saying that you need to work harder to make it happen.  And a good start would be having a firmer grasp of historical and economic forces in play here.

            Not to be abusive, but two quotes that I hope will bring my point home to you:

            Quote:  “People are extremely proficient at minutely voting how they want their lives to be.  They do it hundreds of times per day with every penny spent, and every minute of attention given or withheld.”

            and

            Quote:  “Nor was the fact that African-American slaves getting emancipation took over two hundred years a good argument against supporting the idea and working towards it.”

            So are we to just ignore the historical reality that extensive government action, including the largest ever deficits as a % of GDP, was required to emancipate the slaves?  Did the slaves somehow free themselves through the operation of market forces?  Maybe by boycotting the plantation owners?

            You’ve got some good points here and there that need to be more vigorously advanced among the public, but you’re clearly hanging wayyyyy too much emphasis on the free market fantasies.  Why not take a little pressure off that and build a more robust vision of the world and the way it really operates?

          • charlieprimero

             I see you point, but abiding the Non-Aggression Principle requires that human relationships be free from violent coercion.  That includes economic relationships.

          • Liam_McGonagle

            I’m beginning to toy with the notion that aggression is hardwired into us biologically, and that attempts to deny that may paradoxically leave us prey to it.

            We can’t really cope with a problem unless we admit it exists, and embrace it enough to get a mature appreciation of its contours and limitations.

            But I don’t think that means we have to simply throw our hands up in the air and say, “That’s it!  War’s inevitable!  No point in ever resisting any war under any conditions!”

            Maybe what it really means is that we have to channel our social biases towards pro-social causes.  Maybe you can’t eliminate aggression altogether, but maybe you can radically reduce the incentives to go to war.

            In a way, our intial flirtation with economic globalization approaches this.  It establishes a wider sphere of common interests beyond the province or nation state that does tangibly reduce the incentives to wage war.  Because, despite events in central Asia, the Middle East and Africa, it is an objective fact that the world is more peaceful than it has been for millenia.

            The problem is that a thing can be taken too far.  The structures that were established to support the global economy also increased the power of multi-national corporations to the point they are a law unto themselves, completely unaccountable to the mass of the world’s citizens.

            I think a likely next evolutionary step will be unprecedented trans-national cooperation by governments to check the corporations from looting too rapaciously and depleting their tax base–thus causing massive social unrest, a la Greece and Spain.

            Of course that could go two ways as well.  If we either passively and uncritically support it or ignore it all together, it could be used as a weapon against us.

            I think the only potential positive result would be supporting the THEORY of government–but withholding support from any PRACTICING government until it becomes more responsive to the needs of the people.

            That’s a very narrow path to follow.  There may be only one correct answer out of millions of possible alternatives.  One path leading to a kind of / sort of okay, decent life, and millions leading to misery and doom.

          • Calypso_1

            I’ve done more than toy.  I found it at my front door one day.  Unexpectedly, no fear – just ecstasy.  So I fed it, let it loose… it came back.  It took about two decades to tame it.  Now I have to play with it everyday to keep it from looking for fresh meat.  Much more than a notion Mr. McGonagle, it is quiet a journey to make nice with the human beastie and I’m not so sure it’s my best friend. 

    • rtb61

       Here’s how we got here and why we will remain here until we force change. Mine, mine, mine, now, now, now, more, more, more. We have created a society where psychopaths have the keys of control, insane self serving toddlers who can see nothing beyond their own ego.
      These are of course lethal murderous toddlers who scheme to kill without qualm and for whom lying, cheating and stealing are their only morals.

  • KG

    So if we all just stopped pretending money had any actual value, would it balance the scales?
    You can pay me in booze.