£13tn: hoard hidden from taxman by global elite

[bsnub]

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.

[bsnub]

Not a word on this from you lot? Hmm thats interesting.

[billy the kid]

no surprises bsnub
only surprise is that we still have capitalism
which is sucking the livin daylites out of capitalism.

the meek shall inherit fuk all.

[harrybarracuda]

Politicians. They're all scum sucking bottom feeders. And they are owned and controlled by the ones with the thirteen trillion.

[Jesus Jones]

Not a word on this from you lot? Hmm thats interesting.

What? Really? Tell me something i didn't know 8 years ago. It was conspiracy then you know!

[Mid]

• Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.
  • Thomas Tomlin, Baron Tomlin, in the UK House of Lords case, IRC v. Duke of Westminster (1936) 19 TC 490, [1936] AC 1. In the UK in the 1930s, this quote was put on the back of business cards of those marketing tax avoidance schemes, to the consternation of the Inland Revenue; see Philip Baker QC [1].

• Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.
  • Judge Learned Hand, Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).

• In common with my predecessors I regard tax avoidance schemes of the kind invented and implemented in the present case as no better than attempts to cheat the Revenue.
  • Lord Templeman, IRC v. Fitzwilliam (1993) 67 TC at 756 (UK).

• Now of course I am minimising my tax ... and if anybody in this country doesn't minimise their tax, they want their heads read.
  • Kerry Packer, Australian media tycoon. "Australia's Richest Man Fights Tax Man And Overstates Tax Bill, March 25, 2005.

http://en.wikiquote.org/wiki/Tax_noncompliance

[billy the kid]

still waiting for the dude in the House of Lords
to explain how his bank supported drug cartels and terrorists
and his role in the Libor rate fixing scam.

not really expecting the brit press to inform me of his criminality.
politicans are investigating their support friends.
so we should all sleep at night knowing that the goverment is doing all it can
getting to the root of it all

[Butterfly]

it's all a question of volume,

it makes more sense to tax a little the average man because of the volume involved than bother taxing the very rich or going after them because of the very little recovery impact on total volume

[harrybarracuda]

I think you've got that arse about face. As usual.

They won't tax the people who not only *could* be taxed without hurting, but *should* be taxed, because those people pay for their election campaigns, or in European and other countries donate to their party campaigns and promise them fat contracts at the end of their tenure.

It's quite a loathsome system and sooner or later people are just going to go off the deep end.

[socal]

Not a word on this from you lot? Hmm thats interesting.

Who wants to pay taxes to socialist governments around the world ? Sure as hell not me.

If you won 10 million and you could choose to cash it with no tax and stick it in Switzerland or cash it in the US and lose 30%, what would you do ?

[VocalNeal]

Any money in a UK offshore account is transparent as far as the authorities are concerned. They created the system for the benefit of those with money.
Switzerland, Lichtenstein and Monaco?

Given that no one knows how much is in accounts other than the transparent ones how does anyone know it is 13 tn.

All a load of BS by whingy people with no money. When times are good no one cares. It's all gone tits up so now they want to raid some child's piggy bank.

[socal]

no surprises bsnub
only surprise is that we still have capitalism
which is sucking the livin daylites out of capitalism.

the meek shall inherit fuk all.

All the fault lies in one thing. Credit and medium of exchange denominated savings. After this American dollar thing is over, people will finally lean not to save in the same thing the government issues or borrows. They will save in gold.

Gold will be for "store of value" purposes, digital/paper money will be for "medium of exchange" purposes only.

[Latindancer]

"Economists often talk about The 80/20 Principle, which is the idea that in any situation, roughly 80% of the "work" will be done by 20% of the participants.
In most societies, 20% of criminals commit 80% of crimes. Twenty percent of motorists cause 80% of all accidents. Twenty percent of beer drinkers drink 80% of all beer. When it comes to epidemics, though, this disproportionality becomes even more extreme : a tiny percentage of people do the majority of the work".
From The Tipping Point, a book by Malcolm Gladwell.

Not surprisingly, the situation pictured above looks similar to a crime scenario.....even an epidemic.
.
.
.
.

[The Big Fella]

more Communist fucking whining again. They all want to tax the fuck out of people till they leave office and start to milk the system themselves they they just do the same as the others and avoid paying as much as they can. Just look at Blair, brown and that slimy bastard Mandelson.
In the UK the top 1% of earners pays 27% of all the tax taken by the treasury. The top 10% pays over 50% of the tax taken so they are already being taxed the fuck out of now it's just the Communist / Socialists want even more. Tax them too much and they just up and fuck off altogether and then the poor fuckers have to pay even more. I like this analogy to explain taxation using beer drinking




Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that ' s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I ' m going to reduce the cost of your daily beer by $20." Drinks for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men– the paying customers? How could they divide the $20 windfall so that everyone would get his fair share? They realized that $20 divided by six is $3.33. But if they subtracted that from everybody ' s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man ' s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. ! And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!" "Yeah, that ' s right," exclaimed the fifth man. "I only saved a dollar, too. It ' s unfair that he got ten times more than I!" "That ' s true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!" "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill! And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.