The World’s Super-Rich have Stashed $21 Trillion in Offshore Accounts (Mathiason)

Nick Mathiason writes at the Bureau of Investigative Journalism:

Investigative economist James Henry exhaustively trawled through financial information held by the IMF, World Bank, Bank for International Settlements, central banks and national treasuries to come up with the most definitive report ever written on the super-rich and offshore wealth.

Henry’s Price of Offshore Revisted report, commissioned by Tax Justice Network, shows:

– between $21 trillion and $32 trillion of financial assets is owned by High Net Worth Individuals in tax havens. This does not include real estate, art or jewels.

– a conservative 3% return on that $21tn taxed at 30% would generate $189bn – a figure easily eclipsing what OECD industrialised nations spend on overseas development aid.

– the top 50 private banks collectively managed more than $12.1tn in cross-border invested assets for private clients, including their trusts. This is up from $5.4tn in 2005.

– fewer than 10 million members of the global super-rich have amassed a $21tn offshore fortune. Of these, less than 100,000 people worldwide own $9.8tn of wealth held offshore.

Accompanying the Price of Offshore Revisited is a separate paper (which I co-wrote). It reveals that data used by individual countries to assess the gap between rich and poor is inaccurate. And as a result, inequality is far more extreme than policymakers realise.

This is because economists calculating inequality fail to include the vast majority of offshore cash in their findings. So the wealthy are far better off than the studies suggest.

In Inequality: you don’t know the half of it, eight of the world’s leading economists were asked whether offshore wealth was largely excluded from inequality studies. Ranging from the World Bank’s acting chief economist to academics at the Paris School of Economics and the Brookings Institute in the US, they all confirmed this was the case.

This is because the wealthy do not disclose their true incomes. They also rarely participate in surveys. Academics do compensate for non-particpation but they admit, official data vastly underestimates the true picture.

Trickle up
Combined, the two papers published by TJN end any notion that trickle down economics – the Thatcher/Reagan doctrine that suggests tax breaks for the rich benefits all society – works.

We already know that in the US between 1980 and 2010, incomes of the top 1% doubled and the top 0.1% tripled while the bottom 90% saw their incomes fall 5%. But the TJN studies show this wealth disparity would be statistically even worse if offshore cash is included in official studies.

Perhaps most tellingly, the reports bring into sharp focus how global banks – so-called ‘pirate banks’ – have enabled the super-rich to avoid unimaginable sums of tax while at the same time enjoying taxpayers cash through government bank bailouts. A true double whammy of dark proportions.

Some of these banks have been labelled ‘too big to fail’ following the financial crisis. But after the Libor scandal, HSBC’s key role in laundering Mexican drug cash and the subprime bank disaster, there is compelling evidence to suggest they are also ‘too big to be true’.

Which brings us to an issue that is fast troubling global financial regulators: the so-called ‘London disease’. It has not gone unnoticed that many of the financial scandals in recent years have a Square Mile connection. Never mind Libor, it was the London offices of AIG, Lehman Brothers and Bernie Madoff that helped destroy them. The JP Morgan and UBS rogue traders who lost billions were both London based.

The UK is also arguably the centre of the offshore world. It is one of the biggest private bank centres and Britain’s non-domicile tax rules allow the global super-rich to legally avoid taxes on their overseas income while residing here. In addition, many of the UK’s overseas territories and crown dependencies such as Jersey, Isle of Man, the Cayman Islands and the British Virgin Islands are major offshore centres. This perhaps explains why the British government, for all its rhetoric, has failed to clamp down on the shadow financial system.

It has taken the painstaking work of TJN’s Henry to bring to light the true price of offshore. That the IMF, World Bank or OECD has not done this work is troubling especially as their lack of effective oversight contributed to the economic crisis that has caused significant hardship for hundreds of millions of people.

A good way to atone is to start deploying their thousands of economists to implement measures that will introduce transparency to the financial system instead of policies that facilitate secret offshore hoarding by a tiny elite.

________

Mirrored from The Bureau of Investigative Journalism

Posted in Uncategorized | 7 Responses | Print |

7 Responses

  1. The world’s dictators like Ferdinand Marcos, Saddam Hussein, and Muammmar Khadafy each had billions in foreign banks. Most of it was, of course, improperly diverted.

    It ssems to me that the issue could be dealt with by the U.N. or another international authoritative body that would require disclosure requirements of member banks and forbidding transactions with non-member banks to encourage membership of all financial institutions and force full disclosure.

  2. You make capital flight sound like some kind of crime. Are there any limits on your sense of moral entitlement to other people’s money?

    • Gerald knows as well as I, that much of the ‘other people’s money’ was usually acquired illegally or semi-legally. Therefore, the fact that it has been stashed outside the reach of he IRS is a matter of my and others’ interest.

    • And since so much of that money is stolen, or “obtained in manners and by methods that have been legislated to not be illegal,” or by people who have purchased immunity from prosecution one way or another, where do you get off your “moral” high horse pontificating about the sanctity of purloined “capital?”

      You maybe admire Yasser Arafat, who squirreled billions of bucks intended for relief of the misery of “his people,” much of which was apparently in accounts in them furrin sekrit banks to which only he, in his brain, kept the numbers and passwords? And of course he is just one of a large host of parasites and predators, for whom you are apparently an apologist. Who’s got all that swag now, hey?

      What’s “fled” is the TAKEN wealth actually created, actually “earned,” by generations of people who just do an honest day’s work, most often any more for a whole lot less than what even former Robber Barons and vampire squids considered an honest day’s pay.

      These Beautiful Folks blow off the truth that we are all in this together, they have no sense of even propriety, let alone satiety. And they really sicken the rest of us, who know that there really is enough of everything that’s needed to go all around the table, except for the Effing Few who eat all but one of the chops and all but one of the broccoli spears and all but one of the chocolate chip cookies, and then sucker the rest of us into warring over the scraps they leave.

      That you are posting crap like this here indicates to me that you are not yourself one of the post-trans-national Really Rich Folk, just one of their “people” or a wannabe who isn’t and likely never will be.

      Don’t come down on my block, bunkie.

  3. I am angry that the people who initiated the current financial crisis (banks) have been offered huge bailouts by the government whilst we, the little people foot the bill.

    Meanwhile it is business as usual as the heads award themselves huge bonuses and carry on their banking practices as if nothing has happened.

    Do banks really operate with such impunity or will the time come when people say “enough is enough”?

  4. As the plot thickens, an explosive number of stories are being leaked to the public of the clandestine activities of those who perceive they are better and more privileged than the entirety of humanity. And by bloodline? They are not all that smart it turns out as the inferior bloodlines are on to them. How much longer will they be permitted to play out their fun and games? That is up to us.

  5. For a little more in the way of facts and opinions of even many former and current Bankstas, here are a couple of recent extracts from Yves Smith’s “Naked Capital.”

    First, it seems even a lot of Really Big Present or Former Bankstas are now (for whatever reason — to deflect the anger of the rest of us?) offering that the Big Things (can’t honestly call them “banks” any more) need to be dissected into smaller theft units:

    link to nakedcapitalism.com

    And in case you think this was all just boys-will-be-boys, and this stolen wealth should be “protected” where it has gone to, look here — it’s not even like most of this was “not illegal,” here’s a nice concise collection of felonies for you to berate your boughten legislators and timorous prosecutors with:

    link to washingtonsblog.com

    “Mother of God, is this the end of RICO?” link to snopes.com

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