Super-rich hiding $21trn offshore, says report
By Michael Northcott Monday, 23 July 2012
A new report from the Tax Justice Network claims that more than $21trn has been hidden by the world's wealthy in tax havens.
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We’ve all heard of offshore accounts and the way that the rich use them to shelter money from the taxman, but this unreported financial wealth owned by individuals is larger than the GDP of the US and Japan combined. That’s according to The Price of Offshore Revisited, a study by the Tax Justice Network, which also claims the figure could actually be as high as $32trn if more accurate data were available. Furthermore, the study is only for financial wealth and does not include ‘a welter of real estate, yachts and other non-financial assets owned via offshore structures.’ Wowzer, they really are rich!
Former McKinsey & Co chief economist James Henry carried out research for the study, so we can be in no doubt that the study’s methodology was sound. Data came from the IMF, the UN and a countries’ central banks. It found that the biggest banks for managing these assets were UBS, Credit Suisse, Goldman Sachs, Bank of America and HSBC. The most popular locations were Switzerland, the Cayman Islands, Luxembourg, Hong Kong and Singapore. So absolutely no surprises there then.
The study comes as the government moves to implement a ‘name and shame’ system for tax avoiders. The government reckons that about 14% of all unpaid tax is due to aggressive avoidance schemes in Channel Islands-based trusts and instruments. The new measures would force these organisations to disclose the names and account details of their clients. If we were more cynical, we might think that timing of the study and the government policy was a deliberate coincidence…
It looks as if the study has some question marks over its methodology though. The study could not possibly have found accurate information on the 10 million people it claims have money offshore, banks would not have been forthcoming with the details, and if the money is truly hidden, how on earth would the Tax Justice Network have found it just by doing a bit of digging around? These super-wealthy characters have clever accountants who are pretty good at making money ‘invisible’…
What’s more, the study says the amount of money held offshore could be anywhere between $21trn and $35trn. What Henry admits, by leaving such a gargantuan margin of error, is that he really has no idea at all about how much money is being kept out of sight of the taxman. Add some ramblings about ‘inequality is far worse than we think’, ‘there’s a growing gulf between rich and poor’, and ‘tiny elites’, and you have a quasi-political pamphlet that the media can fill some column inches with on a slow Monday morning.