Tax Evasion Costing The World Trillions Of Dollars: Report
In a world filled with bulging budget crises and anti-tax rhetoric sits the looming problem of how to obtain the revenue at all.
Tax evasion accounts for more than $3 trillion, or about five percent of, world gross domestic product, according to a briefing paper from the Tax Justice Network. The tax evasion activity is largely the result of shadow economies around the world and has some, but not everything, to do with the existence of tax havens, the report found.
To put the expense into perspective, tax evasion costs countries around the world more than half of what they spend on health care, according the paper. The U.S. is the biggest loser from tax evasion in absolute terms, the report found, while Bolivia loses the most from tax evasion as a proportion of its health care budget.
The problem may only get worse. Shadow economies around the world are poised to grow; the Organisation for Economic Cooperation and Development predicts that the shadow economy will employ more than two-thirds of the world's workers, up from the OECD's 2009 estimate of half the world's workers.
The report mirrors others that indicate tax evasion is costing governments around the world big time. Multi-national corporations' ability to avoid taxes both legally and illegally has cost developing countries hundreds of billions, according to a recent report from the European Network on Debt and Development. Sub-Saharan African countries alone lost nearly $27 billion due to "trade misplacing" or when companies manipulate trade access borders for profit, the ENDD report found.
But developing countries aren't the only ones losing out from tax evasion. Thirty of America's most profitable companies paid less than zero in income taxes in the last three years, according to a report from the Citizens for Tax Justice released last month. The financial sector alone netted $222.7 billion in tax subsidies, the report found -- the largest share of any industry.
And corporations are working to get more subsidies. Apple, Google and other corporate giants have hired more than 160 lobbyists to press lawmakers for a tax holiday on more than $1 trillion in offshore profits, according to Bloomberg.
Some rich Americans have also become adept at avoiding taxes as well. That could soon change, however. Swiss and U.S. officials met in Switzerland over the weekend and they're getting closer to a deal about wealthy Americans using Swiss bank accounts to dodge taxes.