The global super-rich are stashing trillions of dollars offshore with the help of some of the world's biggest banks, putting billions of dollars out of the taxman’s reach and masking wealth inequality's true heights.
Wealthy people were hiding between $21 and $32 trillion in offshore jurisdictions around the world as of 2012, according to a 2012 study from the Tax Justice Network, an organization which aims to promote tax transparency. The study, highlighted by a recent Bloomberg News report, found that more than $12 trillion of that money was managed by 50 international banks, many of which received bailouts during the financial crisis, according to James Henry, the study’s author.
“There’s a lot more missing wealth in the world than we had known about from previous estimates,” Henry told The Huffington Post. “The real scandal is not all these individual scandals but the fact that world’s policy makers who know about this stuff, have basically done nothing.”
The issue of wealthy individuals hiding their money offshore has come into sharp focus in recent months as reports, including those of the International Consortium of Investigative Journalists, have noted the broad scope of the issue.
The study's findings also reveal that the true levels of global income inequality remain unknown, as current estimates do not incorporate the offshore stashes and hence underestimate its true levels. the study found.
The G20 only recently made a push for its member countries to automatically exchange financial information about possible tax evaders. Under such an agreement, the U.S. would alert Mexican officials if it suspected a wealthy Mexican resident of stashing cash in an American bank account.
According to Henry, it’s not increasing tax rates that are driving the wealthy to move their cash offshore; it’s simply the growth in the offshore money industry.
“This offshore wealth industry has been exploding even in a period in which we have been cutting taxes,” he said. “It’s been growing at something like 15 to 16 percent a year in nominal terms.”
Many of the nations around the world being subjected to austerity in the face of major debt problems could use some of the tax revenue from all that money stashed offshore to address their woes. Overall, the world’s tax authorities are losing $200 to $300 billion in taxes because of offshore wealth issues, the study found.