Wealthy Tax Avoiders Stash Trillion$ “Offshore”

According to a new study sponsored by the Tax Justice Network (TJN), an estimated $21 trillion is socked away in “offshore” tax havens worldwide. A tax haven is a place that charges low or no taxes on foreigners’ deposits. (They are called offshore because, whether they are islands in the Caribbean or little landlocked countries like Luxembourg or Lichtenstein, they are sovereign states other than the home country of the individual or business whose money they hold.) $21 trillion is enough money to pay off the entire national debt of the United States, Germany, and Italy combined—and have a few hundred billion dollars in change leftover. Or perhaps to cover the entire 102 square miles of the Cayman Islands—one of the most famous tax havens—about a foot deep in crisp one-dollar bills.

The untold riches in these offshore banks belong to wealthy individuals assisted by an army of investment and banking professionals, lawyers, and accountants. Banking secrecy makes possible the existence of tax havens, which the TJN prefers to call “secrecy jurisdictions.” In some cases, the offshore accounts may belong to criminals or even terrorists, but primarily the tax havens enable people to avoid taxes, not evade them. One can go to jail for tax evasion, but tax avoidance is just how the 1% of the 1% live. About half of the offshore assets reported by TJN belong to fewer than 100,000 people, a global super-elite the report terms High Net Worth Individuals (HNWIs).

It is estimated that about one-third of global financial assets are “beyond the reach of effective taxation” because of tax havens. As a result, according to the TJN, the “owners and controllers of wealth” are thus able “to escape their responsibilities to the societies on which they and their wealth depend.” Ultimately, massive offshore tax avoidance causes inequality and poverty to increase and financial corruption to spread.

Image credit: © Images.com/Corbis

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2 Comments

  1. stephanie says:

    at school