22 July 2012

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Black Money $21 trillion hidden in tax havens by Rich Class the Price of Offshore Revisited report

Black Money  $21 trillion hidden in tax havens by Rich Class the Price of Offshore Revisited report

The Price of Offshore Revisited report is written by James Henry, a former chief economist at the consultancy McKinsey, for by the Tax Justice Network.

Mr. Henry said his $21tn is actually a conservative figure and the true scale could be $32tn. A trillion is 1,000 billion.

Henry draws on data from the World Bank, the IMF, the United Nations, central banks, the Bank for International Settlements, and national treasuries, and triangulates his results against data reflecting demand for reserve currency and gold, and data on offshore private banking studies by consulting firms and others.

Findings of the Report –

At least $21 trillion of unreported private financial wealth was
Owned by wealthy individuals via tax havens at the end of 2010.
This sum is equivalent to the size of the United States and Japanese
Economies combined

There may be as much as $32 trillion of hidden financial assets held offshore by high net worth individuals (HNWIs), according to
report The Price of Offshore Revisited, which is thought to be the most detailed and rigorous study ever made of financial assets held in offshore financial centres and secrecy structures.

This is only financial wealth and excludes a welter of real estate, yachts, and other nonfinancial assets owned via offshore structures.
James S. Henry, TJN Senior Adviser and main researcher for The Price of Offshore Revisited, said:
“Using several independent estimation methods, and the most comprehensive data set ever assembled, we have been able to triangulate on the size and growth of this black hole.
 “Since most of missing financial wealth belongs to tiny elite, the impact is staggering.
“Second, the lost tax revenue implied by our estimates is huge. It is large enough to make a significant difference to the finances of many countries, especially developing countries that are now struggling to replace lost aid dollars and pay for climate change.

Indeed, once we take these hidden offshore assets and the earnings they produce into account, many erstwhile “debtor countries” are in fact revealed to be wealthy.

But the problem is, their wealth is now offshore, in the hands of their own elites and their private bankers. Indeed, the developing world as a whole has been a significant CREDITOR of the developed world for more than a decade.

That means this is really a tax justice problem, not simply a “debt” problem.”
“Third, it turns out that this offshore sector – which specializes in tax dodging - is basically designed and operated, not by shady no-name banks located in sultry islands,

Other main findings of this wide-ranging research include:
at the end of 2010, the Top 50 private banks alone collectively managed more than $12.1 trillion in cross-border invested assets for private clients, including their trusts and foundations.
This is up from $5.4 trillion in 2005, representing an average annual growth rate of more than 16%.

The three private banks handling the most assets offshore on behalf of the global super-rich are UBS, Credit Suisse, and Goldman Sachs.

The top ten banks alone commanded over half the top fifty’s asset total – an increased share since 2005.

The number of the global super-rich who have amassed a $21 trillion offshore fortune is fewer than 10 million people.
Of these, less than 100,000 people worldwide own $9.8 trillion of wealth held offshore.

If this unreported $21-32 trillion, conservatively estimated, earned a modest rate of return of just 3%, and that income was taxed at just 30%, this would have generated income tax revenues of between $190-280 bn – roughly twice the amount OECD countries spend on all overseas development assistance around the world.

For our focus subgroup of 139 mostly low-middle income countries, traditional data shows aggregate external debts of $4.1 TN at the end of 2010.
But take their foreign reserves and unrecorded offshore private wealth into account, and the picture reverses: they had aggregate net debts of minus  US$10.1---13.1 tn.
In other words, these countries are big net creditors, not debtors. Unfortunately, their assets are held by a few wealthy individuals, while their debts are shouldered by their ordinary people through their governments.

world’s largest private banks, law firms, and accounting firms, headquartered in First World capitals like London, New York, and Geneva.
Our detailed analysis of these banks shows that the leaders are the very same ones that have figured so prominently in government bailouts and other recent financial chicanery.

“Fourth, given all this, it is scandalous that official institutions like the Bank for International Settlements, the IMF, the World Bank, the OECD, and the G20, as well as leading central banks, have devoted so little research to this sector.
This scandal is made worse by the fact that they already have much of the data needed to estimate this sector more carefully.
For reasons of their own, they have tolerated the growth of the offshore sector for far too long, out of sight.

Reality views by sm –

Sunday, July 22, 2012

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the Price of Offshore Revisited report facts



MEcoy July 23, 2012  

thats a lot of money

Anonymous,  August 24, 2012  

..Well! Not so many comments here then!! :(

Tax consultant July 02, 2013  

Brilliant article.Thanks a lot for sharing this.