Global super-rich had at least $21 trillion of wealth in tax havens, a new study says
The size is equivalent to combined U.S. and Japanese economies
The study was released Sunday by advocacy group Tax Justice Network
The world’s super-rich had between $21 trillion and $32 trillion of wealth hidden in tax havens by the end of 2010, a new study says.
The size of these unreported financial assets is equivalent to, or even larger than, the combined GDPs of the United States and Japan, representing up to $280 billion in lost tax revenues.
The study, titled “The Price of Offshore Revisited,” was released Sunday by the advocacy group Tax Justice Network.
Written by James Henry, former chief economist at McKinsey & Co., the study drew data from the World Bank, the International Monetary Fund, the United Nations and central banks.
The number of the global elite who parked their fortune overseas is fewer than 10 million people, or 0.14% of the global population, the report says. It also shows that major private banks such as UBS, Credit Suisse, Goldman Sachs, Bank of America and HSBC handled the most assets on behalf of the super-rich.
According to the group’s 2011 Financial Security Index, which ranks nations and territories providing tax havens, Switzerland, the Cayman Islands, Luxembourg, Hong Kong and Singapore are among the biggest destinations.
In a statement, Henry, senior adviser of the Tax Justice Network, said that “it turns out that this offshore sector — which specializes in tax dodging – is basically designed and operated, not by shady no-name banks … but by the world’s largest private banks, law firms and accounting firms, headquartered in First World capitals like London, New York and Geneva.”
The report also calculates capital flight from 139 developing countries between 1970s and 2010. Of the top 20 developing countries that lost tax revenue overseas, China ranks first, with nearly $1.2 trillion siphoned offshore by 2010. Russia and South Korea follow, with $798 billion and $779 billion missing respectively.
“Since most of missing financial wealth belongs to a tiny elite, the impact is staggering,” Henry said. “For most countries, global financial inequality is not only much greater than we suspected, but it has been growing much faster.”
The Tax Justice Network says the estimated offshore fortune is conservative, adding it excludes non-financial assets such as real estate, yachts and artworks.