New Report: Wealthy Elites Actively Hiding Trillions From Taxman
By Dolores M. Bernal
NEWS JUNKIE POSTJul 30, 2012 at 5:58 am
If you thought that the wealthy elite in the world was about 1 percent of the population, think again because it’s more like 0.001 percent — far less people.
The global economic crisis that has countries around the world cutting government programs including vital safety nets for the poor is nothing but the by-product of the greed of approximately 92,000 wealthy people, according to an article by Heather Stewart of The Observer newspaper.
According to the article, “Trillions hidden from taxman by global elite,” some $21 to $32 trillion has been hidden away by wealthy people in Switzerland and the Cayman Islands, with the help of private banks, such as UBS, Credit Suisse, and Goldman Sachs.
The amount of money that the mega-wealthy elite have been able to hide in these bank accounts is the size of the United States’ and Japan’s GDP combined, wrote Stewart. The information was provided exclusively to The Observer newspaper by the Tax Justice Network and their researcher James Henry, an expert on tax havens and the former chief economist at McKinsey. The report’s name is The Price of Offshore Revisited.
The amount of money that the wealthy are hiding is so huge that according to John Christensen of the Tax Justice Network, “People on the streets have no illusions about how unfair the situation has become.” The tax loopholes are also being exploited by multinational corporations, which use expensive accounting agencies to help hide assets and cash.
The report states that oil-rich countries have specially seen billions of dollars escape taxation:
- $800 billion has left Russia since the early 1990s.
- $308 billion has left Saudi Arabia since the mid-1970s
- $306 billion has left Nigeria since the mid-1970s
The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts [of the nation] are shouldered by the ordinary people of these countries through their governments.
The rich’s avoidance of paying taxes is what is making a lot of the governments of many countries (and cities) go broke. According to the Tax Justice Network, this is specially bad for poor countries because they become dependent on foreign aid due to the lack of tax revenue that their governments collect, furthermore:
The corrupted international infrastructure allowing élites to escape tax and regulation is also widely used by criminals and terrorists. As a result, tax havens are heightening inequality and poverty, corroding democracy, distorting markets, undermining financial and other regulation and curbing economic growth, accelerating capital flight from poor countries, and promoting corruption and crime around the world.
According to The Observer’s article, since 2008 leaders of G20 countries have pledged to close down tax havens. Unfortunately, little or nothing has been done about it and investments banks like UBS and Goldman Sachs continue to handle these accounts and refuse to cooperate with authorities.
Conservative politicians in the United States such as House of Representatives Speaker John Boehner continue to defend not taxing the wealthy elites by believing in the flawed “trickle down effect,” which they believe works. But instead, the money the wealthy are hiding in offshore accounts will never help the poor and working classes on U.S. soil.
It’s unfair that the wealthy elites are using city airports, roads and highways, police and fire services, without wanting to pay for it, argue the Tax Justice Network.
The middle class families of many countries in the world, including the U.S. are being “squeezed” to the limit by paying higher taxes than the rich in order to shoulder the cost of public infrastructure. At the same time governments are cutting public services and education because they simply can’t afford them, nor do anything to aggressively tax the rich to pay their fair share. Both the wealthy elites who are hiding their money from taxation and the banks that aid them should be brought to justice.
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