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Archive for May 13th, 2014|Daily archive page

THE REAL “TAKERS”: THE RICH

In Bureaucracy, Business, Politics, Social commentary on May 13, 2014 at 1:42 pm

Ann Coulter, the Republican version of the Miss America Nazi, was devastated by the November 6 defeat of Mitt Romney.

“People are suffering,” she whined. “The country is in disarray. If Mitt Romney cannot win in this economy, then the tipping point has been reached.

“We have more takers than makers and it’s over. There is no hope.”

Actually, Coulter was right–but not in the way she thought she was.

The “takers” are not the “have-nots” who depend on government for assistance.  They are the “more-than-haves” who cheat the government of billions in lost tax revenues.

In 2012, Tax Justice Network, which campaigns to abolish tax havens, commissioned a study of their effect on the world’s economy.

The study was entitled, “The Price of Offshore Revisited: New Estimates for ‘Missing’ Global Private Wealth, Income, Inequality and Lost Taxes.”

http://www.taxjustice.net/cms/upload/pdf/Price_of_Offshore_Revisited_120722.pdf

The research was carried out by James Henry, former chief economist at consultants McKinsey & Co.  Among its findings:

  • By 2010, at least $21 to $32 trillion of the world’s private financial wealth had been invested virtually tax-­free through more than 80 offshore secrecy jurisdictions.
  • Since the 1970s, with eager (and often aggressive and illegal) assistance from the international private banking industry, private elites in 139 countries had accumulated $7.3 to $9.3 trillion of unrecorded offshore wealth by 2010.
  • This happened while many of those countries’ public sectors were borrowing themselves into bankruptcy, suffering painful adjustment and low growth, and holding fire sales of public assets.
  • The assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments.
  • Local elites continue to vote with their financial feet while their public sectors borrow heavily abroad.
  • First World countries do most of the borrowing.
  • Of the $7.3–$9.3 trillion of offshore wealth belonging to residents of these 139 countries, the top 10 countries account for 61% and the top 20 for 81%.
  • The offshore industry has many levels of protection: Private bankers, lawyers and accountants get paid handsomely to hide their clients assets and identities.  These groups also maintain influential lobbies.
  • Bank regulators and central banks of most individual countries typically view private banks as key clients.  They have long permitted the world’s top tax havens and banks to conceal the ultimate origins and ownership of assets under their supervision, especially those held in off-balance sheet trusts and
    fiduciary accounts.
  • Although multilateral institutions like the Bank for International Settlements (BIS), the IMF and the World Bank are supposedly insulated from politics, they have been highly compromised by the collective interests of Wall Street.
  • These regulatory bodies have never required financial institutions to fully report their cross-­border customer liabilities, deposits, customer assets under management or under custody.
  • All conventional measures of inequality sharply understate the levels of income and wealth inequality at both the country and global level.
  • Less than 100,000 people, .001% of the world’s population, now control over 30% of the world’s financial wealth.
  • The impact on lost tax revenue may be huge–large enough to make a significant difference to the finances of nations.
  • Assuming that global offshore financial wealth of $21 trillion earns a total return of just 3% a year, and would have been taxed an average of 30% in the home country, this unrecorded wealth might have generated tax revenues of $189 billion per year.

Summing up this situation, the report notes: “We are up against one of society’s most well-­entrenched interest groups. After all, there’s no interest group more rich and powerful than the rich and powerful.”

Yet the study reveals two bright spots for countries fed up with being bled dry by those parasites whose allegiance runs only to their wallets.

  1. A huge pile at least $21 trillion of untapped financial wealth has been discovered–monies that can be called upon to help solve the most pressing global problems.
  2. A substantial fraction of this wealth is being managed by the top 50 players in the global private banking industry.

As a result, these findings allow nations’ leaders to:

  • Prevent the abuses that have lead to off-the-books wealth accumulation in the future.
  • Make use of the huge stock of accumulated, untaxed wealth that is already there, as well as the steady stream of untaxed earnings that it generates.

It was Stephen Decatur, the naval hero of the War of 1812, who famously said: “Our country, right or wrong.”

Billionaire tax-cheats like those uncovered in the above-cited report have coined their own motto: “My wallet–first and always.”

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