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13 Trillion Pounds hoarded by the "elite"


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Guardian article

A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.

James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.

He shows that at least £13tn – perhaps up to £20tn – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, "protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy". According to Henry's research, the top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than £4tn in 2010, a sharp rise from £1.5tn five years earlier.

The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.

Oil-rich states with an internationally mobile elite have been especially prone to watching their wealth disappear into offshore bank accounts instead of being invested at home, the research suggests. Once the returns on investing the hidden assets is included, almost £500bn has left Russia since the early 1990s when its economy was opened up. Saudi Arabia has seen £197bn flood out since the mid-1970s, and Nigeria £196bn.

"The problem here is that 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," the report says.

The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry's calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world's population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.

"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network. "People on the street have no illusions about how unfair the situation has become."

TUC general secretary Brendan Barber said: "Countries around the world are under intense pressure to reduce their deficits and governments cannot afford to let so much wealth slip past into tax havens.

"Closing down the tax loopholes exploited by multinationals and the super-rich to avoid paying their fair share will reduce the deficit. This way the government can focus on stimulating the economy, rather than squeezing the life out of it with cuts and tax rises for the 99% of people who aren't rich enough to avoid paying their taxes."

Assuming the £13tn mountain of assets earned an average 3% a year for its owners, and governments were able to tax that income at 30%, it would generate a bumper £121bn in revenues – more than rich countries spend on aid to the developing world each year.

Groups such as UK Uncut have focused attention on the paltry tax bills of some highly wealthy individuals, such as Topshop owner Sir Philip Green, with campaigners at one recent protest shouting: "Where did all the money go? He took it off to Monaco!" Much of Green's retail empire is owned by his wife, Tina, who lives in the low-tax principality.

A spokeswoman for UK Uncut said: "People like Philip Green use public services – they need the streets to be cleaned, people need public transport to get to their shops – but they don't want to pay for it."

Leaders of G20 countries have repeatedly pledged to close down tax havens since the financial crisis of 2008, when the secrecy shrouding parts of the banking system was widely seen as exacerbating instability. But many countries still refuse to make details of individuals' financial worth available to the tax authorities in their home countries as a matter of course. Tax Justice Network would like to see this kind of exchange of information become standard practice, to prevent rich individuals playing off one jurisdiction against another.

"The very existence of the global offshore industry, and the tax-free status of the enormous sums invested by their wealthy clients, is predicated on secrecy," said Henry.

To put it into perspective, if you divided the quoted $21tn up equally to everyone on the planet, you'd be giving hundreds of millions of people more money than they see in five years.

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round them up and shoot them. It's the only reasonable response. Or close all the loopholes. And demand payback on unpaid ethical dues at 1000% interest and solve most hunger and shelter problems in a swift stroke.

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But the economic mess that the world faces was caused by a) Jimmy Carr - a well know comedian who chose to take the piss out of Cameron B) anyone on benefits c) public sector workers who try and protect what few rights they have both financially and for their working conditions. I know this because I hear the same message being bleated by those in Gvmt today and their supporters many of which are the same people who that article alludes to.

Interesting that Gvmt try and gain glory by Tax Loophole initiative (which in theory should be a good thing but day to day rather than some sort of headline policy) but the reality is that it avoids those who gain the most from this sort of scheme. I suppose when Ashcroft is one of your main backers you have to be careful what you say and do

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One tired old argument in their defence is the "Oh, but these are the Wealth Creators, and we need to protect them/serve their interests/whatever".

This was compared (by one person in the comments section below that article) to the Inca tradition, where the ruling elite would take halucinogenic plants, and then sell their halucinogenic piss for the lower classes to drink. A pretty off-the-wall comparison, but quite a good one when you think about it.

Anyway, as the Rev says, they're not creating wealth for anyone by storing their cash in the **** Cayman Islands.

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I know this because I hear the same message being bleated by those in Gvmt today and their supporters many of which are the same people who that article alludes to.

Tony Blair is a Tory supporter :shock:

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One tired old argument in their defence is the "Oh, but these are the Wealth Creators, and we need to protect them/serve their interests/whatever".

This was compared (by one person in the comments section below that article) to the Inca tradition, where the ruling elite would take halucinogenic plants, and then sell their halucinogenic piss for the lower classes to drink. A pretty off-the-wall comparison, but quite a good one when you think about it.

Anyway, as the Rev says, they're not creating wealth for anyone by storing their cash in the **** Cayman Islands.

Where could one purchase said Inca piss ? sounds right up my alley .

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One tired old argument in their defence is the "Oh, but these are the Wealth Creators, and we need to protect them/serve their interests/whatever".

This was compared (by one person in the comments section below that article) to the Inca tradition, where the ruling elite would take halucinogenic plants, and then sell their halucinogenic piss for the lower classes to drink. A pretty off-the-wall comparison, but quite a good one when you think about it.

Anyway, as the Rev says, they're not creating wealth for anyone by storing their cash in the **** Cayman Islands.

Where could one purchase said Inca piss ? sounds right up my alley .

Not sure, but you're welcome to have some of mine. It wouldn't be hallucinogenic just at the moment though, but hey, it's free.

Fortunately for those of us less keen on drinking weewee, these days there are other forms of piss one can drink in order to achieve a state of being-off-one's-tits. Finance-wise, however, we're pretty much stuck with the Inca method.

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solve most hunger and shelter problems in a swift stroke.

I doubt it would solve any hunger problems. Money doesn't create food. In fact I doubt that much money has any real meaning, because there's nothing you can actually use it for, and trying to mobilise it would drive the world into impossible inflaction due to ludicrously high money supply.

Just another example of the press trying to say its all someone elses fault and there's an easy fix.

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solve most hunger and shelter problems in a swift stroke.

I doubt it would solve any hunger problems. Money doesn't create food. In fact I doubt that much money has any real meaning, because there's nothing you can actually use it for, and trying to mobilise it would drive the world into impossible inflaction due to ludicrously high money supply.

Just another example of the press trying to say its all someone elses fault and there's an easy fix.

Glad you cleared that up, so they are really doing us all a f favour, Fair play to the tax dodgers, thieves and crooks amongst them for thinking of us in such a self sacrificing way

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Fair play to the tax dodgers, thieves and crooks amongst them

small point but if they are legally avoiding ways of pay tax , then how do they become crooks and thieves ?

As it was in the news today it reminded me , but whenI had my new kitchen fitted the other year I paid the Plasterer , electrician and the fitter in cash ... I suspect that not one of them declared that income .. so that IS theft ... what these other people are doing doesn't appear to be breaking any current laws , other than maybe a moral one

Ok my electricians couple of hundred quid isn't in the same league as few trillion but I bet when he went down the pub that night and told all his mates that he had a result with a cash in hand job I bet they all said "Nice one mate" rather than pointing out the laws that he had broken and going into outrage mode on the interweb

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Fair play to the tax dodgers, thieves and crooks amongst them

small point but if they are legally avoiding ways of pay tax , then how do they become crooks and thieves ?

As it was in the news today it reminded me , but whenI had my new kitchen fitted the other year I paid the Plasterer , electrician and the fitter in cash ... I suspect that not one of them declared that income .. so that IS theft ... what these other people are doing doesn't appear to be breaking any current laws , other than maybe a moral one

Ok my electricians couple of hundred quid isn't in the same league as few trillion but I bet when he went down the pub that night and told all his mates that he had a result with a cash in hand job I bet they all said "Nice one mate" rather than pointing out the laws that he had broken and going into outrage mode on the interweb

I take the view that your tradesmen are just the sort of folk who SHOULD be able to get sly cash in hand if there's any justice in the world.

Right now, whether you're conscious of it or not, by the wonder of Corruption/Financial Engineering/Overcharging you're leaking money one way or another somewhere to some leech who is doing nothing whatsoever to earn it, doesn't even know or care he's earning it from you, and has absolutely no intention of paying tax on it.

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Fair play to the tax dodgers, thieves and crooks amongst them

small point but if they are legally avoiding ways of pay tax , then how do they become crooks and thieves ?

As it was in the news today it reminded me , but whenI had my new kitchen fitted the other year I paid the Plasterer , electrician and the fitter in cash ... I suspect that not one of them declared that income .. so that IS theft ... what these other people are doing doesn't appear to be breaking any current laws , other than maybe a moral one

Ok my electricians couple of hundred quid isn't in the same league as few trillion but I bet when he went down the pub that night and told all his mates that he had a result with a cash in hand job I bet they all said "Nice one mate" rather than pointing out the laws that he had broken and going into outrage mode on the interweb

not paying tax, just because a legal loophole has been provided is still dodging paying it, especialy when that loophole has been provided for the very rich only to exploit, It's amazing how few loopholes there are for you average working stiff. But I'd sure be surprised if there is no illegal tax dodging going on, and that's before we explore how plenty of this 13 trillion was attained, weather in a legally or morally fair way. All because money wasn't attained illegally doesn't always mean it was gained fairly and without a bit of dodgy dealing.

As for your scenario regarding you builders, I guess avoiding VAT had nothing to do with paying in cash, so if full VAT was charged than surely the income would need to be declared to tally up the books, otherwise they would be guilty of VAT fraud as well as denying Income tax.

but getting away from the aside I've gotten into above, it's strange how someone almost painting 13trillion beng ferreted away for tax avoidance reasons as a good thing has been ignored.

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I take the view that your tradesmen are just the sort of folk who SHOULD be able to get sly cash in hand if there's any justice in the world.

that's kinda double standards though isn't it and suggests more a chip on the shoulder attitude because it's not fair that someone else has more than me

(not intended as an insult so please don't take offence)

like I said , one group is blatantly breaking the law , the other is legally manipulating around it .... there is a difference whether we like it or not / fair or not

My mate said the other day that you go anywhere else in the world and see a bloke in a Rolls Royce , people look at it and say nice car , it's what I aspire to and through hard work i hope to achieve it ... come to England and you see someone in a rolls Royce and we think " rich rocket polisher "

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I take the view that your tradesmen are just the sort of folk who SHOULD be able to get sly cash in hand if there's any justice in the world.

that's kinda double standards though isn't it and suggests more a chip on the shoulder attitude because it's not fait that someone else has more than me

(not intended as an insult so please don't take offence)

like I said , one group is blatantly breaking the law , the other is legally manipulating around it .... there is a difference whether we like it or not / fair or not

well law and justice are two completely different things, but then it's easy to legally manipulate yourself around paying tax when the system is set up to make it easy to for people with enough wealth, poorer people have to resort to plain breaking the law to avoid tax

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My mate said the other day that you go anywhere else in the world and see a bloke in a Rolls Royce , people look at it and say nice car , it's what I aspire to and through hard work i hope to achieve it ... come to England and you see someone in a rolls Royce and we think " rich rocket polisher "
Probably true.

And it's one of things I like best about this country.

But if it were just a case of some people being a bit more comfortable than others it would never go beyond that.

If somebody has a nicer house or car than me, I don't think I have any right to try and bring them down.

But when it's a case of some people sitting on TRILLIONS of pounds while millions are dying through poverty, malnutrition, disease and violence, I think we not only have the right to bring them down, it becomes a **** OBLIGATION.

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