Super rich men and women from around the world are failing to pay at least $21 trillion in taxes, more than the entire American economy, according to new research from the campaign group, Tax Justice Network.
James Henry, from Tax Justice Network, and previously a chief economist at consultancy, McKinsey, conducted the research based on data from the International Monetary Fund and the Bank for International Settlements.
His report shows that tax avoidance schemes, such as that used by comedian Jimmy Carr last year, are just the tip of the iceberg. Carr used a trust based in the Cayman Islands to cut the amount of tax he paid but, according to the report, many of the world’s super rich are hiding some or all of their assets off shore, despite the efforts of many leading economies to tackle tax evasion.
The report shows, says John Christensen from Tax Justice Network, that inequality is much greater than government statistics indicate. Politicians rely on the trickle-down effect to transfer some of the wealth held by the rich to poorer members of society. However, the report indicates that, in fact, vast amounts of wealth are actually flowing out of the country and into off shore accounts.
James Henry estimates that more than $21 trillion (£13 trillion) is held in off shore accounts, possibly as much as $32 trillion (£20 trillion). Half of that is owned by just 92,000 people.
According to Henry, if these super rich tax evaders could be persuaded to reinvest their wealth back in their home countries, much of the wealth could be used to tackle many of the challenges faced by economies today. For example, taxing the super-rich citizens of Europe could, potentially, end the Eurozone’s debt crisis. African economies, such as those of Nigeria and Ivory Coast, could also drag themselves out of the indebtedness they currently face.
