Report: $21 trillion hidden from taxman in offshore accounts
The wealthiest people in the world have exploited loopholes in international tax rules, evading the taxman and sheltering a staggering $21 trillion or more in offshore accounts, according to a report released Sunday.
To give perspective to the scale of the offshore economy, the economic transparency group Tax Justice Network said the sum is larger than the entire United State’s economy, or enough money to entirely solve the European debt crisis.
The report, called The Price of Offshore Revisted, says between $21 trillion and $32 trillion could be hidden in tax havens in countries like Switzerland and the Cayman Islands. The first details of the report were released to the Observer in London.
And most of the money hidden overseas comes from people who would make the was majority of the top 1 percent turn green with envy, economists said.
Instead, some $10 trillion that has been stashed in off-shore accounts is owned by only 92,000 people, or 0.001 percent of the world's population, the report finds.
"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show,” said John Christensen of the Tax Justice Network. "People on the street have no illusions about how unfair the situation has become."
Private banks and investment firms have enabled these wealthy individuals and corporations to take advantage of loopholes and gaps in cross-border tax rules, according to the report.
Questions about offshore accounts and tax shelters has recently become a major point of contention in the U.S. presidential campaign, with Democrats accusing Republican candidate Mitt Romney of stashing some of his wealth in offshore banks to avoid taxes.
The Romney campaign dismissed the allegations as an "unfounded character assault."
According to the Tax Justice Network report, almost every country has suffered from the billions of dollars in lost tax revenue, But, it says sub-Saharan Africa and oil producing states like Saudi Arabia have been especially hard hit. In some cases, the total worth of these hidden assets far exceeds the international debts owed by these countries.
The report was compiled using thousands of pieces data and sources, including information from the IMF, the Tax Justice Network said.