Forget the 47 percent. Foreign tax havens—and investment vehicles like those the GOP candidate established at Bain Capital—are robbing world treasuries of billions.
Major Banks Help Clients Hide Trillions in Offshore Tax Havens
Published on Aug 3, 2012 by TheRealNews
James Henry of Tax Justice Network: US media and politicians mostly ignore massive untaxed wealth that big banks help rich move to tax havens.
Well, when you look at the distribution of wealth here that’s offshore, we think there’s no more than about 10 million people that really account for about 83 percent of the $21 trillion that is at a minimum offshore. And that’s pretty concentrated. The top 100 are multibillionaires. They account for about 8.1 percent of the total. The next 2,900, billionaires with an average wealth of $1.4 billion, account for another 7 percent of it. So that’s about 3,000 people that already are owning nearly 15 percent of the world’s financial wealth.
And then we have—the next step in the ladder is the sort of ultra high net worth crowd, which are—their average wealth is on the order of $58 million, and there’s about 117,000 of them in the world. And then, finally, there’s another fortunate few, who are about 9.9 million, whose average wealth is on the order of $6.3 million, and they account for about 60 percent of this. So 82 percent of the world’s wealth, then, when you add all this up, is—of the offshore wealth is owned by about 0.14 percent of the world’s population.
So if you look at it from the standpoint of who’s actually benefiting from this industry, you know, it’s a tiny share of the global population. And that group has—in terms of global wealth, which is about $231 trillion, they own about a third of all that global wealth. And so that’s a—you know, 0.14 percent is a tiny fraction owning that much wealth.
James Henry, a former chief economist at McKinsey & Co., describes offshore tax havens like the “bar scene in Star Wars.” He explains, “Dictators and kleptocrats used them to conceal stolen loot. Arms dealers and drug dealers use them to launder their deals. Google and Apple and Pfizer use them to park their intellectual property and pay themselves tax-free royalties. Banks use them to park lousy loans and stash the offshore accounts and assets under management of their wealthy individual clients, many of which are paying zero taxes back home…And so on.”
Romney has investments in a number of well known tax havens, including Ireland, Luxembourg, the Cayman Islands, and Bermuda. Until 2010, he held a few million in the Swiss bank UBS, which in 2009 was forced to pay the US $780 million in fines and penalties for helping more than 17,000 Americans commit tax fraud by hiding as much as $20 billion overseas. The total value of Romney’s offshore investments is unknown, but his tax returns have revealed that he has at least $30 million invested in the Cayman Islands, in at least 12 different Bain Capital funds. When pressed about the relationship between his offshore investments and his low tax rate (he paid 14.1 percent on $13 million in income, according to his 2011 tax return), Romney has largely declined to answer questions about his overseas holdings other than to say, “I pay all the taxes that are legally required, not a dollar more.” Romney has also denied getting tax benefits from his offshore accounts. He told Fox News, “[T]here was no reduction, not one dollar reduction in taxes by virtue of having an account in Switzerland or a Cayman Islands investment. The dollars of taxes remained exactly the same. There was no tax savings at all.”
Similarly, a Romney campaign spokeswoman told Mother Jones that Romney’s foreign investments “are taxed in the very same way they would be if the shares were held in the US rather than through a Cayman fund. No taxes are avoided or reduced. These funds are registered with the IRS and report all income to investors and the IRS, just like domestic funds.”
Romney’s assertion that his offshore investments have not reduced his tax bill has been met with skepticism by tax experts.