Nations’ problems of debt and deficit could be easily solved by applying taxes to profits held in offshore tax havens, where the global business elite have hidden up to $32 trillion to skirt their responsibilities to tax agencies all over the world, the liberal-leaning Tax Justice Network reported this week.
The Tax Justice Network said that its estimates of wealth held in offshore havens ranged from $21 trillion to $32 trillion — the lowest of which is still massively larger than the roughly $11.5 trillion held in those same havens in 2005. The latest report refers to the practice of hiding wealth as “the dark side of globalization” — and shows that practice is still growing rapidly.
Activists noted that this disparity affects studies of income inequality because most researchers measure the gap between rich and poor within the boundaries of individual countries, instead of factoring in the massive stores of treasure hidden abroad.
For perspective, the entire gross domestic product (GDP) of the U.S. economy for 2011 was $15.9 trillion, whereas U.S. public debt (household debt plus government debt) stands at about $15.8 trillion. If $32 trillion were dolled out evenly to every single American citizen, each person would receive about $102,698.
But the profits don’t just come from U.S. shores: all over the world, business elites are sending their money offshore and away from government taxing authorities, a phenomena the study’s authors say is making social inequality much worse.
From a global perspective, the figures are even more staggering: with $32 trillion, the Euro crisis could be solved and portions of Africa could become more habitable. Diseases could be eradicated. It could literally end world hunger.
“These estimates reveal a staggering failure,” the Tax Justice Network’s John Christensen told The Guardian. “Inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people. This new data shows the exact opposite has happened: for three decades extraordinary wealth has been cascading into the offshore accounts of a tiny number of super-rich.”
Most of these offshore havens are legally permitted, but that could soon be changing in the U.S., where tax looholes have become a major political issue thanks to the discovery of offshore accounts held by presumptive Republican presidential nominee Mitt Romney, himself a multi-millionaire.
President Barack Obama has proposed eliminating tax breaks offered to wealthy people, pegging millionaires’ tax rates at 30 percent and closing big business’s favorite tax loopholes to bring more wealth back into the U.S. financial system. He’s also proposed cutting the top corporate tax rate to make the U.S. a more attractive place to do business.
Romney’s plan is quite different from President Obama’s. The former Massachusetts Governor recommends up to $600 billion of cuts to federal revenues by 2015, which includes massive reductions in social safety net programs like food stamps and unemployment insurance. A big part of that budget cut is accounted for by maintaining historically low tax rates for the wealthiest Americans — program launched by President George W. Bush and originally intended to sunset in 2010, but kept on life support by Republicans who threatened to shut down the U.S. government if they didn’t get their way.
Romney also supports plans that would turn Medicare into a coupon program and move Social Security out of the government’s hands and onto the stock market, where banks would take mandatory retirement savings from Americans’ pay and place it in private accounts. An estimate by the Center for a New American Security also said that Romney’s budget plan would see the U.S. spend an additional $2 trillion on the military over the next decade.
The vast majority of Americans, including a slim majority of conservatives, favor higher taxes on the wealthy, according to a Washington Post poll published last August.
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