{"id":128933,"date":"2014-07-09T01:57:53","date_gmt":"2014-07-09T01:57:53","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/?p=128933"},"modified":"2014-07-09T01:57:53","modified_gmt":"2014-07-09T01:57:53","slug":"much-wealth-wealthiest-hiding","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/money\/much-wealth-wealthiest-hiding\/","title":{"rendered":"How Much Wealth Are Our Wealthiest Hiding?"},"content":{"rendered":"

More than enough, the latest statistical evidence suggests, to warrant a full-fledged federal search. A new banking law in effect this month could start that search in the right direction.<\/span><\/strong><\/p>\n

Sam Pizzigati<\/span><\/em><\/p>\n

Almost everyone knows how Al Capone went down. We\u2019ve seen the movies.<\/p>\n

The biggest and baddest gangster in American history extorted and murdered for years. But the feds could never convict him on anything, until the green eyeshade guys\u00a0went to work<\/a>. They finally nabbed Capone \u2013 on income tax evasion.<\/p>\n

The moral of this story? Even the most ruthless of our richest can\u2019t hide what the federal government really wants to find.<\/p>\n

We need the green eyeshades back on the job. Today\u2019s wealthy have taken tax evasion to a level that old Scarface never dared imagine. Their network of offshore tax havens is now hiding a significant share of the world\u2019s wealth.<\/p>\n

How much are<\/strong>\u00a0the mega rich hiding offshore? Independent analysts\u00a0have been working<\/a>\u00a0to pin that figure down. The most recent \u2013 and statistically robust \u2013 of these estimates comes from the young London School of Economics analyst Gabriel Zucman, a prot\u00c3\u00a9g\u00c3\u00a9 of the widely heralded French economist Thomas Piketty.<\/p>\n

Zucman\u00a0has zeroed in<\/a>\u00a0on what he calls the \u201canomalies\u201d of international financial record-keeping. His prime example: the \u201cresidence principle.\u201d<\/p>\n

In theory, this notion works simply. Say, for instance, that a French national holds a $1 million investment in U.S. financial securities. Financial records, under the residence principle, are supposed to record this $1 million as an asset for France and a liability for the United States.<\/p>\n

We\u2019re living in a world where taxes on our wealthy can only be collected if these wealthy self-declare their income.<\/strong><\/p><\/blockquote>\n

At the end<\/strong>\u00a0of the day, these assets and liabilities should balance out globally. But they don\u2019t. Not even close. Why not? The wealthy are stashing a growing share of their wealth in tax haven banks that don\u2019t, Zucman\u00a0notes<\/a>, \u201cautomatically report the investment income earned by their clients to tax authorities.\u201d<\/p>\n

In effect, the economist relates, we\u2019re living in a world where taxes on our wealthy can only be collected if these wealthy \u201cself-declare their income.\u201d Ever fewer do.<\/p>\n

Zucman\u2019s\u00a0virtuoso statistical sleuthing<\/a>\u00a0ends up concluding that the global super rich \u2013 deep pockets who typically\u00a0hold over<\/a>\u00a0$50 million in assets \u2013 had stashed, as of 2008,\u00a0$7.6 trillion<\/a>\u00a0in offshore tax havens, about 8 percent of total global personal financial wealth.<\/p>\n

About 80 percent<\/strong>\u00a0of this offshore wealth, Zucman\u00a0calculates<\/a>, goes undeclared to tax authorities. Declaring that income \u2013 and paying a taxes due on it \u2013 would add, Zucman estimates, over $200 billion annually to global tax collections.<\/p>\n

Zucman emphasizes that his figures only cover\u00a0financial<\/em>\u00a0wealth. His calculations do not cover the huge sums the ultra rich have parked in jewels or fine art or luxury real estate.<\/p>\n

Helping the wealthy hide their wealth, financial and otherwise, has become an astonishingly lucrative business opportunity for bankers and barristers the world over. Most all major global banks, including American giants like JPMorgan Chase, have subsidiaries in the world\u2019s top tax havens.<\/p>\n

About 80 percent of offshore wealth goes undeclared to tax authorities.<\/strong><\/p><\/blockquote>\n

This lucrative, tax-evading universe<\/strong>\u00a0occasionally surfaces out of the opaque accounting depths. One story broke late last month when a federal judge\u00a0sentenced<\/a>\u00a0powerhouse Illinois lawyer Paul Daugerdas to 15 years behind bars for a two-decade-long fraud that saved his wealthy clients $1.6 billion in taxes.<\/p>\n

Those clients ranged from an early investor in Microsoft to the late oil billionaire Lamar Hunt, one of the most powerful owners in professional sports.<\/p>\n

For his services, Daugerdas personally pocketed $97 million.<\/p>\n

\u201cThis case shows the astonishing lengths some super-wealthy Americans will go to avoid their obligation as citizens,\u201d U.S. district court judge William Pauley\u00a0fumed<\/a>\u00a0at the sentencing. \u201cMr. Daugerdas was a tax shelter racketeer who tapped into the incredible greed of some of the country\u2019s wealthy.\u201d<\/p>\n

A new tax law provision<\/strong>\u00a0that went into effect July 1 could make life for Daugerdas and his colleagues more difficult. Or at least IRS officials hope so.<\/p>\n

The 2010 passage of the Foreign Account Tax Compliance Act gave these officials the regulatory wherewithal to\u00a0level stronger sanctions<\/a>\u00a0against foreign banks that play footsie with wealthy American tax cheats. As of this month, the heart of the law\u00a0goes fully<\/a>\u00a0into effect: Foreign banks\u00a0must now report<\/a>\u00a0the accounts of U.S. citizens that total over $50,000.<\/p>\n

About 70 nations have so far agreed to abide by the new Foreign Account Tax Compliance Act reporting requirements, many without much enthusiasm.<\/p>\n

Other nations \u2013 tax havens like the Seychelles, an island nation in the Indian Ocean \u2013 remain defiant. They see the new law as an ideal opportunity to boost their global market share in tax-evasion services.<\/p>\n

Financial operators<\/strong>\u00a0in the Seychelles specialize in creating \u201cshell companies\u201d that help their wealthy clients conceal their fortunes. They take a fee for every company created.<\/p>\n

\u201cThe British Virgin Islands registers 30,000 companies a year,\u201d Paul Chow, a former member of the Seychellois parliament,\u00a0boasted recently<\/a>\u00a0to a visiting journalist. \u201cWe are at about 11,000. We are catching up.\u201d<\/p>\n

The United States has in the past, of course, invaded islands with less \u201cjust cause\u201d than the tax-evasion enablers in the Seychelles are now providing. But the United States wouldn\u2019t have to invade anybody to end the tax evading ways of America\u2019s rich. A serious squeeze on their financial industry enablers \u2013 a series of sophisticated, high-profile sting operations, for starters \u2013 would do.<\/p>\n

That squeeze ought to go hand-in-glove with financial wealth reporting reforms that could set the stage for a still bolder step, a global tax on excessive wealth.<\/p>\n

\u201cWith the right policies,\u201d as Gabriel Zucman\u00a0puts it<\/a>, \u201cthis trend in rising wealth concentration could end pretty soon, sooner than we believe.\u201d<\/p>\n

Sam Pizzigati edits\u00a0Too Much<\/em><\/a>, the online Institute for Policy Studies weekly on excess and inequality. His latest book:\u00a0The Rich Don\u2019t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class<\/em><\/a>\u00a0(Seven Stories Press).<\/em><\/strong><\/div>\n

This piece was reprinted by RINF Alternative News<\/a> with permission or license.\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

More than enough, the latest statistical evidence suggests, to warrant a full-fledged federal search. A new banking law in effect this month could start that search in the right direction. Sam Pizzigati Almost everyone knows how Al Capone went down. We\u2019ve seen the movies. The biggest and baddest gangster in American history extorted and murdered […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[487,52],"tags":[],"class_list":{"0":"post-128933","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-breaking-news","7":"category-money"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/128933","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=128933"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/128933\/revisions"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=128933"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=128933"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=128933"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}