World's super-rich 'hiding' trillions offshore, report says
In this Jan. 30, 2008 file photo, the logo of Swiss Bank UBS is seen on Zurich's Bahnhofstrasse, Switzerland. (AP Photo/Keystone, Walter Bieri, file)
Published Monday, July 23, 2012 8:36AM EDT
Forget the one per cent, according to a new report, the world's richest 0.001 per cent were sitting on what amounts to a hidden stash of nearly US$10 trillion dollars in 2010. And that's just under half of the vast wealth held in offshore accounts by the world's super-rich that year.
According to the study’s conservative estimates, the wealthy elite had used cross-border tax law loopholes to stash at least $21 trillion dollars offshore and out of tax collectors' reach by the end of 2010.
The research, conducted by former McKinsey & Co. chief economist James Henry for the U.K.-based lobby group Tax Justice Network, estimates the value of private financial wealth held in offshore bank and investment accounts could actually be as high as $32 trillion.
Either way, that's more than the combined economic output of the United States and Japan, held by fewer than 10 million people.
And, according to Henry, it may be time to stop pointing the finger at the one per cent, as he estimates just 92,000 of those super-rich individuals owned nearly half of that offshore stash. That's just 0.001 per cent of the world's population in control of nearly $10 trillion in offshore financial assets that year.
"This new report focuses our attention on a huge 'black hole' in the world economy that has never before been measured," Henry wrote in a statement released to accompany the release of his research on Monday.
"This at a time when governments around the world are starved for resources, and we are more conscious than ever of the costs of economic inequality."
The figures do not include other types of offshore assets favoured by the super-rich, however, such as real estate, yachts or racehorses.
Other highlights from the report include:
- The top 50 private banks managed more than $12 trillion in cross-border investments for private clients at the end of 2010. That was up from $5.4 trillion in 2005.
- Wealth is concentrated at the top of that ranking too, with the top 10 banks commanding more than half of the top 50's total assets. Of those 10, UBS, Credit Suisse and Goldman Sachs handled the most offshore assets.
- If all the hidden assets highlighted in the report earned a return of 3 per cent that was taxed at a rate of 30 per cent, the tax revenues would total between $190 and $280 billion, or twice the total amount all OECD countries spend on foreign aid.
The report singles out a sub-group of 139 developing countries that were more than $4 trillion in the red in 2010, noting that if their foreign reserves and hidden, private offshore wealth were factored in, they would actually have posted debts of minus $10 to $13 trillion.
"In other words, these countries are big net creditors, not debtors," according to a statement accompanying the study's release Monday.
"Unfortunately, their assets are held by a few wealthy individuals, while their debts are shouldered by their ordinary people through their governments."
The data analyzed for the report "The Price of Offshore Revisited" was drawn from sources including the United Nations, the International Monetary Fund, central and private banks around the world, as well as data on demand for currency and gold.