Figures on the amount of wealth offshore are hard to come by, as none of the international financial institutions has seen fit to lay out the global picture. In 1999, Merrill Lynch's "World Wealth Report" estimated that one-third of the wealth of the world's "high net worth individuals" (as banks like to call them), then $11 trillion, might be held offshore. In 2004, Merrill Lynch revised its wealth figure to $28.8 trillion, but it was no longer estimating how much of that was hidden in tax havens. As the percentage of wealth offshore has been growing, the number would likely be $10 or $12 trillion. Such an estimate was made by "The Global Wealth Report" for 2003 by the Boston Consulting Group (BCG). It estimated the total holdings of cash deposits and listed securities of high-net-worth individuals at $38 trillion and then broke that down by North America-$16.2 trillion, of which less than 10 percent was controlled offshore; Europe-$10.3 trillion of which between 20 percent to 30 percent was controlled offshore; Middle East and Asia-Pacific area-$10.2 trillion, with assets controlled offshore ranging from 10 percent (Japan) to 70 percent (ME); and Latin America-$1.3 trillion, of which more than 50 percent is held offshore.
How much of the money that moves around the world is offshore? The International Monetary Fund estimates that assets held in tax havens equal about 50 percent of total cross-border assets. And according to Merrill Lynch and BCG estimates, assets held in tax havens, beyond the reach of effective taxation, would equal one-third of total global gross domestic product, the value of goods and services, which in 2003 was $36.2 trillion.
If the U.S. government were able to collect these evaded taxes, they would fully fund every social program currently on the books. During the 1950s, U.S. corporations accounted for 28 percent of federal revenues. Now, corporations represent just 11 percent. If big corporations paid taxes of 35 percent on their U.S. profits, as the law requires, corporate income taxes in 2002 would have been $308 billion instead of an estimated $136 billion.
The reverberations of these losses extend to the states. The Multistate Tax Commission estimates that state governments lose as much as $12.4 billion a year to various forms of tax sheltering.
Article comments
1 - Nancy
Please take pity, the petro dollar is dying and the Euro is taking over. The free ride for the US is almost over, so do not drive out the remaining wealth/resources of the well-to-do in the country.
They will simply expatriate and take their wealth with them, (as they are already doing because of the high taxes *(going higher) in the country). That scenario leaves us "worker bees" to shoulder the TOTAL burden all by our selves and we have far less to work with when it comes to resources.
Somehow we, as a country of diverse people, have to re-group and re-think our position
The government has got to find ways to 'cut back', instead of demand more and more money from it's citizens, otherwise history will repeat it's self and those with the ability will up and leave the sinking ship. This is traditionally what has always happened throughout history when the government of any country got too greedy and too heavy-handed... those with the assets, liquidated them and got up and left.
There will always be "places to go", there will always be a shelter offered somewhere for wealth, the tax top-heavy nations of the world cannot go around and militarily attack every nation that offers the opportunity to the individual with assets who wants to bring those assets to their country, and that is what it would eventually come down to.
Why? Because "money talks and you-know-what talks"! Nothing ever changes under the face of the sun, read history and understand that higher and higher taxes spell the demise of the country that imposes them. We will die....a painful economic death if we don't try to keep our wealthy individuals to help us.
NEV
2 - J. Gosline
This article was taken from Dissent magazine's Spring 2005 issue without permission. You may continue to post this article on your blog if you provide a link to Dissent's Web site (www.dissentmagazine.org) and credit us with publishing this article. If you choose not to do this, remove this article from your blog immediately. Thank you for your cooperation.
Sincerely,
The Editors
Dissent Magazine
3 - Eric Olsen
Dear J., I have responded by email and made appropriate changes. Thanks, EO
4 - Aaman
That's a great website/mag - thank you for bringing it to our attention
5 - Jeremy
Sorry about that, it was forwarded to me by a friend, fixed.
6 - Tapart News Advocate
The USA government start funding the moving of production outside the USA to places like Mexico in 1956. It was supposed to be a temporary program to help the Mexican economy while bringing cheaper products into the USA.
The program continued on through the years and just prior to the passing of the NAFTA trade agreement in 1994, 2000 US factories had moved to Mexico. NAFTA just confirmed what was going on for a long time. However after NAFTA was passed the number of factories moved to Mexico accelerated and by the time President Bush took office, there were 4000 former US factories in Mexico.
Right after NAFTA was passed President Clinton had to rush billions of dollars to Mexico to shore up the Peso. This should have demonstrated the failure of the programs from 1956 on but power and money run the show. The workers who are the core of the economies are still left out of the rewards. They also have very little voice in their destinies while world banks play a control game. International entities like the WTO control the flow of so called free trade while controlling the flow of wealth.
For more information, see Tapart News and Art that Talks global issues at http://www.tapsearch.com/tapartnews http://pages.zdnet.com/arklineart/tapin
And ask your leaders if the above is true or not. We do not need any conspiracy theories to know that something really went wrong with the workday all around the world and it was power and greed that ruled the process.
7 - L. Burike Files
So much of the discussion seems to be about taxes and privacy. I am aware of many offshore businesses that left the EU and US because of regulation and litigation. The offshore companies are tax neutral but have located in offshore jurisdictions just to survive litigation and the consequences of special interest groups. A perscription fulfilment company left the US for offshore because of lobbyist pressure from the drug companies to shut them down. (Note they fill only 5 and above and thus deal with things like Lipator etc...) I know of dozens of software companies that moved offshore to stem the tide silly litigation, they had won all of the litigation about fees and annual renewals - but paid hundreds of thousands of dolllars of unreimbursed legal fees every year to win those suits. In many offshore centers winner of the suit has the loser pay the legal fees.
So while we rant about offshore as a haven for criminals and tax cheats - the criminals are in the EU and US - and may or may not use offshore.
How many of us are insured indirectly by Bermuda companies, or invest in offshore stocks by and through a Cayman Fund since US mutual funds cannot directly invest in companies not in the US????
How many ways are we touched by offshore companies - every day - and don't realize it.
In short the offshore jurisdiction would only exist - in classic economic terms - if they offered a competitive advantage.
Just some fodder for thought - to maybe - divest our "big county" point of view.
Burke