Business, Economics and Jobs

Super rich hide more than $21 trillion in tax havens


George Town in Grand Cayman, Cayman Islands.


David Rogers

The world's super rich have between $21 trillion and $32 trillion hidden in tax havens, according to a new study, CNN reported.

The size of the hidden financial assets is equivalent to the combined GDPs of the US and Japan and represents $280 billion in lost tax revenue, said CNN.

The study, called The Price of Offshore Revisited, was authored by James Henry for the Tax Justice Network, said the BBC. Henry used 2010 data from the Bank of International Settlements, the International Monetary Fund, the World Bank and national governments to compile his study.

Henry noted, "The lost tax revenues implied by our estimates is huge. It is large enough to make a significant difference to the finances of many countries."

"This offshore economy is large enough to have a major impact on estimates of inequality of wealth and income; on estimates of national income and debt ratios; and – most importantly – to have very significant negative impacts on the domestic tax bases of 'source' countries," he said, according to the Guardian.

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Henry, a former economist at McKinsey & Co., told NBC News, "We're basically talking about a black hole in the world economy."

According to the analysis, 10 million individuals around the world have offshore assets, but at least $10 trillion is owned by just 92,000 people, said the Guardian. The study did not include non-financial assets such as property.

The study shows that the world's top 50 private banks managed more than $12.3 trillion in 2010, and around half of the sum was controlled by the world's top 10 financial institutions, at least seven of which received bailouts after the financial crisis, according to NBC News.

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The most popular tax havens included Switzerland, the Cayman Islands, Luxembourg, Hong Kong and Singapore, according to CNN.

"On one hand people are asked to cut their wages and live in poverty because banks have to be saved," Paul De Grauwe, a prominent economist and professor at the London School of Economics told NBC News. "And these same banks use all sorts of tech to help super rich to evade taxes."