By: Tony Best
As President Barack Obama’s turns up the heat on Mitt Romney’s use of offshore tax havens in Europe, the Caribbean and elsewhere in order to avoid paying U.S. corporate taxes, thousands of wealthy Americans may have trillions of dollars in offshore accounts.
A comprehensive study of the “offshore” economy conducted by experts of the Tax Justice Network indicates as much as $21 trillion, as much as the combined economies of the U.S. and Japan, was hidden in tax havens or low tax jurisdictions in Europe, Asia, the Caribbean and elsewhere. As many as 100,000 of the world’s super rich may be using them to pay little or no taxes. Most of the money was salted away in Europe but the Cayman Islands, a small Caribbean international offshore center may have been the beneficiary of some of the money. The report pinpointed Switzerland and many of its European neighbors as well as the Cayman Islands as major centers for some of the money.
“These estimates reveal a staggering failure” to keep track of the funds flowing to tax havens, said the Justice Network.
President Obama’s re-election campaign has focused attention on the failure of Republican presidential standard-bearer to release more of his tax returns which they believe may show Romney, like many extremely wealthy Americans didn’t pay their fair share of taxes. The former Massachusetts Governor has acknowledged that he established international business companies and offshore accounts in Switzerland, the Cayman Islands and Bermuda but has denied he used them to dodge payment of taxes to the IRS.
Some of the same countries were cited in the Tax Justice Network’s study.
James Henry, a former chief economist at McKinsey, a consultancy firm compiled most of the figures of hidden money in offshore centers estimated at perhaps $21 trillion to $30 trillion in “secretive jurisdictions” such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract assets of high net-worth individuals.
The Republican nominee is often described as one such high net-worth American.
Henry said that the world’s wealthiest individuals were protected from taxes by “a highly paid, industrious bevvy of professional enablers in the private banks, legal and accounting industries, taking advantage of the increasingly borderless, frictionless global economy.”
UBS, Goldman Sachs and Credit Suisse are on the list of the top 10 private banks involved in the borderless offshore financial business.