The first authoritative report on what the super-rich do with their money has been published by the Tax Justice Network, a group of economists and accountants. It's primary finding is that, worldwide, the world's richest individuals have placed $11.5 trillion of assets in offshore havens, mainly as a tax avoidance measure. Every year they earn over $860 billion on these assets, a figure which is equivalent to roughly half of the revenue of the US government! But what is sure to concern government treasuries the world over is that the taxable income on $11.5tn could exceed $255bn.
The US alone misses out on at least $35 billion in tax every year because it's super-rich citizens hide their money offshore rather than contribute their fair taxes like every other person.
The UK newspaper 'The Observer' reports the story and gives one example, that of Rupert Murdoch, owner of the conservative media's Weekly Standard, New York Post and Fox Network:
Rupert Murdoch last week floated his family's £3.8 billion personal investment company in Bermuda - saving himself £522 million in taxes.
Bermuda was chosen because the media tycoon, who chairs News Corporation, wanted to avoid the taxman after his firm changed domicile from Australia to the United States recently. Just prior to the Bermuda float, Murdoch bought a 20-room, three-floor residence opposite Central Park in Manhattan for £22m. Days later he bought a house in Beijing.
That's $940 million in tax avoidance which should have been paid to the US right there!
And the $35 billion in lost tax revenue for the US doesn't include what corporations owned by the super-rich are avoiding. The $11.5trn does not include the possibly unquantifiable amount of money stashed in tax havens by multinational corporations, which are using increasingly sophisticated techniques to run rings round the authorities.
George Gelber, head of public policy at Catholic aid agency Cafod, says: "The people who use tax havens are free-riders on the taxes paid by working people round the world. They pay little or nothing for public goods such as the rule of law and security, which have to be paid for by the taxes of much less well-off people."
As the UK discovered during the 80's and the US is figuring out now, tax cuts for the rich don't work. The end result is always less investment back into the country that gave the rich the break and more money going into tax havens. That isn't opinion, it is verifiable historic fact.
Bush's huge giveaway to the super-rich can now be put into it's true perspective - 40 percent of those tax breaks, or $500 billion, went to the richest 1 percent, the people who need it the least, while millions and millions of Americans who really needed those tax breaks received nothing or only a few dollars. The vast majority of that $500 billion was hidden away instead of being used to invest in the US. It did absolutely nothing to help the economy or reduce the massive deficit.
Given that the truly super-rich are already hoarding money like no pharoah ever dreamed of while the rest of the country pay for them, that bonanza looks more and more like a selfish act for a rich man and his peers.
UPDATE From the Washington Post today comes an article entitled Business Sees Gain In GOP Takeover.
The article notes:
Fortune 500 companies that invested millions of dollars in electing Republicans are emerging as the earliest beneficiaries of a government controlled by President Bush and the largest GOP House and Senate majority in a half century.
MBNA Corp., the credit card behemoth and fifth-largest contributor to Bush's two presidential campaigns, is among those on the verge of prevailing in an eight-year fight to curtail personal bankruptcies. Exxon Mobil Corp. and others are close to winning the right to drill for oil in Alaska's wildlife refuge, which they have tried to pass for better than a decade. Wal-Mart Stores Inc., another big contributor to Bush and the GOP, and other big companies recently won long-sought protections from class-action lawsuits.
Exxon, just to give an example, has given $5.2 million to Republicans in the past decade and less than $650,000 to Democrats. Bush received $2.5 million from oil and gas companies for his reelection bid alone. Credit card and banking companies, who are leading the lobbying effort on the terrible bankruptcy bill, were top financers of Bush's two campaigns. MBNA, Credit Suisse First Boston LLC, Bank of America Corp. and Wachovia Corp. were among the top 20 contributors to Bush, contributing more than $300,000 apiece.
Bought and sold, my friends, bought and sold.
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