Monday, July 30

About Those Trillions Being Held In Tax Havens Around The World...

Given that about half of all Americans are not paying taxes and are now receiving benefits from the Government, and with things even worse in other countries, politicians and the press are trying to place blame on the lack of an unlimited supply of money to pay for these social programs on rich people who are somehow hiding assets from taxation in tax havens around the world:
The Tax Justice Network, a campaign group, estimated last weekend that as much as $21 to $32 trillion of financial assets are sheltered in offshore tax havens, representing up to $280 billion in lost income tax. - CNBC
First, while it sounds like a very large number, it is very deceptive. That is because, while some of the money is illicit and the beneficial owners are hiding the money from taxation, much of this money is there legally and that the beneficial owners do not owe any additional tax on these funds. 

Worse, look at the study's own estimate of lost tax revenue: 'up to $280 billion in lost income tax'. While in itself a large amount, it is still a mere 1% of the total. At the very least this story is just more evidence that the real problem is excess spending and not enough taxation (other than the growing percentage of the population escaping taxation entirely, and that is not the rich who already pay and pay more...).

Even worse, the potential amount of last tax revenue, assuming the 'best case' scenario, is not even 1/4 of the US 2012 budget deficit of 1.2 Trillion dollars. So even if this lost income tax could be recovered AND IF the US got all of the proceeds, it would not even make a difference in stemming the US's march towards bankruptcy. Greece itself would need just about  the whole amount to help dig itself out of their current fiscal crisis.

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