A new report released Sunday estimates that the United States Treasury loses $280 billion a year in tax revenue from wealthy Americans and companies keeping their money in off shore bank accounts in tax havens. The report estimated between $21 trillion and $32 trillion is held in these offshore accounts.
The Tax Justice Network report says this means that the income inequality in the U.S. if far worse than economists suspected.
The research was carried out by James Henry, former chief economist at consultants McKinsey & Co. He used data from the World Bank, International Monetary Fund, United Nations and central banks
The U.S. taxpayer is not the only victim of this practice, it impacts developing countries as well depriving them of revenue that could go a long way toward alleviating their national fiscal problems, the report’s authors suggest. The research estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3 to $9.3 trillion of "unrecorded offshore wealth" by 2010.
The report considers the impacts of a range of offshore abuses, including unreported capital flows and under-taxed corporate profits. It places considerable blame on big multinational banks and other financial institutions that are integral to the process of shifting money to offshore tax havens.
The “huge, secretive offshore industry has truly become the dark side of globalization,” the report concludes. It urges renewed efforts by developed countries to gain a handle on the problem.
The Obama administration has been putting pressure on governments like Switzerland to cooperate with the IRS in recovering money held by tax cheats offshore. Credit Suisse ahs settled a lawsuit from the government regarding its complicity in allowing depositors avoid U.S. taxes. The Treasury Dept. has collected several billion dollars in money from Swiss banks thus far, but it is just the tip of the iceberg.
This report is going to fuel new pressure on Mitt Romney to release tax returns so voters can determine how much he has in offshore accounts and whether those accounts allowed him, legally or illegally, to avoid taxes.
There is one standard for a businessman to keep money in offshore accounts, but there is another standard for someone who wants to be President of the U.S. Clearly, these offshore accounts are hurting our economy. A President who keeps his money in offshore accounts raises serious questions.
The bigger issue, however, is how our tax policy facilitates or encourages this tax evasion. We have a huge national debt and we need tax dollars to invest in infrastructure, education, and other priorities. $280 billion a year would go a long way towards helping our economic recovery.
Republicans have killed Democratic bills that would take away tax breaks for companies to move offshore.
The Romney campaign wants to pivot away from discussion of his offshore accounts but don’t expect that to happen any time soon.
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