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Trump and Clinton share Delaware tax 'loophole' address with 285,000 firms


1209 North Orange Street in Wilmington is a nondescript two-storey building yet is home to Apple, American Airlines, Walmart and presidential candidates


Rupert Neate in Wilmington, Delaware


Monday 25 April 2016 12.00 BST Last modified on Monday 25 April 2016 17.27 BST


There aren’t many things upon which Hillary Clinton and Donald Trump agree, especially as they court very different Delaware voters ahead of a primary on Tuesday. But the candidates for president share an affinity for the same nondescript two-storey office building in Wilmington. A building that has become famous for helping tens of thousands of companies avoid hundreds of millions of dollars in tax through the so-called “Delaware loophole”.


The receptionist at 1209 North Orange Street isn’t surprised that a journalist has turned up unannounced on a sunny weekday afternoon.


“You know I can’t speak to you,” she says. A yellow post-it note on her computer screen reads “MEDIA: Chuck Miller” with the phone number of the company’s director of corporate communications. Miller can’t answer many questions either, except to say that the company does not advise clients on their tax affairs.


The Guardian is not the first media organisation to turn up at the offices of Corporation Trust Centre, and it’s unlikely to be the last.


Analysis Forget Panama: it's easier to hide your money in the US than almost anywhere

The term tax haven may evoke images of exotic locales, but Panama actually ranks as the 13th most attractive spot for hiding assets, while the US lies third


This squat, yellow brick office building just north of Wilmington’s rundown downtown is the registered address of more than 285,000 companies. That’s more than any other known address in the world, and 15 times more than the 18,000 registered in Ugland House, a five-storey building in the Cayman Islands that Barack Obama called “either the biggest building in the world, or the biggest tax scam on record”.


Officially, 1209 North Orange is home to Apple, American Airlines, Coca-Cola, Walmart and dozens of other companies in the Fortune 500 list of America’s biggest companies. Being registered in Delaware lets companies take advantage of strict corporate secrecy rules, business-friendly courts and the “Delaware loophole”, which can allow companies to legally shift earnings from other states to Delaware, where they are not taxed on non-physical incomes generated outside of the state.


The loophole is said to have cost other states more than $9bn in lost taxes over the past decade and led to Delaware to be described as “one of the world’s biggest havens for tax avoidance and evasion”.


But it’s not just big corporations that have chosen to make 1209 North Orange their official home.


Both the leading candidates for president – Hillary Clinton and Donald Trump – have companies registered at 1209 North Orange, and have refused to explain why.


Clinton, who has repeatedly promised that as president she will crack down on “outrageous tax havens and loopholes that super-rich people across the world are exploiting in Panama and elsewhere”, collected more than $16m in public speaking fees and book royalties in 2014 through the doors of 1209, according to the Clintons’ tax return.



Just eight days after stepping down as secretary of state in February 2013, Clinton registered ZFS Holdings LLC at CTC’s offices. Bill Clinton set up WJC LLC, a vehicle to collect his consultation fees, at the same address in 2008.


A spokesman for Clinton said: “ZFS was set up when Secretary Clinton left the State Department as an entity to manage her book and speaking income. No federal, state, or local taxes were saved by the Clintons as a result of this structure.”


The Clintons’ companies share the office with several of Trump’s companies. They include Trump International Management Corp and several companies that form part of Hudson Waterfront Associates, a Trump partnership to develop more than $1bn worth of luxury condos on the west side of Manhattan.


Of the 515 companies on Trump’s official Federal Election Commission (FEC) filing, 378 are registered in Delaware, he revealed, after being questioned by the Guardian about why so many of his New York-based companies are incorporated in Delaware.


He said he asked his staff to find out how many entities he has in Delaware. “I figured they’d maybe say two or three, right?” Trump said at a rally in Harrington, Delaware, on Friday. “We have 378 entities registered in the state of Delaware, meaning I pay you a lot of money, folks. I don’t feel at all guilty, OK?”


Among them are 40 Wall Street Corporation, Trump’s 72-storey downtown tower that was the tallest building in the world for two months in 1930, and the Trump Carousel in Central Park.


The Trump campaign did not respond to questions about whether Trump was using Delaware in order to avoid taxes in New York.


It is not unusual for rich individuals and companies to register their business in Delaware due to the ease of company formation in the state, but the Clintons’ and Trump’s companies in the state are likely to come under greater scrutiny as the US presidential primary roadshow rolls into the state on Tuesday. A poll by research firm Gravis Marketing last week showed Trump had a 37-point lead over John Kasich; Clinton polled 45%, ahead of Sanders on 38% in the same poll.


A report by the Institute on Taxation and Economic Policy, titled Delaware: An Onshore Tax Haven, said the state’s tax code made it “a magnet for people looking to create anonymous shell companies, which individuals and corporations can use to evade an inestimable amount in federal and foreign taxes”.


Several accounting experts said there are many legitimate reasons why US and foreign companies incorporate in Delaware, particularly because of its highly respected Court of Chancery and business-friendly state government. The process of setting up a company in the state can be completed in just a few hours and requires less paperwork than registering for a library card in the state. There are more than 1m companies registered in the state – more than Delaware’s population of 935,000.



In the US presidential election, Clinton’s rival Bernie Sanders has led the charge to counter corporate greed, and highlighted the tax havens revealed by the Panama Papers as evidence that “the wealthiest people and largest corporations must start paying their fair share of taxes”.


Clinton has called offshore tax havens “a perversion” of the legal code, and Obama called for reform of the international system earlier this month. Even Trump has said he supports raising taxes on the wealthiest Americans, “including myself”, though his tax plan offers cuts.


The Guardian Media Group, owner of theguardian.com, is registered in Dover, Delaware. “Guardian Media Group has business operations in the UK, US and Australia,” a Guardian spokesperson said. “The group’s assets are held entirely by companies in these countries and are fully subject to prevailing tax laws and regulations. The group also has a UK endowment fund which holds a mixture of UK and non-UK assets and is fully subject to UK tax laws and regulations.”


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  • 2 weeks later...
Apple issues bonds worth estimated $12bn


Move would allow the company to pay shareholders without having to repatriate any of $177bn it holds overseas at lower tax rates than in US


Sam Thielman


Tuesday 16 February 2016 20.08 GMT Last modified on Tuesday 16 February 2016 22.49 GMT



Apple announced it was issuing bonds estimated in value at $12bn on Tuesday, despite a current cash reserve of $215bn.


The bond issue, the latest in a series of huge debt issues, will be used largely to return money to shareholders without repatriating any of the estimated $177bn it holds overseas at a tax rate lower than it would be charged in the US.


Reports indicate that US-based companies are offshoring some $2.1tn in cash between them; Google, Apple and Microsoft alone account for one-fifth of that wealth. Some firms have decided to begin bringing the previously tax-free cash back into the country as lawmakers begin to develop policies that disallow untaxed foreign liquidity.


Apple’s bond issuance – which is predicted to do well, given the current upheaval in the stock market and the company’s strong track record – appears to give the company another out.


The tech behemoth’s CEO, Tim Cook, has been voluble on the topic of whether the largest company in the world goes too far to avoid paying taxes on its income. “Apple pays every tax dollar we owe,” Cook told 60 Minutes’ Charlie Rose in December. “I don’t think that’s a reasonable thing to do.”


According to Moody’s credit agency, the company avoided paying $9bn in taxes in 2012 alone using this strategy.


The latest debt issue comes amid an ongoing European Commission investigation into Apple’s use of Irish tax shelters could result in an $8bn tax bill.



To je otprilike pola NASA budžeta. 

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  • 4 weeks later...



UK is most corrupt country in the world, says mafia expert Roberto Saviano


Britain is the most corrupt country in the world, according to journalist Roberto Saviano, who spent more than a decade exposing the criminal dealings of the Italian Mafia.


Mr Saviano, who wrote the best-selling exposés Gomorrah and ZeroZeroZero, made the comments at the Hay Literary Festival. The 36-year-old has been living under police protection since publishing revelations about members of the Camorra, a powerful Neapolitan branch of the mafia, in 2006.


He told an audience at Hay-on-Wye: “If I asked you what is the most corrupt place on Earth you might tell me well it’s Afghanistan, maybe Greece, Nigeria, the South of Italy and I will tell you it’s the UK.


“It’s not the bureaucracy, it’s not the police, it’s not the politics but what is corrupt is the financial capital. 90 per cent of the owners of capital in London have their headquarters offshore.



Edited by Korki
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  • 2 months later...
MPs condemn 'sticking plaster' response to corporate tax avoidance


Tax responsibility group calls for radical reforms in face of new tax structures available in digital environment



There are concerns among some international tax reformers that Britain’s exit from the European Union may see it take an even more aggressive approach to tax competition. 

Simon Bowers



An unprecedented international effort to stop some of the world’s largest multinational corporations – including Google, Amazon and Starbucks – avoid tax has offered only a “sticking plaster” solution that will not hold, according to a report published by a cross-party parliamentary group.


After taking evidence from a range of experts, the all-party tax responsibility group, made up of British MPs and peers, found that G20 nations and others were still falling short in the battle against aggressive tax planning by big businesses. 



The report, published on Thursday, paid tribute to tax experts from the Organisation for Economic Cooperation and Development (OECD), who spent two years working on reforms, published last year, that were supported by more than 60 countries, representing 90% of the world economy.


However, parliamentarians have now called for further, more radical, reforms, particularly in the face of new tax structures available to internet groups. “These proposals are a ‘sticking plaster’ on a global tax system that is struggling to remain fit for purpose with the growth of multinational companies operating in a digital environment,” the report said. 


Their concern was echoed by leading international poverty charities. Oxfam said: “Today’s report is a welcome admission by MPs that the world has so far failed to tackle tax dodging.”


A spokesperson for Christian Aid said: “Every tax scandal leads to promises of a crackdown, but the last government rarely matched words with action ... Theresa May’s government must prove it takes this issue seriously by adopting the proposals in today’s report in full.”


The parliamentarians’ report describes the UK as having been a “difficult friend” to efforts to reform global taxation. Margaret Hodge, who chairs the all-party group, said: “The government has been facing both ways. While publicly proclaiming their determination to tackle global tax avoidance, they have been encouraging these practices by changes they have made to the UK tax system and by refusing privately to agree to some key OECD proposals.”



There are concerns among some international tax reformers that Britain’s exit from the European Union may see it take an even more aggressive approach to tax competition. In a leaked memo, revealed by Reuters, OECD head of tax Pascal Saint-Amans, wrote: “The negative impact of the Brexit on UK competitiveness may push the UK to be even more aggressive in its tax offer ... A further step in that direction would really turn the UK into a tax haven type of economy.”


Before he was replaced as chancellor, George Osborne said he thought the UK should “get on with it” and prepare for its new position outside the EU by slashing corporation tax to less than 15% – markedly below all other major world economies.


Business lobbyists, and some politicians, have suggested the tax is so open to abuse by multinationals that it is becoming increasingly untenable. 


Last October, the OECD released what it called “extremely conservative” estimates suggesting large global businesses were shifting profits and eroding the tax receipts of economies around the world at a cost of $100bn-$240bn (£65bn-£160bn) a year – equivalent to between 4% and 10% of global corporation tax revenues.




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War of words hots up between US and EU over tax avoidance


US accused of ‘acting like a tax haven’ for threatening retaliation against Brussels’ anti-trust investigations into Apple, Amazon and Starbucks



The US has been accused of “behaving like a tax haven”, in an escalating war of words between Washington and Brussels over the European commission’s anti-trust cases against Apple, Amazon and Starbucks.


On Wednesday, the US Treasury threatened retaliation if Europe continues its tax crusade against American multinationals.


Margrethe Vestager, Europe’s top anti-trust regulator, is expected to conclude her state aid investigation into Apple as early as next month. If her ruling goes against the Californian tech group, it could be ordered to hand over as much as $19bn (£14.4bn) in unpaid taxes to the Irish government.


A white paper commissioned by the US Treasury secretary, Jack Lew, accused Europe of targeting American companies disproportionately and behaving like a “supranational tax authority”. The claims have now prompted a swift rebuttal from MEPs and the European commission.


“The US Treasury prefers defending the interest of its multinationals rather than promoting international cooperation to fight corporate tax avoidance,” said Molly Scott Cato MEP, a spokeswoman for the Green party on tax affairs in the European parliament.


Campaigners are furious because the US has failed to back two major initiatives designed to combat tax avoidance and money laundering. They are the creation of public registers of the owners of private companies and the automatic sharing of bank account information between countries, known as the Common Reporting Standard.


The US is behaving like a tax haven by operating a deferral system which allows US companies to stash profits offshore,” said Cato. “The commission is seeking to prevent exactly this sort of free-riding and to ensure that tax is paid where economic value is added.”


America’s 500 largest companies have accumulated a record $2.4tn offshore, according to the pressure group Citizens for Tax Justice. The money, which comes from sales outside of their domestic market, has built up in tax haven subsidiaries because multinationals are refusing to bring the cash into the US, where it would incur a 30% corporation tax charge.


Anneliese Dodds MEP, tax lead for Labour in the European parliament, said: “The timing of this [white paper] seems highly suspect, falling as it does right in the middle of election season in the US. Instead the US government should be working with the EU commission to clamp down on tax evaders and aggressive tax avoiders, rather than criticising attempts to make the system fairer.”


The EU commission said on Wednesday: “All companies, no matter their nationality, generating and recording their profits in an EU country should pay taxes in line with national tax laws.


“Under EU state aid rules, national tax authorities cannot give tax benefits to selected companies that are not available to others. These state aid rules and the relevant legal principles have been in place for a long time.”


Lew’s white paper threatened retaliation, saying the US “continues to consider potential responses should the commission continue its present course”. Existing tax treaties could be revised and this would have a “chilling effect” on US investment into Europe, it claimed.


The commission has already ruled that tax advantages negotiated by Starbucks with the Netherlands government and by the Italian carmaker Fiat with Luxembourg amounted to illegal state aid, with €20m-€30m potentially owed by each company. In January, the commission took a preliminary view that Amazon’s deal with Luxembourg also amounted to state aid. A final decision is pending.


Apple boss Tim Cook has dismissed the claim that his company avoids taxes overseas as “political crap”. The iPhone maker has paid as little as 2% in tax on its international profits, most of which are routed through Ireland. Cook told the Washington Post earlier this month: “I hope that we get a fair hearing. If we don’t, then we would obviously appeal it.”


Alex Cobham, research director at the pressure group Tax Justice Network, said: “The US Treasury has fired the first shots of a tax war with Europe. And while it’s wrapped up in a claim to defend international tax cooperation, it looks more like an attempt to prevent an effective measure against international tax-dodging.”



Dobro je da su se setili da ih oglobe. 

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  • 1 year later...

The Paradise Papers is a special investigation by the Guardian and 95 media partners worldwide into a leak of 13.4m files from two offshore service providers and 19 tax havens' company registries,


The project has been called the Paradise Papers. It reveals:
  • Millions of pounds from the Queen’s private estate has been invested in a Cayman Islands fund – and some of her money went to a retailer accused of exploiting poor families and vulnerable people.
  • Extensive offshore dealings by Donald Trump’s cabinet members, advisers and donors, including substantial payments from a firm co-owned by Vladimir Putin’s son-in-law to the shipping group of the US commerce secretary, Wilbur Ross.
  • How Twitter and Facebook received hundreds of millions of dollars in investments that can be traced back to Russian state financial institutions.
  • The tax-avoiding Cayman Islands trust managed by the Canadian prime minister Justin Trudeau’s chief moneyman.
  • A previously unknown $450m offshore trust that has sheltered the wealth of Lord Ashcroft.
  • Aggressive tax avoidance by multinational corporations, including Nike and Apple.
  • How some of the biggest names in the film and TV industries protect their wealth with an array of offshore schemes.
  • The billions in tax refunds by the Isle of Man and Malta to the owners of private jets and luxury yachts.
  • The secret loan and alliance used by the London-listed multinational Glencore in its efforts to secure lucrative mining rights in the Democratic Republic of the Congo.
  • The complex offshore webs used by two billionaires to buy stakes in Arsenal and Everton football clubs.



Neko je pominjao Robespjera? 

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Забрана пљачке је пљачка, јер се забраном пљачке држава меша у односе између два слободне поједница, што је пљачка

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Nisu baš skroz tuđe pare.


Zatim nam ostaju bogati iz bogatih zemalja. Mogu li oni da se tapšu po leđima i da kažu – samo mi zaista zaslužujemo to što zarađujemo? Mislim da ne mogu, jer ljudi često ne razumeju da visoka produktivnost ljudi iz bogatih zemalja presudno zavisi od činjenice da su rođeni u društvima naprednih tehnologija, dobrih institucija i kvalitetne infrastrukture, ili da su bar tamo emigrirali. Većina tih stvari je kolektivno akumulirana vremenom, a nije nešto što su ti pojedinci sami stvorili.

Voren Bafet je u jednom intervjuu devedesetih lepo ovo objasnio. Rekao je: „Bacite me usred Bangladeša, i šta ću ja biti? Biću poljoprivrednik. I bio bih vrlo siromašan poljoprivrednik, jer ne umem ništa da uzgajam. Dakle, čak i po bangladeškim merilima, bio bih siromašan. Ja sam bogat zato što sam slučajno rođen u ovoj zemlji, koja precenjuje moju finansijsku darovitost, pa smatram da je većinu mog novca zaradilo društvo, a ne ja“. On je pametan čovek, on to razume.

Barak Obama je nedavno isto to pokušao da artikuliše kada je rekao – kada je neko uspešan, znači da je u životu imao nekog ko mu je u tome pomogao, možda nastavnika, možda državnu stipendiju, možda infrastrukturu, ali moramo da shvatimo da je naša produktivnost kolektivna. Ona nije čisto pojedinačno dostignuće. To znači da postoji dobar argument zašto bogati treba da plaćaju viši porez.

Ne razumem jednu stvar u ovoj zemlji: vi ste toliko uplašeni da ćete ostati bez svojih bogataša, uprkos tome što su isti ti ljudi izazvali ove nevolje. Okanite ih se. Stvarno, ako su im porezi toliko važni, zašto se svi ne presele na Jamajku? Porez na dobit na Jamajci je 5%. Zašto ne presele svoja preduzeća u Albaniju, gde je porez na dobit 10%? Ostaju ovde zato što ova zemlja pruža sjajne obrazovne institucije kao što je LSE, dobro, železnica je problematična, ali infrastruktura je inače pristojna, dobar pravni sistem itd. Sve su ovo kolektivno stvorene stvari, nije ih Ričard Branson stvorio. Nije ih stvorio ni Alan Šugar.


Ha-Joon Chang, The London School of Economics, 10.10.2012.


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The desperate inequality behind global tax dodging

Gabriel Zucman


Nearly 10% of the world’s wealth is held offshore by a few individuals. The rest of us pay the price for this theft


Wednesday 8 November 2017 05.59 GMT Last modified on Thursday 9 November 2017 11.38 GMT


Out of sight, a powerful industry has been developing since the 1980s in tax havens across the globe. By following the money, we can start to grasp the costs that these territories impose on the economies of other countries.


The data that offshore centres publish is far from comprehensive, and our system for measuring household wealth and multinationals’ profits has many weaknesses. But it is improving, and by analysing the data carefully, we can detect consistent patterns and dissipate some of the secrecy that has for decades surrounded the activities of tax havens.


Let’s look first at tax avoidance by big multinationals. In principle, these companies are supposed to allocate profits across their various subsidiaries as if these offshoots were independent entities, trading goods and services among themselves at the prevailing market prices. In practice, however, the prices of intragroup transactions are routinely manipulated by offshore accounting firms to make their global profits appear in low-tax jurisdictions. Moreover, a growing number of multinationals locate their algorithms, trademarks and logos in tax havens to strip earnings away from countries, such as Britain, where they are generated.


A case in point – maybe the most spectacular– is Google Alphabet, Google’s parent company. In 2003, less than a year before its initial public offering in August 2004, Google US transferred its search and advertising technologies to “Google Holdings”, a subsidiary incorporated in Ireland, but which for Irish tax purposes is a resident of Bermuda.



Ever since then, all the profits generated by these assets have ended up in Bermuda, after a (tax-free) detour via the Netherlands – the infamous “double Irish Dutch Sandwich”. In 2015, Google Alphabet reported $15.5bn in profits in Bermuda, where the corporate tax rate is a modest 0%. It is as if every Bermuda resident (almost none of whom actually work for Google) each generated $260,000 in profits for the company.



My colleagues Thomas Tørsløv and Ludvig Wier and I have combined the data published by tax havens all over the world to quantify the cost of the artificial shifting of profits. Tiny countries such as Bermuda do not produce meaningful statistics. The EU’s own tax havens – which are opaque in many ways, but at least have to comply with the statistical guidelines imposed by Eurostat – do.


Our research shows that six European tax havens alone (Luxembourg, Ireland, the Netherlands, Belgium, Malta and Cyprus) siphon off a total of €350bn every year. This is the amount of profit generated in mostly EU countries, which ends up – after being manipulated by armies of accountants in Luxembourg or the Netherlands – being taxed at bargain rates, typically between 0% and 5%. Globally, our data suggests more than €600bn is artificially shifted by multinationals to the world’s tax havens each year.


Who loses? By and large, the US and the bigger European countries, where most of the multinationals’ workers and consumers are located. Tax havens deprive the EU of the equivalent of a fifth of the corporate tax revenue it currently collects. This represents a cost of €60bn per a year. For the UK alone, the bill adds up to about €12.7bn.



Every country has the right to choose the form of taxation it wants. But when the Netherlands offers tailored tax deals to multinationals or Switzerland keeps the wealth of corrupt elites out of sight in its coffers, they steal the revenue of other nations. And while we lose, they win: through fees (sometimes a great influence on the international stage), and even – the supreme irony – actual tax revenue.


Take Ireland. Thirty years ago, when its corporation tax rate was 50%, Ireland collected less revenue from companies as a share of its national income than the US or the EU as a whole. Since it cut its rate to 12.5% in the 1990s – it has collected much more than high-tax countries. Is it because low taxes have spurred domestic activity, employment and growth? Not at all: the extra revenue ​originates from the fictitious profits that multinationals park in Dublin or Cork: profits generated by workers in other countries. The Irish government thus gets more income to spend on roads or hospitals; other countries get less. Nothing in the logic of free exchange justifies this theft.


It is simple to understand why it nonetheless persists. Given the enormous amount of profits shifted offshore, tax havens only need to impose taxes of ​just ​a few per cent to collect big sums relative to the size of their economy. As long as large sanctions are not imposed on them, offshore financial centres won’t spontaneously abandon this lucrative business. Unfortunately, governments have not been stellar up to now in their boldness or determination. The artificial shifting of profits thus keeps growing, year after year. US multinationals now make 63% of all their foreign profits in six havens, the most prominent being the Netherlands. This is 20 points more than in 2006.



And every time tax havens are forced to close a loophole, a new one is exploited. As the Paradise Papers have revealed, when Ireland announced it would phase out the “double Irish” by 2020, Apple was quick to set up similar tax-erasing arrangements in Jersey. Tax havens are a key driver of global inequality, because the main beneficiaries are the shareholders of the companies that use them to dodge taxes.



Most of the world’s equity wealth belongs to very wealthy people, so corporate tax avoidance only enriches a small group. And the taxes multinationals dodge have to be compensated for by higher taxes on lower-income households, making it harder for these people to save and accumulate wealth. In the absence of higher taxes, public spending has to fall. The revenue EU countries lose to tax havens represents the equivalent of about half of public spending on higher education. Tax havens, like climate change, are thus at the root of a massive intergenerational transfer of wealth, which enriches the old and impoverishes the young.


But there is an even more direct way in which tax havens increase inequality. On top of helping multinationals dodge taxes, offshore centres enable a number of ultra-wealthy individuals to hide their riches – from the taxman, business partners, spouses or judges. The equivalent of 10% of global GDP is held offshore by rich individuals in the form of bank deposits, equities, bonds​ and mutual fund shares, most of the time in the name of faceless shell corporations, foundations and trusts. Until recently, we did not have a good view of who owns this wealth, but my colleagues Annette Alstadsæter and Niels Johannesen and I have been able to make progress on this issue thanks to the leaks that have occurred over the past few years.



By investigating data from HSBC and the Panama Papers we were able to study how wealthy the typical users of tax havens are. The extent to which offshore wealth is concentrated in just a few hands is staggering. About 50% of the wealth held in tax havens belongs to households with more than $50m in net wealth, a group that private bankers call “ultra-high-net-​worth individuals”. These ultra-rich represent about 0.01% of the population of advanced economies.


The implications are dramatic in a country such as Russia, where most of the wealth at the top is held outside the country. In the ​UK, Spain, Germany and France, about 30-40% of the wealth of the richest 0.01% of households is held abroad. In the US, accounting for offshore wealth also increases inequality, but the effect is more muted than in Europe, because US wealth is already very concentrated even disregarding tax havens. In all cases, it is clear that our standard statistical toolkit to measure inequality is not adapted to the realities of 21st-century capitalism. And the problem is getting worse by the hour.



As global inequality rises, the companies located in offshore financial centres refocus their activity on a smaller but wealthier clientele. Wealth concealment thus deprives governments of about €155bn a year in revenue. In Britain alone, annual revenue losses are €6bn, to which must be added almost €12.7bn dodged by multinationals.


The veil of secrecy that used to surround the activities of tax havens has begun to lift. Yet much of the data is still missing. Most importantly, a growing share of offshore wealth (more than 60% in the case of that managed in Switzerland) is held through shell corporations, trusts and foundations, all designed to make the ultimate owners of the assets untraceable. It is impossible to properly fight tax evasion in such statistical fog.


A number of big banks, such as Credit Suisse and HSBC, have been fined by the US. But fines are often seen as the cost of doing business and dwarfed by profits. Threatening to withdraw banking licences would be a stronger deterrent.



The stakes are high. Most countries already have registries for real estate. We should first improve them by identifying the beneficial owners. Why do we allow a great chunk of Manhattan and London to be owned by faceless shells, potentially hiding criminals and money launderers? A world financial registry would deal a fatal blow to financial secrecy. It would create invaluable information about the distribution of wealth, without which it is hard to have serene debates about government policy. It should, in my view, be the main objective of the proponents of financial transparency for the years ahead.


• Gabriel Zucman is assistant professor of economics at University of California, Berkeley


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