An organization opposed to tax avoidance has released a report estimating the world’s wealthiest individuals have stashed at least $21 trillion in offshore tax havens: an amount greater than the combined GDP of the United States and Japan.
The London-based Tax Justice Network (TJN), a liberal advocacy, calls its current estimate “conservative,” and says the true figure could potentially be as high as $32 trillion, more than twice the U.S. GDP of $15 trillion. The report updates a 2005 study that put the offshore total at $11.5 trillion.
The report, prepared by by former McKinsey & Co. Chief Economist James Henry and released this week, acknowledges the difficulty in estimating numbers that are intentionally hidden by the “rich and powerful.” Consequently, it supplements data from the IMF, UN and central banks with its own data mining to indirectly establish what it considers a “base case,” or safe estimate.
Tax attorney Jim Duggan of Chicago’s Duggan Bertsch expressed skepticism of TJN’s numbers. “Many of the assets offshore are in jurisdictions with strict confidentiality law,” Duggan said in a statement, “so it is difficult to accept the findings of any such report since it likely supposes too much.”
The report’s author says TJN is making its data and methods publicly available and issued a challenge:
“We believe that the resulting estimates of unrecorded capital flows and accumulated offshore wealth are the most rigorous and comprehensive ever produced. In the spirit of open research, we hereby issue an open challenge to the IMF and the World Bank—to all comers, in fact—to see if they can come up with better estimates.”
A key purpose of the report is to draw attention to tax revenue lost to the world’s poor because of the tax evasion of the rich and powerful. TJN estimates that unrecorded wealth might amount to $189 billion in annual revenue, or more than twice the amount that the rich Organization of Economic Cooperation and Development (OECD) countries give in annual foreign aid.