Are the rich hiding $21 trillion?

According to this video on CNN, some 10 million wealthy people from around the world are hiding $21 trillion and maybe as much as $32 trillion in 80 tax havens.

I haven’t done the math or anything, but this number seems WAY high and outside to me. The source of the report claims that these havens result in hundreds of billions of lost tax revenue each year. Is it conceivable that these banks have combined deposits in this range?

Thanks,
Rob

32 trillion dollars / 10 million people = $3,200,000 on average per person.

I don’t think that sounds unreasonable to me.

Also completely kicks the whole “We need to lower taxes for the rich” argument in the teeth, though.

If we lowered the tax rates then rich people would have less incentive to hide their money which means that they could invest it more productively at home. They would also pay taxes on the money they stopped hiding. This report is exhibit A about why taxes should be lower on the rich.
The shame of this is not that governments of the world lose out on a couple hundred billion dollars but that the worlds economy loses out on the 32 trillion dollars that could go to more productive uses.

Since we have been lowering the taxes on the rich pretty consistently, there ought to be some evidence for your claim. Is there? It doesn’t seem like it.

We could experiment with lowering it to zero, just to see how far we’d have to go, but I think by that time, the point would be moot. Reality is a harsh mistress; fantasy conservative economic theories never turn their back on you.

That dog doesn’t hunt and never will. It’s simply an article of conservative faith with no basis in reality. Repetition does not make something true.

Since the OP is talking about people from “around the world”, I don’t think it, alone, offers us any insight about what should be done in the US. If there are any US-specific statistics in the video, we can discuss those. Someone more interested in the subject (eg, the OP) can watch the video and quote those parts.

Not only do we need to cut the tax rate to 0 for the truly wealthy we need to give them rebates so that they may continue honoring us with their wealthiness. Let’s get the minimum wage down to $2.00 an hour and pay everyone that wage no matter what their abilities are. Then the rich can continue their richness for the rest of time because that has worked out so well in the past.
edited to add to keep on topic - the number is probably low.

Define hiding. I assume this money belongs to the rich fair and square. I assume the tax shelters are legal. It’s a good idea if they would put some of this money into the economy but they are under no obligation to do so. Money is theirs. They can do with it what they choose.

This. The reason for most tax shelters are because most (all?) European countries only tax income when its repatriated. The US on the other hand, requires its citizens to pay taxes regardless of where its earned. The result is that the majority of people leaving their money overseas are Europeans.

I’ve seen estimates like this for US specific tax avoidance efforts:

I think that sort of emphasizes my point. US Corporate profits, like European individual income, can stay overseas without being taxed, so there’s a heavy incentive for them to leave their money overseas. But US individuals get taxed the same regardless, and so have no such incentive.

The only reason for a US individual to leave money overseas is if they’re actually trying to illegally hide it from the IRS. But that’s both illegal and getting increasingly difficult to do, and since most rich people dislike going to jail more then they dislike paying taxes, it doesn’t seem to be a major contributor to the total of overseas tax sheltering.

This is patently false. It’s a common right-wing talking point that somehow taxes are so high that the rich aren’t investing.

The reality: Nobody’s ever going to shy away from a good investment just because their profits will get taxed a few extra percent. That is not only poor business sense, but it’s just mathematical absurdity. If this were true, big businesses would be taking advantage over everyone else who was too risk-averse to do anything. We don’t see this. Besides, taxes are already at an all-time low and they have record profits and cash reserves. How does adding more money to that massive pile actually help everyone in the end? It doesn’t.

So why aren’t people investing? Demand is low. The middle class doesn’t have money. Costs are high. What good is there to invest and hire workers when people can’t afford to buy your product/service?

If what you’re saying is that taxes should be lowered to the point where it’s cheaper to hire Americans instead of people working for peanuts overseas, then all you’re really saying is that you’d prefer to make Americans work for peanuts instead. Shifting the tax burden to those who can least afford it while giving more money to those who already have tons of money doesn’t make sense.

We’ve been lowering taxes on the rich for years and it hasn’t helped. They shelter the money. It’s not much different from the argument that when we gave tax rebates to the poor/middle classes in the past, they saved it and paid down debt instead of spending it. The better response is to raise taxes instead and cut costs within our own infrastructure so more people can actually afford to participate in the economy.

The fact that there’s trillions of dollars being sheltered from taxes is just crazy.

We have run experiments, in 1916 the top tax rate was 15% and was increased to 73% in 1921. During that time the taxable income of those paying the top rate fell 80%. In 1924 the top rate was changed to 24% and so much more taxable income was declared that the revenue from the lower rate was higher than the revenue from a rate that was three times as high.
In 1980 the top rate was 70% and was reduced to 28% by 1988. In 1980 there were 116,757 people who declared over $200,000 in income. In 1988 there were 723,697 people who declared over $200,000 in income. The total amount declared went from 36 million to 352 million.
Here is a summary of a paper by Gruber and Saez which calculates the elasticity of taxable income for people who have an income over $100,000 as being .57. That is much higher than the .11 for those in the $50-100K group and the .18 in the under $50K. The elasticity for those in the highest income brackets must be even higher.
This report is just more evidence on the pile.

And if we all left our cars and houses unlocked, thieves would have less incentive to smash a window to get in.

At the end of the day, it’s a pretty inescapable point: The rich have oodles of money. Oodles of it. They’ve enjoyed huge profits and massive gains in wealth over the past years. And the American economy is still in the dumps.

There’s no real reason that justifies giving them MORE breaks.

This is totally untrue, there are always marginal cases. For example if tax rates changed your expected profits on an investment from 100 dollars to 99 dollars you would probably still invest, and if you change from 99 to 98 dollars you would probably still invest. If you do this 97 more times that would mean you would have as many investors if you paid 1 dollars as if you paid 99 dollars. That is obviously wrong. For every change in expected investment outcome there are marginal investors. The tax rates changes in the US have been small for there last 20 years but this article is about worldwide income and includes places where tax rates can be very high. So the US going from 35% to 30% would do a little bit but France going from 75% to 30% would do a huge amount to free up taxable income.

“Giving them?”

Every dollar I earn is mine.

Taxes take some of those dollars away. If you lower tax rates, you’re not giving me anything that’s yours to give. You are confiscating less of my money.

I’m unconcerned with stats on how many wealthy people there are and how much income they report. The correlation I want to see is that between marginal tax rate and unemployment rates. Lowering those rates during the Bush years has not had any positive effect. The high marginal rates in the 1950s did not impede prosperity. I have yet to see anything that demonstrates a relationship between tax rates and unemployment rates. As to how much income the wealthy people have, how much they report, how many wealthy people there are, I could not possibly care less.

:rolleyes: I leave money overseas, simply because it gets me a better return.

Confiscated? Drama queen. Look around you at what your tax dollars have built. You earned the money but you sure wouldn’t earn as much without the good work your taxes help build. Yes everybody has some things they’d rather not spend their tax money on, but that’s the cost of doing business. It’s part of the social contract. Your tax dollars goes to educate the next people down the line for example. You earned it but a portion must go to keeping this society going. Without your taxes and mine we would have collapse. Do you want that?