Wealth doesn't trickle down – it just floods offshore, new research reveals

[breadandbutterfly]

www.guardian.co.uk/business/2012/jul/21/offshore-wealth-global-economy-tax-havens

""These estimates reveal a staggering failure," says John Christensen of the Tax Justice Network. "Inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people.

"This new data shows the exact opposite has happened: for three decades extraordinary wealth has been cascading into the offshore accounts of a tiny number of super-rich."

...In fact, some experts believe the amount of assets being held offshore is so large that accounting for it fully would radically alter the balance of financial power between countries. The French economist Thomas Piketty, an expert on inequality who helps compile the World Top Incomes Database, says research by his colleagues has shown that "the wealth held in tax havens is probably sufficiently substantial to turn Europe into a very large net creditor with respect to the rest of the world."

In other words, even a solution to the eurozone's seemingly endless sovereign debt crisis might be within reach ? if only Europe's governments could get a grip on the wallets of their own wealthiest citizens. "

And see:

www.guardian.co.uk/business/2012/jul/21/global-elite-tax-offshore-economy

"A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore ? as much as the American and Japanese GDPs put together ? according to research commissioned by the campaign group Tax Justice Network. "

Interesting to read.

Really doesn't surprise me TBH.

But the question is - what are we (all of us) going to do about it?

Personally speaking? I'll be staying poor for the foreseeable...

I believe we'll see an upsurge of activities such as bartering. Local food growing collectives. People going-it-alone. Personal food production. A certain type of autonomy.

People will involuntarily have to withdraw from the Capitalist system as it is currently set up. Less "money" going to those that have. More collectivism.

It isn't what I advocate, or personally push as an agenda, however, I do see this happening more and more.

caramel-

I do hope so. I'm certainly spending most of my money at charity shops, not just to save money, but on the grounds that I've had enough with fucked up economy which puts so little value on people's needs and so much value on making a tiny minority rich.

How bad does it get before governments take action?

Governments are part of the problem, you expect them to do anything when they are rich fucks exploiting the holes in the laws they created and rule over, in order to gain as much wealth as possible before leaving office, and getting a cushy job on the board of some company they where cosy with when in power?.

Man you is going to be waiting a seriously long time.

Yes, they have really let us down imo. So have the legal system and the police.

It's as if they have let us be invaded by a foreign power. We pay the government to protect us - in all ways, but especially from people who want to attack us or steal from us.

Just the fact that people can avoid tax so easily has huge implications for democracy too. Big companies threaten to invest elsewhere unless govt makes it more profitable for them to invest here. One way in which the way the govt does that is by allowing tax loopholes and turning a blind eye. It's like the govt is a police officer helping a burglar by standing guard outside a house that is being burgled and then receiving part of the spoils. It's deeply corrupt.

Someone squirrelling away vast amounts of cash is taking it out of hospitals and schools, out of the pockets of people with disabilities ... It's so immoral.

How high would the govt rise in my estimation if they just decided to crack down on it, once and for all.

Goverments don't do anything unless people force them to.

I'm not at all surprised.
The politicians are highly unlikely to do anything whatsoever about it.

P p p p pick up a pitchfork? (More effective than penguins in street battles, I find).

Probably better to wait until 2015. But the opposition parties need a different strategy.

Have you read this? www.guardian.co.uk/business/2012/jun/08/why-uk-no-longer-superpower

I'm not sure I agree with all of it, but the authors say we are now a 'de-developing' economy and quote George Osborne as saying:

"We are working to develop London as a new offshore market for the Chinese currency."

' ... Not only is the UK supposedly averse to offshore financial centres, believing them to be hotbeds of tax evasion and money laundering, but deliberately setting out to create one has been the act of developing nations around the world, from Panama to the Seychelles, not of mature, developed economies. ...'

Clearly the Tories would only make things worse.

And how can anyone believe that wealth trickles down?? It never has!

The idea that when A gets rich he will provide jobs for b, c, d, and e is true, but A keeps hold of the land and the capital. I don't call that sharing!

And I know all ye merrie capitalists say that over the last couple of hundred years we have all got richer as a result of capitalism - but isn't that more as a result of social reform movements and enlightened government policies (they built council houses, set up the NHS, made school compulsory, etc)? They got the money to do that from taxes, but everybody pays taxes, not just the rich.

Iirc (yes, I really am that old), during the agricultural and industrial revolutions, ordinary people had a wretched time. It was only due to enlightened reformers that things got changed for the common wo/man.

As far as I can see, the only role the rich had in all that was that quite a few of them were philanthropists and made donations, set up hospitals, etc.

Quite a few people on these very boards believe that wealth trickles down. You often see the argument made when it comes to public sector wages that we should pay them more because they then go onto consume goods and services.

"the only role the rich had in all that was that quite a few of them were philanthropists and made donations, set up hospitals, etc. "

This is the trick we're missing today. Tax is a punitive, blunt instrument method of raising money that everyone, from the cash-in-hand plumber to the billionaire with a team of accountants will try to reduce as much as possible. The welfare state took the place of the old-fashioned hospital-building philanthropists and they've taken a back seat every since. We need to get them back at the forefront. Not simply by offering tax-relief on donations but making generosity a UK cultural imperative.

That's not the same thing, Cogito. Ordinary people spend in their local economy. The rich aren't actually shopping in Asda in Stockport - and even if one rich person does, it doesn't make much difference.

Well like I've said before, I'd rather be poor in a western style trickle down economy than a state run economy where being rich is not allowed.

All this article tells me is that if you tax rich people too much they move their resources offshore. I don't see why this isn't obvious. We implement taxes all the time to 'encourage' certain behaviours. Taxes on cigarettes & green taxes we are told are there to encourage us to be healthy and environmentally friendly. So we accept taxes can make people do certain things. Yet somehow we feign surprise and indignation when people choose schemes to avoid paying large amounts of tax?

"Tax is a punitive blunt instrument" - no it isn't, it's a practical and accepted way to to pay for services in a complex society. What generates resentment and avoidance of this system is people's perceptions that the taxes are raised unfairly or not used properly, along with greed. Making "generosity a cultural imperative" would equally have to tackle such resentments and greed.

"We need to get philanthropists back at the forefront." No we don't, as this would futher place services for less well-off citizens in the category of "it would be nice to give them a share of the wealth but not essential if it doesn't come off" - which was the position in Victorian times when, despite the huge efforts and genrosity of some philanthropists, the vast majority of the population were malnourished and uneducated, as was discovered when huge numbers of them were found not fit for military service when they volunteered to fight in the First World War.

Instead of encouraging the superrich to be philanthropists, we should simply make them pay tax. But no government seems to be quite that daring. However, should any lowly, feckless, scrounging poor person dare to claim a little bit of benefit that they are not entitled to - let the wrath of the Daily Mail fall upon them and may the government go after them with all the powers at its disposal.

Yeah, I'm concerned that this government wants to go back to the days when the poor had to rely on there being some Lady Bountiful around. Who would only help those she considered the 'deserving poor'. And definitions of deserving differ between individuals.

The welfare state is being dismantled - the NHS is being slowly privatised. The Health Act enables this. And it's why the govt. are attacking doctors' pensions - because private companies demand lesser pensions before they will take over hospitals and employ doctors. The govt. knows there will be little public sympathy for doctors as high earners so they can get away with this. Just as they are hiding the rest of the privatisation agenda from the public - who would never vote and have never voted to privatise the NHS.

I think it's a change of mindset that is needed. Rather than survival of the fittest (capitalism) we need to aim for everyone surviving.

But that involves a redistribution of wealth that could only be effected by govt stepping in. It might also mean the huge multinational corporations go elsewhere (though I really don't think so, and maybe we should just call their bluff. The UK would still be a highly desirable and profitable place for them to operate in).

You know it doesn't have to be from the sublime to the ridiculous, all or nothing, Niceguy ('a state run economy where being rich is not allowed'). Who would want to ban wealth? It's something we all want more of, isn't it? So those that have far too much could be prevailed upon to share, don't you think?

We need to show the govt the way to go (since they are incapable of deciding what is best for all of us). Let them know that enough of us would vote for higher taxes, that we are interested in living in a fairer society, where everyone can be a winner.

"Who would want to ban wealth? ... those that have far too much could be prevailed upon to share."

I often see such contradictions posted on these boards. It always makes me want to ask the following questions.

1. How much is 'far too much'?
2. Who gets to decide who ?those that have far too much? are?
3. Is the plan to reduce those who have 'far too much' to the level of those that simply have 'too much', 'more than most' or 'doing about average really'?
4. How long before the arbitrators and enforcers become the ruling class?
5. How would you 'prevail' upon someone other than by using the force of the state to confiscate part of their wealth?
6. Does the confiscation of wealth become a de-facto ban on wealth?
7. Does what you are trying to do have a historical precedent and did it end well?

"But no government seems to be quite that daring"

It's not a question of daring. It's the practicality. And that's what I mean by a blunt instrument. Overtax like we did in the seventies and we end up with Caribbean Islands full of exiled billionaires, well outside UK jurisdiction and millions of regular people working hard for nothing in their back pocket. It's been a long time since Mick Jagger contributed to the British economy, for example.

And I don't think encouraging a more philanthropic society automatically means the state steps back from its responsibilities and hands them over to 'Lady Bountiful'. That's far too simplistic.

OK.

1 Dunno.
2 Not the point.
3 No. (What plan?)
4, 5, 6, 7 I think I detect a certain (not unnatural) fear of communism as we know it, ie what happened in Russia and China in the first part of the 20th century.

I'm not talking about anything we (as a human race) have done before, to my knowledge, although maybe somewhere long ago and far away ...

I'm happier to leave the finer points to the experts. All I'm saying is that the situation now is unfair and dangerous and that we need to do something about it before people get angry and feel they have nothing to lose.

Revolutions are chaotic and their outcomes are unpredictable. Civil war is the scariest thing I can conceive of. I don't want either.

I just want the people who have been stealing away huge amounts of money and land that could be used to make life better for so many more of us to share it. If they won't do it voluntarily, then we need to vote in a govt that will make them. There aren't that many of them, btw, they are just incredibly wealthy.

The welfare state is being dismantled

Absolute cr*p. The welfare state is FAR from being dismantled. It's had a haircut to try and bring expenditure back to a more affordable footing and as part of that some tough choices have had to be made as to whom can be supported.

Such scaremongering helps noone. Neither in the long run does spending money we don't have on benefits.