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The Hidden Money


Society & Culture  (tags: abuse, americans, Banking, crime, culture, dishonesty, education, ethics, freedoms, government, finance, law, politics, rights, society, world )

Kit
- 609 days ago - truth-out.org
"Hiding money in the ways and amounts lately revealed by the International Consortium of Investigative Reporters is a deep kind of social corruption," writes Wolff. "It goes beyond questions of legality to the heart of modern political economy."



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Kit B. (276)
Saturday April 20, 2013, 5:28 am
(Photo: JasonUnbound / Flickr)


Recent revelations of hidden money by the International Consortium of Investigative Reporters (ICIR) have embarrassed governments, large and small, and exposed many rich businesses and individuals. They used places like Lichtenstein, the British Virgin Islands, the Cayman Islands, Switzerland and, of course, Cyprus. Those countries' private banks wanted the money much as their governments wanted the revenue benefits of hidden money inflows. The rich around the world took advantage of those banks' services to launder money with some illegality attached to it, to evade or avoid taxes, to hide business deals from government scrutiny, and so on.

Reasonable estimates, based on ICIR and other reports, suggest that many trillions of dollars sit in such hidden money accounts. It follows that debates in most countries about rates of taxation are missing the point. Many among the rich long ago found ways to avoid taxes, whatever the rates. They just needed and used that one "loophole" in the tax law that allows them to hide their money (or "offshore" it) in either personal or corporate accounts or both.

By these means - eagerly abetted by banks competing for their lucrative business - many of the rich avoid whatever taxes the people in their countries of origin tried to impose. How progressive can a tax system actually be when the upper echelons can and do hide so much money from tax authorities? Moreover, so many competing countries and banks and so many easy ways to hide money provide incentives for illegal money-making. Laundering money to cover up its illegal origins has long been so very easy to do.

ICIR's recent exposés have also shown that not only little countries and their local banks launder tainted money and facilitate tax avoidance schemes. Major money-center banks have recently paid huge fines when caught doing such things. Many of the corporations chartered to do financial business in places like the Cayman Islands turn out to be local subsidiaries of money center banks seeking to "service high net worth clients with special needs."

Hidden money represents the old problem of private financial behavior that deprives societies of tax revenues they need while encouraging and abetting illegality. We could try some new laws and impose some new regulations. That was done often in the past when similar revelations provoked action. Yet we know the inevitable result. The rich seeking to escape taxation and the rich criminals seeking to skirt legality will pay well for the best minds (lawyers, accountants, financial advisors, etc.) to devise ways around new laws and regulations. They have done so repeatedly, successfully and often quickly.

One logical solution would be to change any economic system that confers on the top 1-5% such inordinate wealth and income that they can easily afford the expensive professionals usually required to "legally" evade the taxes everyone else pays. With a far less unequal distribution of wealth and income, we would not depend upon or even need the absurd, repetitive theater in which governmental regulation is established, then evaded; new regulation is imposed, then circumvented - and so on. Moreover, consider the huge deficit-reducing potential: With significantly less income and wealth inequality, tax evasion schemes would be less affordable and attractive to more people, resulting in higher tax revenues, while regulation and enforcement costs for the IRS would correspondingly drop.

Another logical solution would be to socialize banking, at least the biggest, money-center banks. Given the already highly developed internationalization of those banks, this would be an international socialization. It would parallel the international efforts to confront another set of problems confronting the world, namely environmental degradation. Major private money-center big banks would become owned and operated by agents directly responsible to political leaders. Their activities would have to become publicly transparent. As state institutions, such socialized banks would have no interest in (and be strictly prohibited from) practices that deprived the state of its proper tax revenues. Because European and US money-center banks are so large, if socialized they could easily "persuade" big banks elsewhere to join for fear of otherwise being boycotted by the socialized combination of dominant European and US banks. Such a solution would win the support, now, of clear majorities of people in many parts of the world. They blame the financial industry - and big banks in particular - for much of the crisis as well as the subsequent bailouts (for the banks) and governments' austerity policies (for the people).

Hiding money in foreign accounts to escape detection and/or taxation has become a routine "financial strategy" for many of the richest people and businesses in the world. Partly protected by special legislation and partly by the refusal of compromised officials to investigate or prosecute, the hiding of money has deprived most countries of huge amounts of desperately needed tax revenues that could have helped their economies grow while lowering their national debts. The heads of the worlds major banks - those who demanded and got trillion dollar bailouts and who now demand austerity programs to balance government budgets - preside over institutions that make money helping the rich escape taxation.

Hiding money in the ways and amounts lately revealed by the ICIR is a deep kind of social corruption. It goes beyond questions of legality to the heart of modern political economy. Capitalism is a system that fosters deepening economic inequality inside most nations across the world today - unless and until popular revulsion and counter-movements stop or undo that deepening. After a certain point, the inequality provokes and enables the super rich to further expand - in a Midas-like frenzy - their already prodigious wealth. Laws become mere obstacles they have the money to evade, rather than binding social agreements. Then deep corruption sets in. The ICIR report and documents make us all see the gory details of the vast holdings of hidden money. The real question is whether the people hurt by this behavior will change the system that promotes and rewards it.
*****

By: Richard D Wolff | OpEd| Truthout |

Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan. Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a Visiting Professor of Economics at the University of Paris (France), I (Sorbonne).
 

Kit B. (276)
Saturday April 20, 2013, 5:35 am

If you happened to have missed the ICIR investigation and want to know more, the documentary is available on Care2. Immerse yourself in some knowledge. Richard Wolff (above) offers an excellent analysis of how our money and ownership of that money is eroding both the capital system and democratic forms of government.

The Tax Free Tour and the Price We Pay for Globalized Capitalism

http://www.care2.com/news/member/451276626/3556201
 

paul m. (93)
Saturday April 20, 2013, 5:41 am

Noted..
 

Carlene D. (239)
Saturday April 20, 2013, 5:46 am
Notes
 

Barbara K. (75)
Saturday April 20, 2013, 6:43 am
Thanks, my friend, for the info. We need it to be illegal for these companies to hide their money like that, and some even got bailouts while hiding millions or trillions. There is so much to be done to put a stop to this form of tax dodging, including jailing them. As far as the businesses go, we can boycott those until they move their money back here and pay their taxes like the rest of us do, while nowhere near the wealth of the weesels hiding their vast fortunes. They have the gall to look down on us while it is OUR money supporting this country.
 

Kit B. (276)
Saturday April 20, 2013, 6:51 am

When a select few become above the laws governing the rest of us, we enviably have some form of disaster. This disaster is environmental, financial and legal. For the potential future of this country and the world, things must change.
 

pam w. (191)
Saturday April 20, 2013, 8:48 am
Indeed, Kit...THEY MUST!

But getting those in government who are STOOGES for enormous corporations to actually pass laws against these practices is a HORRENDOUS undertaking!
 

lee e. (114)
Saturday April 20, 2013, 8:53 am
Since corporations are now "individuals" they ought to be brought up on charges of treason! Not to mention the true individuals!
 

lee e. (114)
Saturday April 20, 2013, 8:55 am
Even if we could "guesstimate" what the people have shuffled overseas, and tax them retroactively with fines and late penalties - that alone might keep SS and medicare going for several more years!!
 

Elle B. (82)
Saturday April 20, 2013, 9:42 am
Thank-you for the article and link Kit. ...the tangled web of greed weaves on... astute to observe and be vigilant of it's current corrupt and convoluted pathways ...wise words and simple truths by those who expressed it so well...

“We have always known that heedless self interest was bad morals, we now know that it is bad economics.” ― Franklin Delano Roosevelt

“The Greed of gain has no time or limit to its capaciousness. Its one object is to produce and consume. It has pity neither for beautiful nature nor for living human beings. It is ruthlessly ready without a moment's hesitation to crush beauty and life.” ―George Eliot [Mary Anne aka: Mary Ann or Marian Evans] 22 November 1819 – 22 December 1880

"...People who have spent all day learning how to sell themselves and to manipulate others are in no position to form lasting friendships or intimate relationships... Many Americans hunger for a different kind of society -- one based on principles of caring, ethical and spiritual sensitivity, and communal solidarity. Their need for meaning is just as intense as their need for economic security." ―Michael Lerner, journalist


“A Native American grandfather talking to his young grandson tells the boy he has two wolves inside of him struggling with each other. The first is the wolf of peace, love and kindness. The other wolf is fear, Greed and hatred. "Which wolf will win, grandfather?" asks the young boy. "Whichever one I feed," is the reply.” ―1st Nations
 

Yvonne White (233)
Saturday April 20, 2013, 11:45 am
Austerity=Atrocity! The rich are waging war on the 99% because Governments allow, enable, and Encourage it. Meanwhile I'm trying to figure out how to hide money under a water-bed mattress..;)
"...Hiding money in foreign accounts to escape detection and/or taxation has become a routine "financial strategy" for many of the richest people and businesses in the world. Partly protected by special legislation and partly by the refusal of compromised officials to investigate or prosecute, the hiding of money has deprived most countries of huge amounts of desperately needed tax revenues that could have helped their economies grow while lowering their national debts. The heads of the worlds major banks - those who demanded and got trillion dollar bailouts and who now demand austerity programs to balance government budgets - preside over institutions that make money helping the rich escape taxation."
 

Lin Penrose (92)
Saturday April 20, 2013, 2:59 pm
Thanks Kit. I must wonder if these $ hiders are planning to take it with them after death? Perhaps they believe they are exempt from death, and/or those who inherit will use the stolen (valuables?) for a better and very different future.

Many who inherit wealth, (what ever the many interpretations), think of themselves as entitled and will not appreciate the limitations of that wealth. View humans, this planet, and the expenditures of the inheritance by the "entitled" - us.
 

Dandelion G. (384)
Saturday April 20, 2013, 4:07 pm
The heads of the worlds major banks - those who demanded and got trillion dollar bailouts and who now demand austerity programs to balance government budgets - preside over institutions that make money helping the rich escape taxation.

Nice world for them, eh? I agree with Lee's comments. Now if we could get the Corporate owned shills in our Governments to stop protecting this crap and do what is best for the worlds people and environments.
 

Kit B. (276)
Saturday April 20, 2013, 4:35 pm

We do still have the power of the ballot, if we would just use it. We do not have to accept this, we can toss out every incumbent and keep tossing them out until they hear us. Nor must we be restricted to one political affiliation, we can seek out new candidates and new parties, run them. That would all depend on being highly active and involved.
 

Theodore Shayne (56)
Saturday April 20, 2013, 4:58 pm
What a scam. Thanks for the article Kit.
 

Glenn Byrnes (192)
Saturday April 20, 2013, 6:03 pm
Noted.
 

Past Member (0)
Saturday April 20, 2013, 6:48 pm
noted
 

Bryan S. (105)
Saturday April 20, 2013, 8:20 pm
What's this, you mean the people at the top who are accumulating all this money aren't using it to create jobs?

I agree with the solution of socializing the big banks (well they've already been socialized half-way -- the loss part). I mean WTF, when considering the role that the flow of capital plays in society, it's no different than if a a private group said "we own all the water" and then proceeded to extract the highest profit they could get by selling it to desperate thirsty people (which has been done in places).

And i agree, Lee, the responsibility of being an individual should go along with corporate "personhood". As the saying goes, "I'll believe corporations are people when Texas executes one".
 

Kit B. (276)
Saturday April 20, 2013, 8:35 pm

Right on, Bryan!
 

Bryna Pizzo (139)
Sunday April 21, 2013, 10:17 am
Thank you for the additional education. Of course, Romney is the poster boy for this problem. I still can't believe he had the gall to run for President. (N, P, T)
 

Kit B. (276)
Sunday April 21, 2013, 10:32 am

In his videos Richard Wolff has spoken of his great disappointment in the American public for their lack of interest in voting. I echo that disappointment, many things could be moved out of this muck and mire by just voting out those who betray us while in office. No politician should ever feel comfortable to vote against the best interests of the American people. They should fear the reaction of the people.
 

Theodore Shayne (56)
Sunday April 21, 2013, 12:12 pm
This takes three card Monte on the boulevard to a whole new level.
 

Kit B. (276)
Sunday April 21, 2013, 12:23 pm

At least with 3 card Monte one knows it is a scam!
 

Past Member (0)
Sunday April 21, 2013, 12:45 pm
ALL hidden money found ought to be confiscated and the holders of these hidden accounts arrested, fined an additional amount equal to the hidden value, and they should be prosecuted for fraud and sentenced to serve the maximum time possible!
 

Winn Adams (203)
Sunday April 21, 2013, 1:30 pm
OMG - really no surprise here. Thanks.
 

Lois Jordan (58)
Sunday April 21, 2013, 1:32 pm
Multi-national corporations and the wealthiest have financially supported lobbyists to craft Congressional bills to further aid them in tax-dodging. Publicly financed campaigns would go far in stopping this, as well as an amendment proclaiming that corporations are not people. MoveToAmend.org is on the forefront of moving Congress to introduce such a bill. This group is also working in cities & towns across America to end Corporate Personhood. The last count I have, (it could be more now), was 90 cities who implemented this.
 

Kit B. (276)
Sunday April 21, 2013, 1:36 pm

Well said Lois. Yes, a move to amend is on the agenda for some, just not enough to get an amendment passed.
 

Angelika R. (144)
Sunday April 21, 2013, 2:26 pm
Another scandal revealed here just yesterday: the president of Germany's most famous football(socker) club, BAYERN MUENCHEN , Mr Uli Hoeneß was caught with tax evasion and has made a self report and already payed € 6 million retroacive to the IRS, which suggests that the evaded amount is around hundred/s of € millions.

Bayern Munich Head Reports Self for Tax Evasion
 

Angelika R. (144)
Sunday April 21, 2013, 2:29 pm
Perhaps US authorities might try to make an OFFER to buy one of Switzerlands tons of CDs with tax evaders data? They LOVE to sell them! ;-)
 

Birgit W. (152)
Sunday April 21, 2013, 4:07 pm
Noted
 

Jennifer C. (169)
Monday April 22, 2013, 3:55 am
Noted.
 

Kerrie G. (135)
Monday April 22, 2013, 5:33 am
Noted, thanks.
 

Deborah W. (6)
Monday April 22, 2013, 8:49 am
From the highest to the lowest of levels, good and bad will always butt heads. Scams/shelters, whatever the label, are designed for the self. No one gives a shit until it hits their own personal home/family. Only then will the silent majority of righteousness vocalize ... and vote with awareness and research individually gained, not stuffed down the throat by full-time spinners for their ownership base.

Could be a long time coming ... if ever.
 

Janet G. (0)
Monday April 22, 2013, 12:49 pm
noted.
 

Birgit W. (152)
Monday April 22, 2013, 1:14 pm
This is the same all over the world.
 

Tom Edgar (56)
Monday April 22, 2013, 2:26 pm
When the terminology describing the "West" i.e "Democracies" is changed to being what it really is "Capitalist" then maybe progress can be visualised .Socialism is a system primarily for the promotion of social equality, harmony, and justice. Capitalism is primarily the system where money is of itself the most important factor and the acquisition of greater wealth becomes the only pursuit deemed desirable. It isn't for nothing that the old saying still holds true. The LOVE of money is the greatest evil. Let us change that and have, primarily, a love for humanity, in other words let us all be sociable
 

Julia R. (294)
Monday April 22, 2013, 4:13 pm
Great posting Kit! Richard Wolfe really hits the nail on the head in this article! I heard a very interesting interview with him on Bill Moyers and his incisive comments about all the pitfalls of capitalism. Maybe in the future, will we have a combination of capitalism and socialism in our economy such as Sweden and some other countries? And an economy that doesn’t favor but a few at the expense of so many? But now when you even try to open up a debate on this topic, you have people such as those who are exploiting the capitalistic system the most with their enormous excesses and greed calling those that question- communists, and unfortunately, even though this isn’t accurate that ends the debate; so we continue with the very rich not paying their fair share in taxes and offshore bank accounts hiding huge assets which could benefit the entire world!
 

marie c. (168)
Monday April 22, 2013, 4:50 pm
I enjoy reading all of your comments but I am from UK so do not always stick my nose in to comment
Thanks for posting Kit
 

Tom Edgar (56)
Monday April 22, 2013, 5:51 pm
marie tc By all means put your oar in the water, this applies, in varying degrees, to all countries, not the least being the U K Whilst the U S A and some Middle Eastern countries are at the extreme end of the economically advantaged citizens who control the major portion of the wealth the U K is no slouch either. The wealthiest people are still the landed gentry. The Queen herself being amongst the world's richest and only paying the tax SHE decides to pay whilst her income is not allowed to be investigated by the Taxation Department. That tax now being paid is only a very recent innovation, previous Monarchs never paid under a, by stealth, arrangement between Churchill and George V. So by all means be a stirrer the pot will always be having unsavoury ingredients added. Additionally there is very little that the U S A does that is voided of repercussions everywhere else.
 

june t. (66)
Monday April 22, 2013, 11:46 pm
thanks for the article - an important conversation
 

Craig Pittman (47)
Tuesday April 23, 2013, 5:30 am
The ICIR does amazing work and this story is huge. As the ICIR processes each individual involved in this and verifies the information, they are posting their photos, bios and particulars online. They have a website and are also on Facebook. I have donated funds to this group and do what I can to keep this story current. The Canadian government is threatening to take the ICIR to court to force them to turn over their records. In the meantime scores of wealthy Canadians are voluntarily revealing their financial offshore activities to avoid prosecution. In Canada you can do this if you do so before the Revenue Department officially begins investigations against you.
Thanks Kit for bringing this story forward.
 

marie c. (168)
Saturday May 4, 2013, 4:40 am
Tom Edgar
.
I object to your stupid description of me "a stirrer in the pot'
I think you should re read my comment and attack some one else Surely you have misinterpreted my. comment. I find Kits articles very interesting Think before you make silly accusations. .
 

Rehana VN (0)
Friday November 1, 2013, 5:12 am
Greedy Sods! very interesting read.Thanks
 
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