‘Paradise Papers’ Shed Light on Offshore Tax Havens

A treasure trove of 13.4 million financial documents dating to the 1950s from private financial firms is revealing fascinating information about how the global wealthy stay rich, oftentimes by suspect or at least questionable means.

This much-needed followup to 2016′s Panama Papers is known as the Paradise Papers, reflecting the bucolic settings of many tax havens. The documents implicate the rich and famous from all over the world, and account for about $10 trillion in financial transactions.

The Paradise Papers originated with a leak to a German publication, Süddeutsche Zeitung. Journalists there brought the documents to the International Consortium of Investigative Journalists (ICIJ), which worked with numerous partners to explore, verify, and validate the documents. The Consortium took those documents to the companies affected and asked for comment. Those companies claimed the documents were the result of an information security compromise. The ICIJ then went public, and now we’re getting an intimate look at how the wealthy hide their wealth in order to avoid tax liability.

The most interesting thing about the Paradise Papers may not necessarily be further evidence that rich people use tax havens and shady financial services firms to protect their assets. Instead, it’s who’s involved, because some of them are big names: Queen Elizabeth II through to big companies like Apple and Nike.

They’re not the only ones taking advantage of offshore havens, though. Numerous Trump influencers also appear in the Paradise Papers, including Rex Tillerson and Robert Mercer — so much for draining the swamp! In fact, nearly $60 million in funds used to prop up the Trump campaign were funneled through offshore accounts. Don’t think that the Democrats aren’t getting their hands dirty, though. Prominent Democratic donors were also implicated, as were key party players. Penny Pritzker, who served as Commerce Secretary under President Barack Obama, may have violated ethics rules with offshore banking activities.

Private citizens like Bono, Madonna, Keira Knightly, and Lewis Hamilton also appear in these documents. Notably, many celebrities engage in charity work as part of their public persona and for the purpose of developing positive relations. It’s striking, then, that they’re so protective of their own wealth, going to elaborate lengths to avoid paying their fare share in taxes, while putting on a public face of charitable engagement.

The documents also show heavy Russian investment in U.S. social media companies Twitter and Facebook. Commerce Secretary Wilbur Ross has also benefited from Russian investments in his shipping companies. The tangle of relationships between people, corporations, and offshore interests revealed by these documents is immense, and highlights the results of a poorly regulated financial landscape.

The ICIJ notes another issue with offshore tax havens that sometimes doesn’t get very much press: While the rich and powerful benefit from hiding their funds overseas, this often comes at a cost to ordinary citizens in those countries, as well as neighboring nations.

The ability to easily dodge tax liability by moving funds elsewhere may be legal or quasi-legal, depending on where the money is coming from and how it’s handled, but it can result in a net transfer of wealth away from developing nations, money that could be going to public services, infrastructure, and other government activities in nations that can’t enforce their tax laws.

With such a large volume of documents to go through, there’s likely much more to learn from the Paradise Papers. This includes understanding the numerous mechanisms used to avoid tax liability, gleaning more about the people and companies involved, and finding out more about the web of connections that spans powerful individuals, private companies, and the banks that serve them.

Photo credit: Thinkstock.

40 comments

Linda D
Linda D8 months ago

Check out what you buy, choose carefully if you don't want to keep supporting the tax dodgers in the world. Boycott, boycott, boycott. Supply and demand. If there is no demand and we demand change then maybe they will change. Demand transparency. They all use the resources and infrastructure but don't want to pay for it, I just think this is totally greedy.

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Eric L
Eric Lees8 months ago

@Leanne K
"Lousy. Just pay the damn taxes! The world will be a better place, not just for you!"

I hope that's sarcasm Leanne, more tax revenue is just more money politicians can waste. Just look at what the USA spends on it's global military empire. Like the Romans, our empire will come to an end.

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Eric L
Eric Lees8 months ago

@Shirley S "What is earned in a country should stay in the country."

Why? A free person should be free to spend their money however and wherever they please. We are not slaves to the state.

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Eric L
Eric Lees8 months ago

As I've said before the elites do not show up on the Forbes list of wealthiest people. They are the people that run the biggest Corporations, governments and central banks behind the scenes. They win no matter which wing of the Oligarchy we elect. Divide and Conquer.

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Winn A
Winn A8 months ago

:-(

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Debbi W
Debbi W8 months ago

According to the Courage Campaign, "The “Paradise Papers” -- internal documents from a law firm that specializes in setting up offshore tax shelters -- surfaced this week. They show how the biggest corporations are using offshore tax shelters to avoid paying billions in taxes. __Apple moved $250 billion to the island of Jersey.__ Pfizer__ Microsoft__ GE__ Google__ and many others have hundreds of Billions Offshore."

"Investigative reporters have been digging into these documents for months, and this week they’re starting to reveal how corporations and the super wealthy hide their money in shell companies on tiny islands."

That's one way they are avoiding/dodging their legitimate Taxes.

True Tax Reform will make it harder for corporations and the 1% to avoid paying their FAIR SHARE. We must _demand_ a fair tax reform bill, Not a tax give-a-way for the greedy wealthy.

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Shirley S
Shirley S8 months ago

What is earned in a country should stay in the country.

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Glennis W
Glennis W8 months ago

Tax cheaters Rich get richer poor get poorer Thank you for caring and sharing

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Glennis W
Glennis W8 months ago

4 Corners Australia ABC TV was very interesting too Can view on TV anytime you want Thank you for caring and sharing

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Glennis W
Glennis W8 months ago

Very interesting article Thank you for caring and sharing

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