Super rich rip off tax office, accumulate more loot

“Behind every great fortune there is a great crime”, 19th century French novelist Honoré de Balzac is supposed to have written. Two centuries later, this same precept applies.

An international university research team based in Norway has just published its finding that the super rich systematically practise tax evasion. This probably won’t surprise anyone, but now we’ve got hard evidence.

Taking advantage of data that have become publicly available through leaks at the HSBC Bank and the publication of the Panama Papers, together with random tax audits, a team led by professor Annette Alstadsaeter found that the higher a person moves up the wealth distribution ladder, the more likely they are to hide assets from the tax man.

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Focusing just on Scandinavia, the researchers found that the top 0.01 percent, those with more than $40 million, were 250 times more likely to conceal their wealth. Because their assets were so much larger than those of everyone else, these small numbers of people were responsible for half of the entire wealth hidden through offshore tax havens.

Alstadsaeter and her colleagues make the point that responsibility for this criminal activity does not rest only with those hiding their money in the Cayman Islands. They are aided and abetted by the respectable banks, such as HSBC, which have wealth management arms whose main purpose is to help their clients defraud the tax office. On top of the banks are the armies of tax lawyers whose job it is to look at how the rules can be bent or broken discreetly. All for a cut of the loot, naturally.

Then there are the governments that always laud the fat cats as admirable “wealth creators” and draw up legislation and tax codes so loose and with penalties so trivial that they might as well invite the banks and their clients to rort the national treasury.

The picture is even more extreme outside Scandinavia, the authors suggest. “Light touch” rules introduced in the 1980s and 1990s in London and other major financial centres allow the super rich to rip off the system even more brazenly than they do in northern Europe.

The figures involved are significant. Alstadsaeter and her colleagues suggest that adjusting for funds the super wealthy of Norway hide offshore increases estimates of their wealth by 30 percent.

Meanwhile, the very same governments that allow wealthy individuals and big corporations to evade tax criminalise the poor. No light touch for those at the bottom of society, nothing but increasingly intrusive harassment by the likes of Centrelink.

The more data are released and verified, the more that the extreme concentration of wealth is revealed on a global scale. Oxfam, for example, which in 2015 estimated that the top 62 individuals hold as much wealth as the bottom half of the world’s population, reduced that figure in 2016 to just 8 when more accurate data came in from India and China.

In the words of two other Scandinavian writers, Benny Andersson and Björn Ulvaeus, “Money, money, money; always sunny in the rich man’s world”.