A recent economic study found that $7.6 trillion is hidden in tax havens around the world. That’s over $1000 for every person on the planet. Of course, most of the people on this planet wouldn’t know the first thing about how to move their money offshore to a tax haven. Only multinational corporations and people with tens of millions in wealth have those resources.
But what only a privileged few can do has consequences for the rest of us. It means $200 billion a year in tax revenue that is lost, and therefore must be paid instead by the other 99.9%.
It also means that many economic statistics have been skewed because this money isn’t officially “there.” If offshore wealth is counted, then Europe is no longer a debtor continent, the US only owes half as much as was thought, and China is no longer so much a creditor. Amazingly, the Chinese are actually holding their money in a more transparent fashion than wealthy Westerners.
The solution is to create an international registry to track wealth and wealthy individuals. Just like the ownership of houses and cars is registered, partly in order to tax those possessions, so should all large assets be legally tracked so that they can be taxed by the owner’s country of residency or citizenship.
We wouldn’t have to invade anywhere to create such a database. It could be negotiated in the next round of world trade talks, to which just about every country is a party. If we make membership in the world economic club dependent on playing fair with international wealth, then it will be easy to make even the super-rich pay their fair share, and would probably help prevent money-laundering as well.