Tax evasion and opaque offshore tax havens are well known for the economic wreckage that results when countries cannot collect legitimate taxes due. A new report pegs the global tax gap at $427 billion.
The Tax Justice Network (TJN) is a non-profit watchdog originally launched in the British Houses of Parliament in 2003. The organization researches and exposes global tax injustice, raising the profile and hardship caused by the ever-constant flow of hidden money around the world. The TNJ report, The State of Tax Justice 2020, drills down into the costs of tax fraud and recommendations to combat global tax crime.
Some key points include the following:
- The report finds that $427 billion in tax revenues are lost every year to corporate tax abuse, money laundering, and individual tax evasion. For perspective, the report notes that sum would pay the annual salary of a single nurse each second. Put another way, it would pay the annual salaries of 34 million nurses around the world.
- Corporate tax evasion by multinational companies is the leading contributor to money that disappears into secrecy jurisdictions each year. These companies evade tax liabilities of $245 billion while individuals using opaque, preferential tax havens to hide untaxed wealth are responsible for another $182 billion in lost tax revenue each year.
- The impact of the lost taxes due is relative to the size and wealth of a country. Countries with more wealth lose more in tax, but the impact of lost tax revenue is greater on less wealthy countries with significantly smaller budgets. In some cases, the amount of money lost to tax fraud can represent approximately half of a budget for public health.
At first glance, growth and protection of wealth may not seem compatible with efforts to reign in global money laundering. While illicit money deals grow the wealth of a relative few, they also fuel economic and societal instability around the world.
Legitimate tax havens, foreign bank accounts, and other structures can shelter assets, deter IRS interest, and keep you compliant. Tax gaps locally and abroad eventually disrupt the societies within which we live and hope to build a future. When you have questions about your tax shelter, talk to a qualified tax attorney for guidance.
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The law firm of Robert J. Fedor, Esq., LLC focuses solely on tax solutions for criminal tax investigations, strategies to legally and resourcefully grow your wealth, and help your business thrive through appropriate compliance advice. With offices in Cleveland and Chicago, our tax attorneys can assist you throughout the US and abroad. If you are concerned about offshore tax issues, or face an IRS audit—we can help. Call 800-579-0997 or contact us.