World's rich hide at least $21T offshore

British Overseas Territory of the Cayman Islands (Photo credit: Wikipedia)

With about 55,000 inhabitants, the Cayman Islands should not be a well-known name in the rest of the world, but the tiny Caribbean territory has become famous as a tax haven for the world's super rich. According to a new report, the Caymans - along with the other dozen or so international havens for wealth like Switzerland and Bermuda - are the holders of so much of the world's capital, entire regional economies could be moved on it.

The Tax Justice Network has just released a report estimating that the world's tax havens house anywhere from $21 trillion to $32 trillion of money that governments cannot tax. "This offshore economy is large enough to have a major impact on estimates of inequality of wealth and income; on estimates of national income and debt ratios; and - most importantly - to have very significant negative impacts on the domestic tax bases of 'source' countries," James Henry, the report's author and a former chief economist at consultancy McKinsey told the Guardian.

The problem of money leaving countries to avoid the tax man is not just reserved for the world's economic powers. The amount that has left developing countries for tax havens could have been more than enough to pay off their debts to the rest of the world, The Guardian reports. About $800 billion has left Russia since the early 1990s. Read more >>