It's Even Worse

And another reason the elite hate leaks.

Tax records are invaluable for the study of economic inequality. [...] And because tax records exist as far back as the early 20th century, they can be used to shed light on the long-term evolution of inequality.

The graphs published on the World Wealth and Income Database, for example, show just how powerfully this information can inform the public debate. The top 1% income share is now closely scrutinised by journalists and policymakers in the US.

[...]

But for all their merits, tax data raise an obvious issue: by their very nature, they entirely miss tax evasion.

[...]

Before now, there hadn’t been any attempts to address the measurement of global tax evasion systematically. The reason is simple: the lack of comprehensive information about who skirts taxes. The key data source used in rich countries to study tax evasion is random tax audits – but these audits do not capture tax evasion by the very wealthy, because few of them are audited, and because random audits fail to detect sophisticated forms of evasion involving shell companies and hidden accounts.

In our recent study, however, we exploited a massive trove of data leaked from HSBC Switzerland, the so-called HSBC files, to fill this gap. [...] The documents leaked [in 2007 by a systems engineer, Hervé] Falciani included the complete internal records of more than 30,000 clients of this Swiss bank in 2006-07.

[...]

This is a unique source of information through which to study tax evasion, because the leak can be seen as a random event, and it comes from a large (and, the available evidence suggests, representative) offshore bank.

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We also made use of the Panama Papers, which last year revealed the identity of the shareholders of shell companies created by the Panamanian firm Mossack Fonseca.

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We combined random audits with these new sources of information to shed light on who really evades taxes in Denmark, Norway and Sweden – and the results are striking.

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This pattern is not specific to HSBC or the Panama Papers. Over the last few years, thousands of Norwegians and Swedes have voluntarily declared previously hidden assets under a tax amnesty.

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In Norway, where the available wealth data is particularly detailed, the super-wealthy appear to be 30% wealthier than previously thought, when all the wealth hidden in tax havens is taken into account.

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Since Scandinavians generally pay their taxes and hide little wealth in total, our results are likely to be even stronger in Great Britain and elsewhere.

  Guardian

Scandinavians are more honest? Or just more concerned about paying their fair share to keep their country afloat?

[T]he key to successfully fighting tax evasion is to change the incentives for the providers of wealth concealment services. Over the last few years, a number of banks have pleaded guilty in the US to criminal conspiracies to defraud the Internal Revenue Service – yet they were able to keep their banking licences, and the fines they had to pay paled in comparison to their profits. A more ambitious approach would put criminal organisations out of business. If tax evasion ceases to pay, it will disappear.

Sorry, we can't have that. But thanks for the info.

...but hey, do what you want...you will anyway.