Money

Here's how much money the super-rich are hiding

Grand Cayman, Cayman Islands
David Rogers | Getty Images
Grand Cayman, Cayman Islands

The super-rich are even richer than they appear, once you factor in all of the assets they hide from the authorities.

That's according to a new analysis in The Guardian by the Ford Foundation-backed Inequality Project. Researchers take into account information gleaned from random audits, the HSBC files as well as the Panama Papers and determine that, in Scandinavia, the rich are overwhelmingly more likely to avoid paying taxes by admitting only to a portion of their true net worth: "The higher one moves up the wealth distribution, the higher the probability of hiding assets."

The researchers write that "Scandinavian households in the top 0.01 percent of the wealth pyramid – the ultra-rich, who own more than $40 million in net wealth each – are 250 times more likely than average to hide assets." They conclude: "In Norway, where the available wealth data is particularly detailed, the super-wealthy appear to be 30 percent wealthier than previously thought, when all the wealth hidden in tax havens is taken into account."

That means that, in Norway, the top 0.1 percent of population controls not eight percent of the nation's wealth, as previously concluded, but a full 10 percent.

Can these findings be extrapolated to the super-rich of other nations? The researchers believe so. In fact, they say, they expect the numbers in other Western countries to be even more sobering: "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. A more accurate measurement of tax evasion would likely increase inequality levels even more than in Scandinavia."

The top 0.1 percent in the United States, Robert Frank reports for CNBC, who "have a net worth of more than $100 million," controlled "just under 12 percent" of America's wealth as of 2014. And the situation is only getting more dire: "Over the past half century, they have nearly quadrupled their share."

If the Inequality Project researchers are correct, that means the .01 percent in America could in truth control significantly more than 12 percent of all of the wealth in the country and could also be more than 30 percent richer than they appear.

Frank notes that "the U.S. still has far and away the largest number of millionaires, with eight million. China ranks second with 2.1 million, followed by Japan with 1.1 million and the United Kingdom with 961,000."

It is unclear to what degree President Donald Trump's proposed tax plan will close loopholes or in other ways push for America's super-rich pay taxes on their hidden, as well as their acknowledged, wealth.

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