In the worst cases, bouts of capital flight can gain momentum until the value of the currency collapses, plunging the nation into crisis.
.. Balance of payments records show that 10 of the last 12 major currency crises, dating back to the Mexican peso meltdown of 1994, began when residents started sending money abroad, which was typically two years before the currency collapsed. Often politicians blamed “evil” and “immoral” foreign speculators for these crises, but it was the locals who first saw trouble coming.
.. Right now, this forensic accounting offers clear evidence of looming financial difficulty in only one major country: Turkey.
.. Starting early last year, affluent Turks began effectively moving large sums of money out of the country by exchanging their lira bank deposits for dollars and euros, while foreigners continued to buy Turkish assets.
.. Turkey’s millionaires appear to be fleeing both deteriorating financial conditions marked by very high inflation, and President Recep Tayyip Erdogan’s crackdown on his critics, including those in business.
.. Owing largely to the stability and glitter of the most famous emirate, Dubai, the United Arab Emirates in 2017 had a net inflow of 5,000 millionaires, increasing the size of its affluent population by 6 percent, the largest gain in the world.
.. Britain was among the millionaire havens until 2016, but may continue losing ground until it can resolve the uncertainties raised by Brexit.
.. Savvy locals are also the first to return when a country’s fortunes begin to turn for the better.
.. More broadly, economists and politicians might rethink the blame they heap on “immoral” foreigners in periods of capital flight. They assume global money managers are more sophisticated than provincial locals
but those longtime residents are in fact quicker to spot and respond to trouble in their own backyards
The United States loses, according to my estimates, close to $70 billion a year in tax revenue due to the shifting of corporate profits to tax havens. That’s close to 20 percent of the corporate tax revenue that is collected each year. This is legal.
Meanwhile, an estimated $8.7 trillion, 11.5 percent of the entire world’s G.D.P., is held offshore by ultrawealthy households in a handful of tax shelters, and most of it isn’t being reported to the relevant tax authorities. This is… not so legal... In 2015, $15.5 billion in profits made their way to Google Ireland Holdings in Bermuda even though Google employs only a handful of people there... 63 percent of all the profits made outside of the United States by American multinationals are now reported in six low- or zero-tax countries:
- the Netherlands,
- Singapore and
- Switzerland... After learning Irish authorities were going to close loopholes it had used, Apple asked a Bermuda-based law firm, Appleby, to design a similar tax shelter on the English Channel island of JerseyAppleby duly obliged, and Jersey became the new home of the (previously Irish) companies Apple Sales International and Apple Operations International... In 2015, the Swiss Leaks revealed the owners of bank accounts at HSBC Switzerland, and in 2016 the Panama Papers revealed those of the shell companies created by the Panamanian law firm Mossack Fonseca. These showed that 50 percent of the wealth held in tax havens belongs to households with more than $50 million in net wealth.. In the Paradise Papers, we see that these are not only Russian oligarchs or Belgian dentists who use tax havens, but rich Americans too... For a long time, the bulk of it was held in Switzerland, but a fast-growing fraction is now in Hong Kong, Singapore and other emerging havens.The most compelling way to do this would be to create comprehensive registries recording the true individual owners of real estate and financial securities, including equities, bonds and mutual fund shares... One common objection to financial registries is that they would impinge on privacy. Yet countries have maintained property records for land and real estate for decades... comprehensive registries would make it possible to not only reduce tax evasion, but also curb money laundering, monitor international capital flows, fight the financing of terrorism and better measure inequality.