The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

A hidden network of hidden wealth

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The Big Four finance institutions are massively implicated in tax avoidance. Of the more than 4,000 foreign subsidiaries owned by the four largest U.S. finance institutions, 89 percent are located in tax havens. Photo: The Big Four finance institutions are massively implicated in tax avoidance. Of the more than 4,000 foreign subsidiaries owned by the four largest U.S. finance institutions, 89 percent are located in tax havens. Photo:

If taxed on the nearly $100 billion dollars they keep offshore, the largest U.S. financial institutions could cover the U.S.’s entire poverty-focused foreign assistance budget for 2014.

Stephanie Fontana is a former Research Intern at Oxfam America.

Tax havens are a scourge. They allow individuals and institutions to cloak their financial activity in secrecy to escape and undermine other jurisdictions’ tax laws and financial regulations. According to a recent Citizens for Tax Justice (CTJ) report, Fortune 500 companies have more than $2.1 trillion in offshore cash in tax havens. These companies use subsidiaries in tax havens to avoid paying an estimated $620 billion in U.S. taxes.

The Big Four finance institutions are massively implicated in this tax avoidance practice.1 Of the more than 4,000 foreign subsidiaries of JP Morgan Chase & Co., Bank of America Corporation, Citigroup Inc. and Wells Fargo & Co., 89 percent are located in tax havens! The chart below tracks the number of subsidiaries held by the big four in tax havens.

All Foreign Subsidiaries In Tax Havens2 Percent in Tax Havens
Bank of America Corporation 308 260 84.4%
Citigroup 890 583 65.5%
JP Morgan Chase & Co. 2673 2588 96.8%
Wells Fargo & Co. 136 135 99.3%
TOTAL 4007 3566 89.0%


By their own estimates, the Big Four park almost $100 billion offshore using these tax haven subsidiaries. Keeping this cash “indefinitely reinvested” allows them to avoid paying $23.6 billion in taxes at home.


Cash held offshore “Deferred” Tax Bill
Citigroup $43.8 billion $11.6 billion
JP Morgan Chase & Co. $31.1 billion $7 billion
Bank of America Corporation $17.2 billion $4.5 billion
Wells Fargo & Co. $1.8 billion $0.5 billion
TOTAL $93.9 billion $23.6 billion


To put the degree of this tax avoidance in context, the amount of tax these four companies would owe could cover the U.S.’s entire poverty-focused foreign assistance budget for 2014. Alternatively, this tax bill could fund more than a third of the federal government’s spending on education for a full year. It could also provide one monthly retirement benefit to nearly 18 billion retired workers.

These figures on the amount of cash held offshore and the “deferred” tax bills are the finance institutions’ own public estimates and are likely quite conservative. As you can imagine, financial institutions like to keep the extent of their subsidiary networks under wraps. Though, as public companies, they are required to report some of their subsidiaries in their annual 10-K report, these filings only capture a fraction of the total amount of subsidiaries. Luckily, the Federal Reserve requires fuller disclosure on the subsidiaries of large financial institutions – which you can find, if you know where to look.

Combined, JP Morgan Chase & Co., Bank of America Corporation, Citigroup Inc. and Wells Fargo & Co. only report 17 percent of their subsidiaries on their 10-Ks. This difference between subsidiary disclosures made to the Federal Reserve and disclosures in 10-K filings is striking, especially as the 10-K is designed to enhance transparency, public knowledge, accountability and investor protection. So this begs the question: why aren’t Congress and the SEC acting to demand greater scrutiny and transparency?


Federal Reserve 2014 10K Percent disclosed on 10K
Bank of America Corporation 1518 103 6.8%
Citigroup 1620 279 17.2%
JP Morgan Chase & Co. 5516 49 0.9%
Wells Fargo & Co. 2034 1427 70.2%
TOTAL 10688 1858 17.4%


Even the CTJ report is significantly undercounting the number of subsidiaries held in tax havens. It relied on the companies’ 10-K filings, reporting that the big six finance institutions disclosed a combined 412 subsidiaries in tax havens. This total captures less than one-eighth of the actual number for just the big four. It is amazing to think of how CTJ’s already shocking findings could compound dramatically if working with a more accurate disclosure of subsidiary holdings.4

While the Big Four finance institutions are dodging their own taxes through subsidiaries in tax havens, they may also be implicated in the pervasive tax avoidance and evasion occurring in developing countries. More than half of the Big Four’s foreign subsidiaries are located in low- and middle- income countries, all of which have a gross national income of less than $12,736 per capita.3 According to Global Financial Integrity’s report released last month, illicit financial flows out of developing economies surged past the $1 trillion dollar mark in 2013. This outflow is more than 8 times larger than the total spent on official development assistance in 2013 by the OECD’s Development Assistance Committee’s members, which include the US, the UK, Germany, France and 25 other OECD countries. The banking industry is involved in moving the $8 trillion in resources lost by developing countries from 2004 to 2013, but, given the opacity of the financial sector, we are left to conjecture about who is involved.

Overall, the more than 10,000 subsidiaries of the four largest finance institutions contribute to the concentration of assets in the financial sector. Last week, I blogged about my concern that the five largest U.S. banks5 – JPMorgan Chase Bank, Bank of America, Citibank, Wells Fargo Bank, and US Bank – control $6.9 trillion in assets, nearly half of all assets in the U.S. banking sector. The financial holding companies – or finance institutions – that own these big banks, along with over 1,000 smaller banks and other companies each, are even larger. The Big Four U.S. finance institutions hold $8.1 trillion in assets, making up 42 percent of total financial industry assets and 15 percent of the total assets for U.S. multinational enterprises across all industries. This number is increasing year by year as these massive institutions continue to grab larger shares of industry assets.

As we continue to uncover more and more about these big finance institutions, the extent of their wealth, their control, and their reach into countries all around the world is shocking.

And to think we only know a fraction of it.

Some ways to move forward with greater transparency:

  • Public country by country reporting for transnational corporations to eliminate discretion and discrepancies in reporting and allow for a better understanding of the effects on government budgets in developing countries
  • Non-reciprocal automatic information exchange to make sure developing countries are not excluded
  • Reporting requirements for public beneficial ownership registries


[1] Tax avoidance is the use of legal, but arguably immoral, tactics to modify one’s financial situation in order to lower the amount of tax owed.

[2] I classified a country as a tax haven if it ranked in the top 50 world-wide on Tax Justice Network’s Financial Secrecy Index.

[3] The low and middle income classification is calculated by the World Bank based on estimates of gross national income.

[4] The Federal Reserve data with the full subsidiary disclosures are only available for finance institutions. It is likely that Citizens for Tax Justice did not use these data because they are not available for the other Fortune 500 companies in their study.

[5] I grouped the largest four finance institutions together because there was a relatively significant drop off in assets below the fourth financial holding company. I grouped the five largest banking institutions together to maintain alignment with other reports on U.S. banks.

Join the conversation

  1. Pingback: Hiding From Taxes | Pretending Not To Panic

  2.'Maya Forstater

    ’89 percent of subsidiaries in tax havens’ sounds bad, but if your calculation is based on the headline top 50 Financial Secrecy Index ranking, it is not all that meaningful.

    The FSI combines a rating of secrecy and one of scale, so that the ‘top 50’ includes the US, Germany, Japan, UK, China, Austria, Brazil, Russia, Canada, France and India (not because they offer particularly high levels of financial secrecy, but because they are particularly large).

    If 9 out of 10 of the world’s largest economies are included in your
    definition of ‘tax haven’ that would tend to lead to a high count of subsidiaries.

    1.'Michael Chernick

      You sound knowledgable and above my head. Will you please offer an opinion on significance of your observation, especially fairness? And do you approve of these havens?


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