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Loading...Swiss Banks, Tax Shelters, and You’re Crying Foul Over Earmarks?
You may have more power than you think.
I have been called naïve recently for my positive take on our government’s response to the economic crisis – stimulus bill, earmarked budget and financial bailout included.
You see corruption; I see reform. I see problem solving; you see problem government.
And yet here I go again.
News this week that Swiss banks have been forced to comply with international banking standards that require release of information to stop tax evasion on the two trillion dollars of foreign assets located in Swiss banks.
Now if you are an anti-government fanatic you may say, “keep the government away from that money.” But if you are willing to look a little closer, you will see that there is more to the story than the big bad government wanting people’s money.
Funds from illegal drug cartels, third-world government embezzlement and hidden (to put it nicely) corporate income wind up in secret Swiss accounts. The Swiss and a few other European institutions are favorite hideouts for those seeking a shelter from government authorities because they are secure, stable and sworn to secrecy.
Generally, in the past, if the U.S. government prosecuted a criminal case against the owner of the account, the bank will cough up the information. But if the government doesn’t know enough to prosecute or doesn’t know about the account, the bank doesn’t either, if you know what I mean.
Upset that tax dodgers don’t face the same income taxes that the rest of us face? I am.
The U.S. government estimates that it loses $100 billion in revenues per year because of tax havens. By contrast the earmarks for spending on public projects in the 2009 government budget were estimated at $7.7 billion.
The U.S. and other governments have tried to break down Swiss secrecy on numerous occasions. But it’s lucrative for Swiss banks and the Swiss economy, as it is for other nations, which similarly welcome illicit funds. One percent in service fees for the banks is equal to $200 billion of the $2 trillion involved in Switzerland alone. That buys a lot of lobbying, campaign financing and political influence.
So what’s happened?
The American and European publics are enraged over the financial crisis and the anger has been channeled to well meaning and/or worried leaders. G20 Presidents, Prime Ministers and Treasury officials are talking directly about corruption, hidden revenue and financial irregularities along with all the rest of the irresponsible bad behavior.
Like an elephant in the room, it must have been making for some awkward conversations between world government leaders, Swiss officials and Swiss banking executives. Officials don’t want the banks to fail out of fear it would domino through the world economy, yet these same banks now receiving government support are hiding taxable and ill-begotten assets from government benefactors.
And so the heat is on. The banks of Switzerland, Andorra, Liechtenstein, Austria and Luxembourg faced potential blacklisting by big governments as the next G20 meeting in April neared.
At this point, it appears that the Swiss and cohorts are caving into the pressure. Money that is essentially under-the-table-pay to people and corporations that are less scrupulous and more financially able (it requires unscrupulous or at least seemingly less civically responsible lawyers, accountants and advisers to hide big assets) may become part of the regulated economy.
“The beginning of the end of tax havens,” is how UK Prime Minister Gordon Brown refered to the change.
There is still the possibility that the banks wont live up to their aggreements or will force some kind of compromise or watered down version of the rules. The U.S. government has requested information on 52,000 Americans with bank accounts at just one Swiss bank, UBS. So far the bank has only given the U.S. details of 300 accounts.
But I’ll be watching. And I hope you will too. (petition)
Yes, some of the money will leave the Swiss banks for some other off-shore hideout. But it wont be quite so secure, so protected and well managed as what they have enjoyed to date. Other money will stay put, preferring security and taxation like the rest of us do as regulators make their inspections.
Call me dreaming. Pie in the sky.
I never said any of it was a panacea — only confidence-building, problem-solving, reform.
Read more: financial regulation, G20, politics, swiss banks, tax shelter
Image: © Marc Seltzer 1998
Disclaimer: The views expressed above are solely those of the author and may
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23 comments
+ add your ownMarc Seltzer, You're right on! What a fantastic idea! And I also loved your upbeat assessment of how things are going in Washington these days. What a breath of fresh air from all the posters who are constantly knocking the president and the new administration.
I am so sick and tired of seeing posts referring to paying taxes as the worst thing that could ever happen to them. Personally I feel very privileged to live in this wonderful country and was always happy to pay my taxes. I consider it an honor. If all the rich paid the taxes they should pay and all the rest of us pay our fair share willingly we wouldn't be in the financial messes we are now in. I think there should be very heavy penalties for those that try to shirk their responsibilities to this great nation by trying to hide money and avoid their honest obligations.
You're so right, Genevieve B!
I think that your opinion on the matter of foreign bank secrecy is valid--up to a point. I am one of the educated- poor on a very meager pension. I like to imagine, "what would I do if I were to win a lotto?" One huge lesson that life has taught me so far is that once someone with power or influence learns that a person has money, the already-wealthy and powerful will find a way to get their hands on it. I have a right to my own money and what I do with it. A bank that is sworn to secrecy is a safe haven. Now if there is a limit imposed, say perhaps more than 50 million, there should be transparency with accounts of that magnitude.
Gregory P. Mar 18, 2009
i'm sure htat the last administration and their war/financier-profitiering cronies use ever off-shore haven at their disposal. swizzerland should be declared a haven for economic terrorists!
To see the BIG PICTURE, read Thom Hartmann's book (or listen to... I checked cd's out from my library) SCREWED.
You will find a clear and powerful explanation of what we are experiencing outlined there. DO IT! You can listen on your commute. Some of the data is mind blowing, for example the statistics on how much of various industries are owned by foreign interests.
If you are moved, ponder this idea: could we get progressives and libertarians to sit down together and hash out what constitutes the public commons? A resolution of this could change our history as a nation.
To 'it's my money': every time you drive on a highway, take a plane, drink water, purchase or eat food, take a crap, make a phone call, use the internet access you just wrote on, get emergency services, call 911... get the idea?... you are availing yourself of the public commons. This is made available to you by the taxes you, or if you hide your money in Swiss banks, BY SOMEONE ELSE, paid.
The real discussion is about what we think should be under the aegis of the commons and what shouldn't be. I certainly don't want a government agent dictating my health care choices or what fertilizer I use in my garden. Let's get to the real questions and address them. Meanwhile, read the book.
I want to say just a few words about the stimulus notion. I guess I should start with the idea of an economy. A good economy is one where you sell more than you buy. We don't. So what do we do then? Print money. It's not real money. We've been doing this for many years. Living in a fairy tale authored by the international banking cartel. So what is a stimulus package supposed to do? Encourage spending. Why? Good question. What does spending money that we don't "really" have get us? More debt. How does more debt help us? It doesn't. So why are we agreeing to do it? Because we don't know what's going on? We don't understand the system? We listen to economists? We trust the government and the news and the so called experts? Must be. What's the solution? There is no solution in a make believe economy. We can get to the solutions for all things if we can get rid of the present banking system. Next we can take away the corporations claim to the rights of human beings. Since that law was passed all kinds of hell has been unleashed on the real human being. These are just common sense things. But it's what we need to return to. The move away from sanity that avarice has engineered can be undone. It will be when enough people understand the real problem and insist on the reestablishment of ethics and common sense as the guiding rule. In no world can you spend your way out of debt.
To the author of these lines:
"I say keep your grotty little poverty tainted hands off MY money. What is mine is mine...."
1- You were kidding, right?
From this point, I'll assume that your response would unfortunately be "Hell, no!"
2- What the HELL are you doing on this site? You obviously don't share the same values as most Care2 regulars. Of course it's your right to come here, I just don't understand your reasons.
3- So it's ok for you to receive services from your government but not to pay for them? People like you are parasites that feed off the collective. Your selfishness is beyond belief; yours is exactly the kind of thinking that has brought on the current economic situation. Greed is NOT what will get us out of the hole we've gotten ourselves into as a society and as a civilization. It's people like you that hold us back as a species and spoil it for the rest of us.
And just in case you're planning on using such a weird insult as "poor" (???), that is not my case. I own my own house totally and have financial assets. But I'll willing pay my taxes any time knowing the money I give will serve to maintain roads and provide other essential public services. Do I think my money could be better spent? Sure. But this system is still one of the best we found to maintain a decent quality of life for all.
nunyabusiness -- if you read a couple more of my articles you will realize it's not jealousy. I believe in democratic government. That's not to say I believe government should do more than is absolutely required of it, but unlike the anti-government lot, I don't want to starve the government, I want to manage it, like any other useful functioning operation.
I say keep your grotty little poverty tainted hands off MY money. What is mine is mine and all your disgraceful jealousy cannot change that. Sure, keep paying income tax if you insist but be aware that it is voluntary despite the illusions put forward; that's right it IS voluntary under the law, as evidenced by the fact that the people with enough money to access the facts are legally declining to pay it, as your green-eyed article points out. So why winge about it while letting your pockets be picked by tax agents, suck it up Princess, dry your eyes and toughen up to the reality that YOU are at fault and those who choose to not pay extortionists are doing the entire world a world of good.
From 1985 until 2002, Phil Gramm was a United States Senator from Texas. In the Senate, Gramm led the fight for deregulation of our financial institutions. In 2002, Phil Gramm left his seat in the Senate and joined UBS, the Swiss bank.
Why do Americans open Swiss bank accounts? Because they want to hide their income and assets.
During the Watergate investigation, Deep Throat told Bob Woodward, "Follow the money." Today, when we follow the money, it leads to Phil Gramm!
Your illustration is perfect! Thanks
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