Tuesday, June 30, 2009

Is the United States at war with Switzerland?

Three recent articles highlight the hostilities that have broken out between Switzerland and other countries, not least the United States. For the record, we're firmly on the Americans' side on this one. First, from the FT:

"An economic war has broken out between Switzerland and the rest of the world after the crackdown on Swiss banking secrecy, according to one of Geneva’s leading private bankers. . . . “There is a feeling in the banking community, and also in the population . . . that we are in an economic war. . . . We understand that we are in an economic war and we have our own weapons,” he added."

Let's get one thing clear first - if there is a war, the Alpine protagonist is not Switzerland, but a certain section of Swiss society and politics; many and perhaps a majority of Swiss don't like the stink of bank secrecy. Yet the banker, Pierre Mirabaud, did make a point that we agree with, however: the United States (not to mention Britain and with its many offshore satellites) are hypocritical when they point the finger at the Swiss, as Mirabaud points out:

"There is nothing easier than doing tax evasion in the US. Look at Delaware companies or trusts in the Channel Islands."

Indeed. But now here's something else. It's an article by Marty Sullivan in the high-brow tax publication TaxAnalysts - we blogged it already - and we now reproduce it in full, with their permission. It's well worth reading all of it, (it's not that long), as it helps explain some of the issues clearly. It contains gems such as this, in reponse to Swiss claims about the importance of "privacy":

Privacy is nice. But let’s just say two things. First, if by some miracle the IRS does obtain information about off-shore accounts held by U.S. citizens, it won’t broadcast it over the airwaves. It would be covered by the same severe restrictions on disclosure of taxpayer information that applies to all domestically obtained information. Second, if privacy is so paramount in importance, why are we enabling it only in offshore jurisdictions? Should we repeal information reporting requirements for domestic banks?"

On the same subject, we finish this blog with a statement from our friends at Global Financial Integrity in Washington, entitled "U.S. Justice is Not for Sale, DOJ Must Pursue Case against Swiss Bank UBS, Says GFI". As it says:

"Global Financial Integrity (GFI) urges the U.S. Department of Justice (DOJ) to remain steadfast in its pursuit of information about the suspected 52,000 secret bank accounts held by U.S. citizens with Swiss bank UBS.

“This is about bringing to justice tens of thousands of tax-evading Americans and making it clear that the U.S. will no longer tolerate this type of behavior,” said GFI director Raymond Baker. “If we let UBS off the hook with a fine we’re letting the world know that U.S. laws may be flouted, bent, or just plain broken provided you have the cash to pay your way out of trouble.”

Mr. Baker also noted that the U.S.-Switzerland Tax Treaty agreement reached earlier in the month would do little to help tax authorities investigate and prosecute cases of tax evasion.

“The wording of the new agreement states that an exchange of information on tax matters will still only take place in ‘individual cases where a specific and justified request has been made,’” said Mr. Baker. “To see the shortcomings of this agreement just apply the new standard to the current case. U.S. authorities, under the new agreement, would have no additional capacity to obtain information than they do now. In the case of investigating banking secrecy, generating a ‘specific request’ is impossible.”

DOJ is expected to make its next court filing today, followed by a court hearing July 13."


Anonymous Anonymous said...

The US should back off on his embarrassing witch hunt. Soon the EU (high tax) countries will "catch" one of our"investment bankers" that went to Europe and solicited wealthy clients to put their money in our "secret" accounts. Our "investment bankers" convinced the wealthy clients to bring their money to the US because non resident aliens pay no taxes on gains in the US. Goldman Sachs, Morgan Stanley, etc are violators of this deceit. Lehman Bros was allowed to fail to cover up this solicitation fact. These Investment houses knew what UBS was doing. In fact, UBS was "copying" what our Investment Banks were doing. (Soliciting wealthy clients for our banks). The EU countries don't have the surveillance that we do. That is why UBS got caught before Lehman Bros IE's got caught. Do you think that UBS is the only violater of these solicitations? These big Investment Banks don't work in isolation. They belong to a "good ole boys" club. they knew what each other was doing.

6:13 am  

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