Slashdot Mirror
Swiss Bank Secrecy Under Renewed Attack
Stanislav_J writes "All you wealthy Slashdotters better start making alternate arrangements for stashing your millions. Switzerland's storied role as discreet banker to the world's tax-avoiding wealthy is under threat like never before, and this time the country ultimately may not be able to stop the rest of the world from prying into those legendary 'secret' accounts, said to contain between $1 trillion and $2 trillion. A massive German tax-evasion scandal is putting pressure on the Swiss to cooperate, and the rest of Europe is also hardening their resolve to force change upon them. Per the article, 'The official Swiss reaction has been self-conscious detachment, which they hope will deflate the issue,' but even their own citizens are not too concerned about those outside their borders: 80% of Swiss support the banking confidentiality law, but that number drops into the 40s when it is applied to foreigners. Pressure is also coming from US pols — not the 'let's pry into everyone's business' Republicans, but the 'make the rich pay their fair share' Democrats, including Illinois Senator (and presidential candidate) Barack Obama."
It's not so much about the banking laws n Switzerland proper, it's more about Lichtenstein and their completely anonymous foundations. Plus the fact that Lichtenstein (not Switzerland) does not consider tax evasion even a crime, so good luck to get them to tell you anything.
Worse or better, the scandal is already slowly declining. (Basically it has dropped from the news, or at least the front page of newspapers. E.g. the issue of getting rid of Mr. Beck, the party leader of the SPD seems to be way more interesting currently)
yacc
There is no question this is unethical. Switzerland is profiting from these investments and other countries are having to pay the bill (both monetary and socially). It is no surprise that criminals and criminal organizations have used this loophole to continue their practices. Switzerland's practice is hurting these other countries in a very real way. If they want to continue granting this right to their citizens, fine. But they do not have some privacy right to extend this practice unethically to foreigners.
You can't have it both ways.
Why not? I don't think the poster said individual privacy rights were inviable. Get a warrant issued by a judge for a valid reason and the government can look at mostly whatever it likes. The only exceptions (I think) are lawyer confidentiality, and doctor/patient confidentiality.
The only difference here is that Switzerland seems to have a banker/client confidentiality, which seems a bit strange to the rest of us to throw it in with doctors and lawyers. Even that may I believe is cracked open for criminal cases, just not for tax evasion in a foreign country (which I believe isn't illegal in Switzerland).
AccountKiller
Yes, Switzerland has a long tradition of bank secrecy. Here it is considered a natural part of one's right for privacy.
But among the many tax havens (http://en.wikipedia.org/wiki/Tax_haven#Examples), Switzerland is among the best world-citizens: while it still offers secrecy, it has had for several years agreements with the US and the European Community to tax capital income from foreign citizens. The principle is: we preserve secrecy, but we will tax the funds for you.
For money laundering too, Switzerland offers one of the highest levels of scrutiny from the countries above.
Given the number of alternatives, it is not in the interest of the international community to shut down Switzerland.
In Europe alone, Luxembourg, Austria and Malta offer similar levels of secrecy. And it is not in Europe's interest to shut its internal secret- and law-abiding banks.
So the whole story is overblown. Is it just anti-marketing against Swiss banking?
This said, the current affair relates to Lichtenstein - an independent state attached to Switzerland like Monaco is attached to France. Like Monaco, this "small rock" of a state is known to have more lax practices. It would not hurt to take some balancing action there.
[Disclaimer: I'm a Swiss citizen, but have no vested interest in any Swiss bank - I'm a worker/small entrepreneur in the medical/software industry, not a capitalist nor an investor (I do not even play on the stock market). But like many citizens here, I see bank secrecy as just another facet of privacy, which is not incompatible with fair taxation and a fair social system.]
I read an article that claimed that Singapore was trying to position itself as the new bank secrecy country.
Between the rambles, the cliches, the sudden topic changes, somewhat fractured grammar, the dubious attempts to apply American political stereotypes to Switzerland, this has got to be the worst summary I've ever seen on slashdot. Even Michael or Zonk on (hypothetically) quaaludes could have done better.
Remain calm! All is well!
One myth that people keep repeating is that the wealthy don't pay tax.
And it would be a myth if it weren't true...
http://www.nytimes.com/2005/07/03/business/03tax.html?_r=1&oref=slogin
"About one in every 436 high-income Americans paid no taxes in 2002, up from one in 531 in 2001 and one in 1,010 in 2000."
the fact is this is total bullshit, the top 1% in america pay almost 50% of the tax
Actually, its the two 2% paying 53% (which is also in the cite I provided). But close enough.
The trouble however, is that a middle class american pays 30-35% in taxes, while a high-income american pays, on average only 18%.
So sure, if you make 146M bucks, yeah, your paying $26M in taxes. But if you take 1460 families that each make $100,000, that's the same 146 million in aggregate, but they each pay ~33k in taxes on average,... or 48M in aggregate.
Why do they pay 48M when you only pay 26M?
The high-income earners have considerable income from 'investments' not just 'wage/salary' which is taxed differently and wage income has far fewer loopholes and options than investment income, and there are countless more ways to leverage your money too the more you've got to shuffle around to maximize tax savings.
They're more likely to be 'self employed' at least with respect to some investment or other and suddenly that trip to the bahamas is a tax deductible 'annual meeting' instead of a 'vacation', and the twice yearly jaunts to Mexico? Tax deductable trips to inspect their investment rental properties....
Their car? Tax deductible lease payments, maintenance, and fuel... Their mortgage? Bah, who are we kidding they don't have a mortgage, but they do have a HELOC to buy even more investments, and the interest on the HELOC? Because its being used to buy goverment approved investments...you guessed it... tax deductible. The tax savings more than offset the interest, meanwhile the investments themselves can make money too.
The wealthy pay more taxes than the middle in total, but its the ones in the middle who see the largest chunk of each dollar bitten off by the IRS never to be seen again.
If you work very hard in Germany and earn say $150k a year, you pay 50% tax.
This is simply a lie. You pay 35%, which you can easily check at several online tax calculators, such as http://www.zinsen-berechnen.de/einkommensteuerrechner.php. And that's only if you are stupid enough to tax everything.
"When I first heard Daydream Nation it quite frankly scared the living shit out of me." -- Matthew Stearns
Rich people don't have to evade taxes, they can afford to buy politicians to manipulate the tax code for their benefit.
The reason for the Byzantine complexity of the US tax code is that it is the result of nearly a century of politicians selling favors to contributors.
Well, not necessarily. There are some hair brained ideas for advancing "a better society". As much as Democrats stand in favor of supposedly progressive taxation, payroll taxes for social security where their idea, along with taxes on gasoline, alcohol and cigarettes in most northeastern states.
This is my sig.
A number of modern "Terrorists" once used swiss accounts, the two that come to mind are Fidel Castro and Yassir Arafat, having these accounts did allow them to foster their own anti-American agenda, however calling every foreign revolutionary a Terrorist and going after them is not a good idea from a foreign relations perspective Washington was considered a Terrorist by the British; imagine if they had frozen the money France lent him to fund the revolution?
However for real tax evasion the U.S. should really look closer to home, the IRS has agents in the following countries to track investment from American citizens. Belize, Bermuda, Caymen Islands, St. Kitts & Nevis and Panama are just a few British protectorates that offer limited partnerships (LLP's), Incorporations, And cooperations that have Legal recourse under the British privy council but have no reporting requirements with regards to profit on foreign investment, for the small to medium sized account (10,000 to 500,000) these are the ideal places that Shell companies are setup by American's for Insurance (Bermuda), Registration of Offshore investment firms is a multi-trillion dollar business, since investment Vehicles within in these places do not have to pay capitol gains or income taxes. Countries looking to foster a good banking industry usually modify their tax laws to become a "Tax Haven", since U.S. Tax law only applies to the individual with regards to Global income, foreign trusts, incorporations and limited partnerships have always been methods to avoid these taxes legally, the price to profit ratio for each varies but lies around $20,000USD.
The founding fathers meant "land of the free" as in free from British Taxation, however since central planning was implemented and a number of wars were financed taxes have become a national requirement, thus making the United States a less competitive country to invest from.
One major issue has not been brought up yet, and this is the main reason the Germans pressure us.
In Switzerland, we have two degrees of tax evasion. One, which is a criminal offense, involves forging documents etc. The other one, which is basically only treated with a slap on the wrist (and a large fine), involves "forgetting" to include part of your wealth, e.g. "black money".
Now, the thing is that Switzerland only provides criminal assistance to other countries seeking to prosecute tax evaders for the more serious tax evasion, not the other one. What Germany now wants is that Switzerland changes it's tax laws to be more like Germany, or other countries. And here we have, for obvious reasons, a problem. Suppose Saudi Arabia wants your help in prosecuting a woman who cheats on her husband, or any other situation like that.
In short, Germany's making a lot of noise, but nothing will come of it
This is not really about the Swiss as much as it is about Privacy and Tax Evasion.
Exactly! Even SWIFT announced that they will setup a data centre in Switzerland to make sure that European and Asian messages stay outside the control of USA.
http://www.swift.com/index.cfm?item_id=63570
According to the Swiss Bankers Association, "200,000 employees work in the financial sector. That represents 5.3% of the total workforce. Broken down, 3.2% of the total workforce work for banks, 1.4% for insurance companies and 0.6% for other financial services providers."
Which is just a little bit short of "four in five" Swiss citizens.
Tax evasion is illegal in switzerland by law but the banking secret usually makes it impossible to track it down.
What I've been told, but don't have a hard source for, is that the Swiss court system will crack-open the privacy for cases where a crime is likely to have occurred (like say you're a Columbian drug lord, or a Terrorist). But it won't crack open the privacy where tax-evasion in a foreign country has occurred. The explanation in this difference (both being a crime in the foreign country) was that tax-evasion in Switzerland is a crime, but tax-evasion from foreign taxes is not a crime in Switzerland. As evidence to this, wikipedia has the following to say about tax evasion in Switzerland:
AccountKiller
As a matter of fact tax evasion is illegal in Switzerland. It is however, as opposed to tax fraud, which is a crime, treated as a misdemeanor. If you are caught to have "forgotten" those 7500 francs income on your tax declaration you will be taxed on those and you pay a fine. It's certainly not legal.
Switzerland does however (and that's where other countries yell foul, because they don't make this distinction) distinguish between tax evasion ("forgetting" to declare income) and tax fraud (which in any case involve fraudulent or fake documentation, or, for example, not booking income as a corporate entity).
What pisses other countries off is that bank secrecy is not punctured in the first case (theoretically), while it always is when fraud is involoved. This goes also for inquiries by foreign government entities. Since tax evasion is not treated as a criminal act, such inquiries usually go unanswered in tax evasion cases.
That's more or less the gist of it, slightly simplified.
ich bin der musikant
mit taschenrechner in der hand
kraftwerk
- Tax Break Prompts Millionaires To Create Private Foundations: Many of these same "feel-good" workers, though, have their own opinion about private foundations. And it isn't pretty. In the best of all worlds, they say, private foundations, like their public counterparts, would help address problems like hunger or illiteracy; in truth, they charge, such charities tend to address the whims and agendas of their benefactors, whose motivations don't always fit the notion of "charity."
- The trustees' perk that keeps on giving: The foundation's accountant, Martin Logies of Sunnyvale, Calif., defended the benefits, saying they had been approved by the foundation's board of directors. But he acknowledged that Sara and Anders Kierulf are the board's only members, and that they approved the benefits for themselves. As to the work the Kierulfs perform for their pay, Logies demurred. "I couldn't give you that information," he said.
- Deduction Ad Absurdum: CEOs Donating Their Own Stock to Their Own Family Foundations: Consistent with their exemption from insider trading law, I find that CEOs' stock gifts occur just prior to significant drops in their firms' stock prices, a pattern that enables the donors to obtain increased personal income tax benefits. This timing is more pronounced when executives donate their own shares to their own family foundations
- Tax Me If You Can: FRONTLINE correspondent Hedrick Smith investigates the rampant abuse of tax shelters since the late 1990s. Through interviews with government officials, tax experts, and industry insiders, Smith uncovers an avalanche of bogus transactions -- created by some of America's biggest and most-respected accounting firms, law firms, and investment banks -- that were then aggressively marketed to big corporations and wealthy individuals.
- How Tax Shelters Brought Trouble to Billionaire Clan: The panel's senior Democrat, Sen. Carl Levin of Michigan, has been probing offshore tax evasion and money laundering for several years. The panel is also looking into how the elite New York law firm Cravath, Swaine & Moore LLP provided legal advice on offshore tax shelters to wealthy individuals, people familiar with the probe say.
What pray tell is the loophole your multi-millionaire employer used? Something to do with classifying personal property as a farm. Sorry, I don't know the exact details, but he was very clear that it was purely a loophole and that it saved him a lot of money. This wasn't some imaginary conversation or something I heard from somebody else. It was straight from the horse's mouth.