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."
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.]
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.