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Swiss Bank Secrecy Under Renewed Attack
Posted by
kdawson
on Sun Mar 30, 2008 03:03 AM
from the havens-drying-up-like-vernal-ponds-in-global-warming dept.
from the havens-drying-up-like-vernal-ponds-in-global-warming dept.
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."
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Secrecy is fine when it protects individual rights (Score:5, Insightful)
Re:Secrecy is fine when it protects individual rig (Score:4, Insightful)
Parent
Re: (Score:3, Informative)
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 believ
Re:Secrecy is fine when it protects individual rig (Score:5, Interesting)
I am swiss. Tax evasion is illegal in switzerland by law but the banking secret usually makes it impossible to track it down. Most swiss people have not much of a benefit about this banking secret. It's the foreigners with shitloads of money which profit (we won't see tax for their illegally stored money neither) but we get into loads of troubles in foreign affairs (politics).
It's still not understandable to me why a country has to protect a private industry by law to make breaking the law possible. the only ones which benefit from this are the banks. The ones which loose because of it are the people.
About damn time to get rid of this law.
kind regards,
-S
Parent
Re:Secrecy is fine when it protects individual rig (Score:5, Insightful)
The bank secrecy has been a boon to the Swiss banking industry. Make no mistake, not only has this created jobs, but it also works as a "Sozialamt", because a bank will employ up to five people (mostly Swiss, of course) to do the job of one single person, all the while the five will whine how "overloaded" they are.
If the Swiss banks didn't have the banking secrecy laws, at miserable (and laughable) 1.85% interest, it wouldn't be interesting to siphon money into Switzerland, so about four in five of your countrymen wouldn't have a job, and couldn't take their expensive vacations two to three times a year!
As expensive and as inefficient and as bureaucratic as things are in Switzerland, what do you think, where did the money come to pay for this huge, inefficient system come? From foreigners siphoning money into Swiss banks because of the secrecy laws!
So if Confederatio Helvetica abolishes bank secrecy laws, Switzerland will be severely busted.
How then are you guys going to pay for those 2-5 expensive vacations per year? And where are the other four guys going to go? Let me remind you, your conuntrymen consider themselves above menial jobs, like the Baustelle, or Kellner...
Parent
Re: (Score:3, Insightful)
IMHO the wealth mainly comes from my parent's generation. the after WWII generation(s) has been working hard, this has changed.
I hear the argument "if we give up banking secret we will loose many jo
Re: (Score:3, Insightful)
To do some crude calculations let us assume that this money is invested at the growth rate of the country. Swiss GDP grows at 2.85% while the interest rates paid on the deposit is 1.85%. This would indicate that Switzerland makes $400 Million in profit every year just on money from Africa. Thats about the GDP of Pakistan!
Africa is extremely corrupt, but also very poor. The rest of the world should contribute a
Re: (Score:3, Informative)
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 th
Re: (Score:3, Informative)
ust not for tax evasion in a foreign country (which I believe isn't illegal in Switzerland)
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 c
Re: (Score:3, Informative)
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 gasolin
Re: (Score:3, Insightful)
I'd give everyone worth over a billion dollars lifetime tax amnesty, just out of spite!
</quote>
And they built those Mega empires on nothing? No infrastructure, no interstates, no railroads, no canals?
Many of which were paid for by government sponsorship, either federal, local or state.
All of whom would have nothing if not for ALL of those bloodsuckers.
Oh but you can. (Score:2, Interesting)
Corporations should not be entitled to "human" rights.
The myth of corporate personhood needs to be firmly put to rest. Either that, or limited liability should end when you have the power to make major unilateral decisions within that firm.
Re:Secrecy is fine when it protects individual rig (Score:4, Insightful)
The Swiss economy is basically subsidised by victims from the rest of world.
Parent
Re:Secrecy is fine when it protects individual rig (Score:5, Insightful)
Parent
Re:Secrecy is fine when it protects individual rig (Score:2, Informative)
But downright wrong when it enables someone to evade taxation like the rest of us. Striking a balance will be a difficult task.
I don't think it will be that difficult to do. Nobody is pressuring Switzerland to give up the privacy of Swiss banks for Swiss citizens. They are pressuring Switzerland to give up the privacy of Swiss banks to foreigners who are evading their national laws. Countries like Germany, France, the United States, and the United Kingdom don't feel that it is a privacy right for you to hide your income and assets from the government to avoid taxation. Switzerland does.
There is no question this is unethical.
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Legality and ethics are not equivalent.
Re: (Score:3, Interesting)
We have two ethical issues that need to be resolved here. The first is the right to privacy of your income and assets from your government. The second is the motivation of Switzerland's bank privacy provisions.
In the first case you will need to argue that a person has a right to protect income and assets from their government. In my opini
Re: (Score:3, Insightful)
Do we have the right to unethically extend freedom of speech to foreigners? The right to banking privacy is considered a defense against government tyranny, just as Free Speech.
While I personally think that the cost's of banking privacy do not justify the benefits, that is a discussion for the Swiss. But while they hold these values, they have just as much right to hold the rest of the world to their values as we
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geeze. i can't believe how blind some people are. as has obviously been pointed out before, the Swiss provide a financial anonymization service. they have removed their own imperfect judgement of what constitutes right and wrong and simply act in good faith for their clients. yes, sometimes this system is abused (nazi gold and various tax evasion schemes, etc), but the principles of the system are no different than you wanting privacy for all users of the
Re: (Score:3, Insightful)
That is the stupidest dumbest fucking analogy I have EVER heard.
A vastly more accurate analogy would be if there were laws in all other western countries GUARANTEEING anonymity of internet traffic above all other laws - such that even if the police had records that a certain IP Address was used for grossly criminal purposes they would NOT be allowed to obtain warrants for the people holding and using
No worries (Score:5, Funny)
read the fine print/research the story first (Score:3, Informative)
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
heh. (Score:4, Funny)
heh. you must be new here....
I fully support a new bank (Score:2)
How about these people, including my fellow dems.. (Score:2)
Especially in the US, where businesses, media outlets, and telecoms have been increasingly 'freed' of regulations necessary for the maintenance of the public good since reagan took office back in the late 80's.
This includes but is not limited to finances.
(my first priority would be the media ownership regulations, the removal of which has resulted in the formation of the largest political propaganda machine since hitler's information ministry)
Re:How about these people, including my fellow dem (Score:5, Insightful)
That's a rather vicious smear, not to mention being a baldfaced lie. Libertarians care far more about the public good, particularly about our freedom, than those on the right or left who constantly seek to increase the power of the government. We've noticed that the freer we are, the better off we are.
-jcr
Parent
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Just repeating the same lie doesn't really make your case, sunshine. Insurance works very well when offered in a free market, where both parties are able to make their own decisions as to what kind of coverage they're willing to buy or sell, and under what terms. That's how Lloyds of London and other maritime underwriters made it possible to vastly expand shipping in the 1700's. Voluntary pooling of risk is a brilliant idea, one of the be
Re: (Score:3, Interesting)
Socialism is about providing free (to the recipient, paid by tax money) education, healthcare, and economic safety nets for everyone. It has been a huge success everywhere it has been tried; as a specific example, it transformed Finland from an economically abused, agricultural society which had just gone trough a civil war into one of the most prosperous countries in the world in half
If it's small enough, take it over already. (Score:2, Troll)
They may have gotten Spitzer, but Wall Streeters (no, that doesnt include pension/mutual funds) need to know about the rules. When they violate said rules, they should feel something large enough not to pass on, and something they must face directly as those of Main Street face.
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Reality mirroring Science Fiction (Score:4, Interesting)
Re:Reality mirroring Science Fiction (Score:5, Funny)
Parent
Re:Reality mirroring Science Fiction (Score:4, Insightful)
Parent
Re:Reality mirroring Science Fiction (Score:5, Interesting)
The K31 is a couple generations old, but I don't imagine they've gotten worse since then.
Parent
Re: (Score:3, Interesting)
"Nothing's changed then to make a rifle-armed mob any more effective"
Terrain helps a lot. Your tanks and trucks will not have a good time of it.
If you have decent snipers scattered about Alps with their supplies, none of the enemy grunts would want to be promoted after the officers keep getting their heads blown away.
And I bet even if your tanks get past the first chokepoint, by then the Swiss gov would have issued people rocket launchers.
You can nuke o
Rotary club members seem a tad naieve.. (Score:5, Insightful)
During a meeting of his Rotary Club in Zurich, his fellow members were appalled that Swiss bankers might be managing the money of foreign tax evaders. "We had no idea," Mr. Hummler recalls them saying, "that you did things like that."
I don't pay a hell of a lot of attention to financial news, or banking laws.. but even _I_ know that the Swiss have built a long reputation on providing accounts to foreigners trying to avoid taxes in their home country. Isn't this just common knowledge? I'd think it'd be even more common knowledge in Switzerland.
Overblown, Switzerland will do fine (Score:5, Informative)
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.]
Singapore? (Score:3, Informative)
worst. summary. ever. (Score:5, Informative)
I don't give a $*&%$ about the Swiss.... (Score:3, Interesting)
Everybody has always known that Switzerland is used for tax evasion. From the very very beginning, since we started doing income taxes in the US. I am not sure about cultures in other parts of the world, but in the US it became "public knowledge" a long time ago. Just recently I was watching an episode of MASH on TV, which was filmed in the 70's and set in the 50's where Switzerland and Tax Evasion was mentioned. So it is not new, and it is not shocking.
What I find strange is that anybody is trying to do something about it. I wholeheartedly believe that the political systems in most western countries are irreparably broken and absolutely corrupt. The only logical conclusion is that position of those in power have shifted their ideology and wish to trade the value of secrecy for the value of intelligence (data).
Privacy takes power away from governments. Tax Evasion does not always require privacy. It certainly helps, but it is not required. So I view this as mostly an attack on Privacy with the "cover" of going after Tax Evasion.
Taxes are a controversial subject, but I really see it as a choice between 2 systems.
An active system which grants authority to take away privacy through auditing and information policies and the legal foundation to seize property. This is what we have now. A system that grants a large amount of control to certain people that through a perverted legal authority can destroy lives with a guilty-first, innocence-proven-later approach. Additionally, the value of the data, and the ability to gain said data, is way to attractive to other governmental agencies that wish to use it as leverage or in some other "intelligence" related manner. What I have always found so despicable about this approach is that once you "kill" somebody and realize it was a mistake later, you cannot raise them from the dead. Also, a dead person cannot defend himself. Many Americans have been destroyed by the IRS only to prove themselves correct later. This was of course after all their property was confiscated and sold. I am not saying there are true tax evaders, but for every 10 of those I would speculate at least 1 person is truly innocent.
The other system would be a passive system. One in which Privacy can co-exist harmoniously. Instead of taxing personal income, just tax purchases. A consumption tax, which is not unheard of in the US, and did in fact exist in its past. There are alternatives to a consumption tax and the basic idea is to not tax income, but to tax expenses. The government would have no business in the private financial affairs of its citizens anymore. Banking data would become intensly private, as it should be. Why care if somebody has 100 million dollars in the bank? The moment they try to live their lives in a higher standard of living than the average person, they must start paying higher than average taxes. The taxes on those private jets and the gasoline alone would represent the yearly taxes for whole neighborhoods and communities of people. What happens when they die? They leave 100% of it to their children with none of going to the state in the form of death taxes. Same situation all over again. The kids would have to pay taxes on any "big ticket" items they purchase as well. Flat taxes, consumption taxes, etc. WORK. They just don't work for the real interests of the government.
In any case, the tax environment in the US and many countries was setup from the very beginning to favor the tax evader. It was meant to tax the poor and the middle class while providing methods for the rich and the elite to hide their wealth.
If you think I am too cynical... pick up any copy of "Millionaire" or "Billionaire" magazine or any similar publication and look at the full page advertisements for "Asset Protection", "Tax Deferment", or "Zero Tax Liability".
Re:I don't give a $*&%$ about the Swiss.... (Score:4, Insightful)
Take a rich man who makes 1 million a year, and a middle class man who makes 40K. Lets say the tax rate is 20%. With a consumption tax, the guy with 40K will likely need to spend 33K on food, clothing, shelter, entertainment, etc. He'll pay 20% taxes on that, adding up to 6,600 dollars. He basicly breaks even. The rich man may spend lavishly, and spend 300K. He'll pay 60K in taxes. The rest he saves. He only paid 60K taxes, a mere 10x the poor man despite earning 25x. This shifts the tax burden onto the poor. This is not acceptable.
Now take a flat tax. There's two types of flat tax- flat by rate, and flat by dollar amount. If you have flat by dollar amount, you have the same problem as above, but magnified- it will likely be 50% or more of the poor man's salary. If you do a flat rate, you haven't solved any of the problems of the current system- you still need to figure out how much he actually made, and he still has incentive to hide it.
Flat taxes just don't work. Consumption taxes, while they are technically possible, don't work socially- far too regressive. The only people who really think either of these are a good idea are those who are already rich and have the "Fuck you, I got mine" attitude, and those who don't understand math.
Parent
Switzerland: A Direct Democracy (Score:5, Insightful)
Re:tax burden myths (Score:5, Informative)
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 [nytimes.com]
"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.
Parent
Re: (Score:3, Interesting)
One reason the rich get a lot of these tax breaks, is that they assume higher risks, and do more entrepreneurial things. Yes, if you got $100M in the bank, it's pretty easy to assume risk on new investments. Nonetheless, the risk is what is being rewarded. If you bought a condo in Mexico (not out of the question for many people who earn a reasonable salary), you too could justify a "busi
Re:tax burden myths (Score:4, Insightful)
One reason the rich get a lot of these tax breaks, is that they assume higher risks
Yes, if you got $100M in the bank, it's pretty easy to assume risk on new investments. Nonetheless, the risk is what is being rewarded.
Uh-Huh. So the risk is really about going from SUPER-DUPER-DUPER rich, to just SUPER-DUPER rich for a few years. Somehow I don't see that as much of a "risk", especially one worth rewarding with lower tax rates.
If you take a 100% safe job earning a specific salary,
Where are these 100% safe jobs you're referring too? Because I'll take one of those, thanks. The truth is that economies bust, people get sick, and people screw up. No job is "100% safe". The only thing that's even close to "100% safe" is having 100 million dollars sitting in the bank.
but you're not assuming much risk either
Uh-huh. Tell that to the people who've just lost thousands of dollars in equity on their major investment, their home do to the credit crisis. Tell that to the people who've been laid off over the various recessions the country has experienced. If you think being middle class (and to a much larger extent lower class) isn't taking a lot more risks than some guy who's super-rich, then I guess you don't know the true meaning of the word risk.
Parent
Higher Risk? Not in Socialism for the Rich (Score:4, Insightful)
Parent
Re:tax burden myths (Score:4, Insightful)
Your comparison to slavery is disgusting and horribly elitist. No rich person would be where they are without the society around them, the infrastructure created by the government, the military that defends them (made up disproportionally, of course, with the lower and middle class), and the people who work for them. The redistribution of wealth acknowledges that people owe society for what it has given them, and must support it so that future generations can benefit from it as well.
Parent
Re: (Score:3, Insightful)
We're talking federal taxes here, and the services you list are paid for heavily by state and local taxes. Federal taxes go to things like defense (and the wealthy have more to defend than the middle class), welfare (which is not normally used by either the wealthy or the middle class), and Social Security (which is funded disproportionately by the poor and middle class - the wealthy often do not work at jobs that require that tax, and if they do it is a trivial part of their income). The Federal court a