Extraterritorial Jurisdiction, or How Tax Evasion Cops Kill International Reconciliation and Cooperation
Okay, that's a bit overblown, but in the event anyone (other than me) is interested in this stuff:
I was talking to a friend from the UK the other day, a reasonably liberal post-doc at university of pennsylvania, and he said the general consensus is that the US is a little too bullyish when it comes to applying its laws everywhere in the world. It's not that they're not good laws, and it's not that it's bad to put crooks in jail, but come on, there *are* other governments out there with just as much right to govern.
Right now, the IRS and UBS are fighting over the names of alleged U.S. tax evaders. UBS doesn't want to cough up the names because (they say) doing so would violate swiss privacy laws. Violating those laws, as I understand it, comes with swiss criminal penalties. The DoJ says, in response: screw you and your dumb secrecy laws; our tax evasion laws are more important. So UBS has got to decide: break the US laws, and risk losing US business (poor dears, I know) or violating swiss laws and losing european business. I'm not trying to paint too sympathetic a picture here; it's just an example that's in the news.
It's positions like these that make people not want to talk to us when it comes to, oh, I dunno, climate change treaties.
I'm not saying our tax laws are less important than Switzerland's secrecy laws--although honestly, when you boil it down, it all comes down to which country's treasury needs/deservers more money -- but we should come to the table appearing a little less opinionated. We might be mistaken for les francais otherwise.
By the by, this post shouldn't be confused with the kinds of arguments used to support a downward convergence in regulation of the banking industry. Just because having a global regulator might ease some of the pains that comes with conflicting jurisdictions doesn't mean we should have NO regulator.
We are hardly the only government in the world who's had enough of the Swiss and their gigantic tax evasion business and are doing something about it. The EU,and the Germans specifically, have also had about enough and are putting the screws to them too so, frankly, your friend's complaint sounds a bit like several Europeans I know who are basically irritated that America is more powerful than their own country (which they never seem to want to go back to) and constantly express that irritation in terms of a specific irritation with whatever it is we happen to be doing--or not doing--at any given time.
One of the many horrible things about the Bush years was not feeling like I had moral standing to respond to most of their criticisms.
A hundred billion dollars. That's how much illegal offshore tax evasion schemes (or "tax shelters" as the rich sociopaths who use them like to call them) are estimated to cost the U.S. government every year. The whole rotten network of banking secrecy laws in places like Switzerland and the Caymans exist solely in order to facilitate and profit from the commission of felonies--or the depredations of kleptocracies--in other countries. UBS--the American subsidiary, not just the Swiss parent, knowingly and willfully promoted tax evasion schemes to rich people in this country. Boo effing hoo if it's put them in an uncomfortable position with the parent crime syndicate back in Basil.
July 13, 2009 8:20 PM | Reply | Permalink
Several comments:
- UBS was stupid and blatantly broke US law on US territory. No qusetions about that. However, they have settled this case.
- It is ignorant to lump the rest of Switzerland in that label, just as much as it is to lump all of the USA together with all the effed up things the US does.
- The IRS is too heavy handed, if taxes were reasonable - people would not be looking to avoid them. The US is one of the only countries in the world to tax US citizens regardless of the country where they are a a resident. There are some tax breaks given but the US citizen living abroad, earning the same salary and subject to same costs of living as their local counterparts will end-up paying more and effectively being financially penalized than their local counterpart. However you slice it, even with some tax reductions (which were thankfully introduced by Reagan) this is double taxation and unfair to Americans living and working abroad.
- The current situation is basically now economic warfare and it is wrong for the US to impose their laws on sovereign states. The really rich people avoiding taxes have the best advisers and will surely find other ways to avoid the taxman or simply move to other regimes much, much worse than Switzerland. In exchange for some quick cash, quick fix attempt and extorting $$ from Switzerland and UBS to add a bandaid on the US hemorrhaging economy the US would be better off by making reasonable tax laws and not creating a situation that drives people to move wealth off-short. Particularly corporate taxes.
- Switzerland does not support felons and does assist completely with anti-terrorist, drug smuggling and money begotten from illegal gains. There are plenty of valid reasons for anyone with legally earned money today to want it kept discreet, including minimizing risk of kidnapping of family members, blackmail and other harm that can come to such fortunate people.
July 16, 2009 3:50 PM | Reply | Permalink