With UBS deal, the end of financial parasites hiding in Swiss bank accounts
Swiss banking giant UBS finally reached a deal today with the Internal Revenue Service to turn over the names of more than 4,000 U.S. citizens: allegedly, the worst offenders in tax-evasion schemes to use Swiss bank accounts to hide. At some point, those accounts held over $18 billion, according to the AP. Somber Swiss officials admitted they had no choice but to cave to IRS demands.
This is the beginning of the end of secret banking practiced in the open -- what an oxymoron! -- by supposedly upstanding financial institutions domiciled in countries that do not have the sole purpose of serving as tax havens. And good riddance to the Swiss parasites.
True, the list did not include all accounts of U.S. citizens holding assets in Swiss bank accounts. But the number was high enough to make a clear statement that no one hiding money in Geneva or Zurich is safe from the long arm of the U.S. government. Got an account in Switzerland? Better get your tax attorney's name on speed dial.
With state governments reeling from massive deficits and the federal government setting records for borrowing, it's not surprising that Uncle Sam has picked this moment to slam the door in the face of Switzerland. And it's only fair. Switzerland's prosperity, to a significant degree, has been built upon providing ways for people to hide money and rip off their own governments. One can argue about the justification for taxation until you turn blue in the face.
The hard right anti-tax folks will scream bloody murder from their fallout shelters stocked with canned goods and water distillation equipment. But no one can argue that most people in this country are happy to get government services funded by taxpayer dollars. Medicare, unemployment insurance, environmental protections, SBA loans and key basic and applied R&D are all funded with taxes. So are the federal highways. Switzerland itself offers a rich palate of government services to its citizens.
So even the Swiss must surely understand how their country's activities drain the lifeblood out of other economies. Shifting money to Swiss accounts has allowed secret holders to evade hundreds of billions of dollars in taxes over the years. By allowing people to hide money they make in one country, Switzerland has intentionally undermined tax collections for most of the Western world and, increasingly, for the developing world as well. Switzerland's policy towards secrecy also reinforces the increasingly toxic divide between the rich, who play the game of life with different rules, and the rest of us, who can't afford Swiss accounts.
The U.S. and its friends in the E.U. do not even represent a worst-case scenario. Swiss banks have been the favored deposit destination of bloodstained African despots, drug lords, and former Nazi officers on the lam. When squeezed by global events, such as the post-9/11 al-Qaeda investigations, Switzerland has willingly delivered account holders believed to have terrorist ties. But when asked to divulge the names of tax evaders, Swiss banks have traditionally refused to budge. (Apparently, tax evasion is not considered a crime over there.)
Now, in an era when the economic power of the West is on the wane while its political power remains intact, a time of diminishing national coffers and rising demands by aging populations, Switzerland is getting squeezed. Today's revelation of UBS customers is unlikely to be the last, as open season has been declared on Swiss banking traditions and their parasitic relationship with the world.