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The Buffets and the Gates of the US will be shedding a few tears this week as the United States and Switzerland have reached an agreement that brings the status of the latter as a tax haven for Americans (or will they?). No more hiding their cash away in Swiss banks. No more tax avoidance and money laundering. No more secret accounts and banking secrecy. At one time bankers could be trusted to keep secrets. These days they can’t. There’s always someone somewhere willing to pay more than the secret of what you have locked away in the vaults is actually worth.
The US and Switzerland have been talking over the possibility of putting a stop to the flow of money from the US into the Swiss banks for three years and have just found some common ground. Although it is hard to see just what advantage the Swiss state has got out of the whole affair. Swiss banks will end up being punished if they have aided and abetted wealthy US citizens in their attempts to hide money from the tax authorities. They will also be required to provide details to the US authorities regarding the account holders as well as details about people who are working on the accounts at the banks. Is this the end of Swiss banking?
It seems that this will only marginally change things however, since for a number of years now already the Swiss bankers have been afraid of increased administration that has been imposed by US authorities and have ended up declining US-based clients from opening accounts with them. Although, it will have the added problem of making it very hard for a US citizen that is living or working in Switzerland to manage to actually open a bank account. The Swiss banks will refuse to do so after this agreement with the US. It’s all very well wishing to reduce tax havens, but what more does the US state actually want in terms of controlling US citizens that wish to open bank accounts in the place where they are living and working?
Delusions?
It also seems that the US authorities are under the greatest delusion believing that because the Swiss bankers refuse to open bank accounts that the US citizens that wish to place their wealth in other tax havens won’t be doing so. The Swiss banks are just a few amongst many world tax havens. The latter will naturally be opening the doors with welcome arms. Forbidding anything never stopped people doing it. Anyhow, perhaps we have all been deluded ourselves into believing that the National Security Agency was far more powerful than it actually was or is with its eavesdropping. Surely they could locate right down to the last dime the money that they are losing in tax avoidance?
But, that said, you would have to have been born just about yesterday at 4pm to still believe that Swiss banks would keep your secrets. Switzerland has been in the firing line for many years now with regard to their banking system.
The only thing that the Swiss will get out of it is that they will be able to write off all disputes with the US regarding taxation that has been voided due to money being placed in their banks. But, the future?
The Swiss Finance Minister Eveline Widmer-Schlumpf stated that the reputation of Switzerland’s banking sector and financial services depended on the agreement going through so that people might have confidence in the banking system. But, isn’t it just the opposite that made Swiss banks famous? Wasn’t it the secret and the fact that it was like a confessional box where anything that was said in the protected basement vaults stayed there? Whatever happens in a Swiss bank stays in a Swiss bank? No more, you had better get to Vegas; things apparently still stay there when they happen.
Intimidation?
The case of the Swiss banker that was arrested in April 2013 after having travelled to the USA showed the determination of the US authorities to come down upon tax evasion and tax havens with a mighty blow. The banker had entered the US on a vacation visa in New York. Although, once again the impunity of the US authorities to believe that it has the right to arrest anyone that enters the country for no apparent reason beggars belief. Just because you’re a banker doesn’t mean that the US can arrest you, does it? Intimidation? Bad for your image, at least. That’s not the way things are done in the world. Or, they shouldn’t be done like that. We don’t intimidate people that work for structures that are legal whether we like it or not. Change the laws, come to agreements. Stop using priggish, bullying force to get your own way. It’s not the bankers that are responsible for something that was set up long before they were out of diapers and into daiquiris.
People in senior positions in banks in Switzerland [13] were advised to avoid travelling to the US at the start of this year. So, perhaps the only thing that occurred was for the US to lose out on visitors; visitors that were wealthy bankers to boot. It won’t change anything. While loopholes exist, the wealthy will find a way of exploiting the system and the administration is far too big and by the time the cog-wheels get moving for a change, the people have moved on to another place.
Secrecy Gone
In March 2013 Swiss banks such as Wegelin & Co. agreed to pay roughly $58 million in fines. They had admitted to helping hide $1.2 billion from the Internal Revenue Service. UBS also ended up paying a penalty of $780 million for having helped US citizens avoid taxes.
Now, the secrecy has gone in Swiss banks, who in their right mind would bank anywhere near Geneva? In 2012, there were 145 foreign-owned banks based in Switzerland. Today that number has fallen to just under 130. It’s not just the Swiss that were secretive. The foreign-based banks were also complacently happy with doing the same. Today, Switzerland has an offshore banking industry that is worth $2.2 trillion. That’s still the largest in the world. But, for how long?
It seems that Singapore is where the money flows are now going as the Swiss banks are seeing money being withdrawn from accounts in a capital flight. By 2020 Singapore is expected to be the number one destination for tax avoidance.
The solution? Perhaps like the other 670 US citizens did in the first half of this year: relinquish all rights to Americancitizenship and along with it avoid paying your taxation. The figure is the highest since data was first compiled in1998. Eduardo Saverin (Facebook founder) went last year. Isabel Getty (daughter Christopher Getty) threw in the towel this year along with Mahmood Karzai (brother of the President of Afghanistan). So far, 39, 000 US citizens have come forward and owned up to having secret bank accounts outside of the US in the past few years. But, that’s just a minute sample of what is winging its way to the tax havens of the world.
But, it’s far from just the world’s wealthy. Secret files that were revealed by the International Consortium of Investigative Journalism in April 2013 showed that it was the dentists, the doctors that were at it too. There were even Greek villagers sitting alongside the Russian executives and the Wall Street fiddlers that were hiding their stash of cash in tax havens. It’s not just the mega-buck earners. It is estimated that there may be between $21 and $32 trillionthat is hidden somewhere in an off-shore bank account around the world. The 50 largest private banks in the world saw their assets grow from $5.4 trillion (2005) to $12 trillion (2010). Those private banks provide services to mainly high net worth people and they also happen to provide access to tax havens.
Whatever is happening with this world?
There was a time when the Swiss were known for being bankers, the Chinese [14] were corrupt and the US was fair. Admittedly it was a long time ago, now. The Swiss just make chocolate and watches now.
The Chinese slap fines on companies that dabble with the Shanghai Composite and the US has become corrupt. Or were they just hiding that from everyone else?
US Bankrupt! [15]| Septaper Will Open Floodgates [16] | How Sinister is the State? [17] | Food: Walking the Breadline [18] | Obama NOT Worst President [19] in reply to Obama: Worst President in US History? [20]
New Revelations: NSA and XKeyscore Program [21] | Obama's Corporate Grand Bargain [22] [22] Death of the Dollar [23] | Joseph Stiglitz was Right: Suicide [24] | China Injects Cash in Bid to Improve Liquidity [25]
Technical Analysis: Bear Expanding Triangle [26] | Bull Expanding Triangle [27] | Bull Falling Wedge [28]| Bear Rising Wedge [29]| High & Tight Flag [30]
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