patrick.net

The sacred cow of the financial media is, that reporting on financial misdeeds is THEIR turf. It matters not whether they ignore the major stories in favor of pipsqueak sacrificial cows, it is THEIRS. When was the last time you heard of any major financial newsbreak by conventional media? Last one I recall is Bethany McLean breaking the Enron story in Fortune magazine. I expect that is the last one you'll ever see. Watch them pile on with stories with barely veiled hostility to upstarts like Assange. The miserable toads of course have their souls held in escrow in Goldman Sachs vaults, but they'll never admit to it.

The fact is we do live in a "class society" but they prefer to deny it and keep the veneer of egalitarianism.

SF ace says

CLA, you can write all you want, and it’s not exactly unknown as the IRS already requires all kinds of disclosure on foreign tax accounts. There’s already crazy penalty associated with it.
These are legal issues beyond what your congress can solve as a swiss bank have no obligations to disclose anything to the US government. How would Wells Fargo feel, if the Chinese government ask for bank accounts held by the chinsese citiziens, they’ll say the same thing, we are prohibited by law to provide them.

It isn't the same if you know that there are loopholes and your association allows for abuse of these. Tax evasion has been pretty much known for a while. Even Warren Buffet mentioned the strategy of using a trust and borrowing against it because it is a tax loophole.

There are a lot of issues with offshoring. If they don't fix it, I'll be doing the same thing and after a while others will, and noone will pay taxes. Issues like this if not fixed have cascading effects of moral hazard.

You guys are confusing "tax loopholes" or tax avoidance which are legal means to reduce your taxes and tax evasion which is illegal hiding of income. If Buffet is discussing something then rest assured it is legal. If something is legal within the tax code then it's not abuse.

The IRS only has leverage on banks that have operations in the US like the Swiss bank UBS that has disclosed its accounts to the IRS. Any banks that don't do business in the US are free to ignore the IRS, as many do. Banks around the world are totally sick of the IRS and rightfully don't see why they should be responsible for being unpaid agents for the IRS. Many are now refusing to open accounts for US citizens and are closing any existing accounts of US citizens. Nothing like encouraging people to do business with the US. Between the IRS and Homeland Security huge amounts of business is being lost.

The sooner wikileaks puts this out the better. It will be so much fun.

bob2356 says

Banks around the world are totally sick of the IRS and rightfully don’t see why they should be responsible for being unpaid agents for the IRS

I agree with most of what you are saying, but the Swiss banks were not innocent bystanders by any means. They recruited investors and knowingly helped US citizens break tax laws... It shouldn't be a big surprise when Uncle Sam starts harassing them.

There are also tax loopholes that should be addressed. If one simply opens an office on the island and writes all their profit to that trust they get to pay 0% in state/federal taxes. A lot of companies are doing that.

tatupu70 says

bob2356 says

Banks around the world are totally sick of the IRS and rightfully don’t see why they should be responsible for being unpaid agents for the IRS

I agree with most of what you are saying, but the Swiss banks were not innocent bystanders by any means. They recruited investors and knowingly helped US citizens break tax laws… It shouldn’t be a big surprise when Uncle Sam starts harassing them.

True, but you can't fault overseas banks for providing a service that is legal in their country. The banks didn't break any Swiss laws. There a plenty of activities in America that are illegal in other countries. Selling alchohal or handguns for example are illegal in many countries. So should America try to enforce these foreign laws for any foreigners that are in Amercia? Why should the Swiss enforce American laws in Switzerland. The Swiss banks like UBS that actually operate in America are a different story. They need to play by American rules.

It's not the Swiss's problem that the US has the most screwed up tax laws in the world, like it's not really Columbia's problem that American's consume cocaine, or it's not the middle east's problem that the US has such a huge consumption of energy per capita. We need to either fix the problems or pay the cost without whining, not expect the rest of the world to do our work for us. It's one of the reasons Americans are perceived as being so arrogant.

Swiss banks should not be approved to operate banks on US soil.

If tax cheats want to evade, they should be forced to carry diamonds in their luggage to Switzerland as it has been done in past. I see no benefit to enabling these SOBs.

bob2356 says

The banks didn’t break any Swiss laws

True, and they profit nicely from the US business.

But that doesn't mean that as a favor, the Swiss governemt (maybe like here owned by the banks - kidding) couldn't help us out, basically as a favor. These things happen all the time too.

One thing they might do is require residence (for more than half the year) for US citizens with account larger than certain amounts. Probably won't happen, because the swiss don't need anything from us (other than what we would be asking them to decrease).

Vicente says

Swiss banks should not be approved to operate banks on US soil.
If tax cheats want to evade, they should be forced to carry diamonds in their luggage to Switzerland as it has been done in past. I see no benefit to enabling these SOBs.

So American banks shouldn't operate out of America? Plenty of criminal money flows through American banks operating overseas, including tax evasion from other countries. Why is it any different? The problem is the tax laws, trying to stop the money flow will never work any more than trying to stop the drug flow will never work. Why should the banks be the IRS's enforcement division? Sorting out legit transactions from possible criminal ones is almost impossible, so banks send everything to the IRS. Do you really want all your banking scrutinized by the IRS? Do you really think there aren't any IRS people who are incompetent, lazy, or just psycho? Who would hassle you just because they could? Especially since they have unlimited power and you have no recourse. It happens all the time.

I am NOT advocating tax evasion. Just saying the resources and methods currently being used to crack down on tax evasion are way over the top, not very effective, and are of dubious legality.

We are already starting currency controls, which is the sure sign that things are really about to blow up. Get your money out now while it's still possible. It will not be possible to get you money out of the country in 20 years when the baby boomers are all eating cat food and the younger generations IRA's are confiscated to pay SS. This is not tin hat paranoia, the crunch is coming. Do you really think 20 years from now when the SS fund is totally depleted (I know it's just an accounting trick already) and all government borrowing is maxed out politicians are going to tell 70 million retired baby boomer voters that their SS payments are going to be cut? Especially when there will be billions of dollars in gen x/y ira's sitting there like a pot of gold. One last parting up the kiester with no vaseline gift to the younger generations from the most self absorbed, self indulgent generation to ever live.

bob2356 says

So American banks shouldn’t operate out of America?

Let's say for example a company that trafficked in prostitution or unlicense pharmaceuticals back home wanted to open their doors here, should we hand them a business license?

Or say you are a Giant advertisinG company with a search enGine wrapper, can you expect to operate freely in China?

IMO this line of thinking is another aspect of the unilateral free trade nonsense. All countries enforce standards about how and if a foreign business may operate on their shores. Here jump over this bar first. Made it past that OK, keep your nose clean and we'll renew your license every year. IMO we should feel not a compunction about enforcing some standards and if a company can't "compete" in our market without breaking our laws fine you don't get a license to operate here. Plenty of countries operate with all sorts of protectionist and tariff policies. The USA prefers to just let shoplifters walk out the front door and shrug about it. And thus the wealth transfer continues unabated......

Vicente says

Let’s say for example a company that trafficked in prostitution or unlicense pharmaceuticals back home wanted to open their doors here, should we hand them a business license?

A silly comparison. I don't understand your point, what shoplifters, what standards are we not enforcing for foreign banks operating on US soil? Foreign banks that operate in the US follow IRS reporting laws, the UBS case settled that point of law. Banks that don't operate in the US don't have to and many don't. Are you saying that every bank in the world should report to the IRS even if they don't operate in the US? Why would they do that? What makes the US so special that every other country on earth should bend over backwards to enforce US laws? How many US banks track deposits and provide reporting to foreign countries they don't operate in. Zero.

If the Sultan of Oman sent a delegation demanding that every liquor store and bar in America track and report to the government of Oman if Oman citizens were buying booze would the government of the US honor the request? Not very likely. So why should some bank in where ever that has a handful of US depositors have spend all the time and money to track those accounts and report the activity to the IRS?