Wednesday, July 15, 2009

Wall Street Journal: Offshore Tax Evaders Deserve No Sympathy

Articles in the media criticising the mess that secrecy jurisdictions have made of this world are now commonplace. The Wall Street Journal has often taken an editorial line in support of secrecy (though some of its journalists, we have to say, have been excellent in exposing abuses too). We are therefore refreshed to see a comment piece on its pages, entitled Offshore Tax Evaders Deserve No Sympathy.

It contains much that we like:

"Earlier this year, UBS agreed to pay a fine of $780 million, admitted that it helped U.S. citizens evade taxes and agreed to cooperate with U.S. investigators. But now it is balking at turning over its clients’ names. UBS says it would violate Swiss financial privacy laws if it complied. In that case, UBS (and its government) should be faced with a simple choice: continue its policy of strict secrecy, in which case UBS should forfeit the right to do business in the U.S.; or compromise, aligning its banking laws with those in the rest of the civilized world."

Well said. And he continues:

"I have no sympathy for the bank’s plight. Switzerland is a sovereign nation, free to pursue whatever banking laws it deems appropriate. That doesn’t mean the U.S. has to open its borders to the exploitation of its citizens for tax evasion and other nefarious purposes, nor should other countries.

Nor do I have any sympathy for those Americans whose identities may be made known, especially those like Mr. Olenicoff, a billionaire who owned a yacht and maintained foreign accounts in multiple so-called tax havens. Those who have accepted an offer of amnesty should count themselves lucky. Paying taxes is an obligation all American citizens share, but somehow tax evasion seems more reprehensible when committed by the rich, who owe their prosperity to this country and could so easily meet their obligations.

With the Madoff scandal still fresh in the public mind, I hope the Justice Department maintains its tough stance. The wealthy need to be reminded that all Americans stand equal before the law."

Well said.

If you're interested - there are a couple of things we don't agree with. This, for instance, is nonsense:

"I’ve been wondering just why anyone needs or wants a Swiss bank account. For African dictators, international arms traffickers and terrorists, the answer is pretty obvious. And there are certainly citizens of countries whose own banking systems are so precarious, and the risks of persecution for any number of reasons so great, that a Swiss bank account may provide welcome security."

This argument is utterly bogus. For one thing, Anyone who has a foreign bank account in a totally transparent jurisdiction faces no risk of expropriation or persecution - all they face is tax on the income from that assset. Why is secrecy required to protect them. Yet that is just one point. There is a whole body of argument in this respect - see this important TJN blog on this subject here.


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