
Inside Swiss Banks’ Tax-Cheating Machinery - jeo1234
http://www.wsj.com/articles/inside-swiss-banks-tax-cheating-machinery-1445506381
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mucker
"Tax Cheating" is evidently another way of saying "sovereign state". The Swiss
can do whatever they want. We don't tax the world. Sadly they capitulated in
what was naked Imperial aggression by a foreign power.

The US is free to prosecute US tax dodgers...in the US.

~~~
ForHackernews
What a silly response. Of course the Swiss can do whatever they want. The IRS
doesn't have any interest in taxing Swiss people living in Switzerland,
earning Swiss francs working in Switzerland.

But people and organizations doing business in the United States, and all US
citizens, have legal US tax obligations. If you don't like it, feel free to
renounce your citizenship and avoid doing business in any US markets.

~~~
sneak
Legality aside, how do US citizens (loosely defined as people who were born in
the US decades ago) who do not live or work in the US have any moral
obligation to pay taxes to the US?

~~~
ForHackernews
When they travel, they may take advantage of visa-free entry into many
countries, negotiated through treaties with the US. If they get into legal
trouble abroad, they enjoy consular protection from the US State Department.
They enjoy the right to vote in US elections, and the (at least theoretical)
right to move to the US should they fancy it.

If they really aren't interested, it's a pretty straightforward process to
walk into the nearest embassy and opt-out:
[http://travel.state.gov/content/travel/en/legal-
consideratio...](http://travel.state.gov/content/travel/en/legal-
considerations/us-citizenship-laws-policies/renunciation-of-citizenship.html)

~~~
bsder
It's not straightforward at all. There are a bunch of financial implications
that are very difficult to navigate.

~~~
fancyketchup
What financial implications are there, aside from "The IRS wants to make sure
you're not leaving just before an anticipated windfall to avoid taxes?"

~~~
bsder
For example: you have to pay up front, lump sum taxes on things like pensions
and retirements, but you still can't withdraw them.

It's _expensive_ to renounce US citizenship.

~~~
ForHackernews
> lump sum taxes on things like pensions and retirements

You mean if they've been living and working for years in the US, and taking
advantage of US tax-advantaged retirement accounts?

Now we're talking about a different person than the parent commenter:
"(loosely defined as people who were born in the US decades ago) who do not
live or work in the US "

------
vonklaus
I find the response to these articles often very baffling. Everyone seems to
want to nail these banksters for dodging taxes using clever loopholes. Then,
they rail against government incompetence and praise people who work within a
narrow framework while getting results ("hackers"). Obviously, this is a
generalization and not _every person_ thinks this way, but I often find this
sort of response on places like reddit and even here to some extent.

If the Federal Gov't wants tax money it better start making a strong case with
some serious value propositions. Realize, that post-civil war the Federal
Income Tax was allowed to expire, even for funding the war it was only 10%. It
had been _ruled unconstitutional_.[0]People don't want to give the government
money at a corporate or personal level. And if they would stop buying
warehouses of hammers and dumping it into the middleeast funding helicopters
that will never fly and powerplants that don't work, maybe people would at
lease be neutral, instead of downright hostile, about the issues of taxes.

[0][http://www.eoearth.org/view/article/153529/](http://www.eoearth.org/view/article/153529/)

~~~
zouhair
Poor rich, they are a persecuted minority.

~~~
vonklaus
My point, which I didn't explicitly state, is that maybe instead of demonizing
the rich for tax evasion we should be doing more to help the poor and middle
class achieve these same ends. Obviously, building a strong economy and job
creation are much more important, but lowering taxes and allocating the money
the government does have, should be important goals going forward.

------
bsimpson
I'd love more background on why the foreign banks cooperated.

Presumably, the larger ones have US arms to do things like trade on Wall
Street. Maybe the American government threatened to penalize Swiss
institutions through their US subsidiaries if they didn't cooperate, but I
imagine that many of the smaller banks (and the state-owned ones) don't have
interests in the US. How can they be penalized for violating the law of a
jurisdiction that's literally on the other side of the world?

~~~
patio11
Transactions in USD must be cleared in NYC; the US' position is that banks
which don't play ball re: money laundering lose access to the US financial
system.

~~~
fla
Which basically means they would lose their US banking liscense and coudn't
trade in USD anymore.

What would be interessting would be to know how some banks could accept these
consequences and still survive.

~~~
gadders
BNP did for a few things.

------
dredmorbius
For those looking for more background (and open access) to offshore banking
and tax shelters, I _highly_ recommend the ICIJ's long-running series of
investigative reports on sheltered wealth:
[http://www.icij.org/offshore](http://www.icij.org/offshore)

------
gohrt
I wonder when a guy who robs a liquor store can get the same deal as these
white-collar tax cheats: steal $500, and avoid criminal charges in exchange
for paying $250 restitution.

~~~
SeoxyS
More like: robber has $1000 to his name, robs the liquor store for $500;
avoids criminal charges by paying $750 restitution. (The article mentioned
half of the account balance, not half of the amount of taxes owed.)

But the real difference is that while robbing a liquor store is universally
viewed as unethical; that isn't the case with tax evasion. Many people
(including, ironically, the founders of the USA, who seceded from the British
over taxation) believe that taxes are unethical, and using every loophole and
trick in the book to minimize taxes is both ethical and smart.

~~~
vonklaus
I totally agree. Just to add, playing the game well and keeping your own money
is borderline unethical/illegal depending on where you land on the issue but
it is _your money_. Threatening someone else at gunpoint, and taking their
money is quite different than simply keeping your own and not paying a fair
share.

------
1971genocide
Tax Evasion is a Global Problem - every country from UK to Russia to my own
country of Bangladesh have rich people hiding their money in foreign
countries.

I am happy that the US public is forcing their govt to look into it and
hopefully a global system is set up to prevent tax evasion everywhere.

~~~
patrickdavey
Interesting, unsure why you were downvoted here. I completely agree that tax
evasion is a global problem. There's a fantasic book called "Treasure
Islands"([http://treasureislands.org/](http://treasureislands.org/)) which
goes into it in detail. Showing how multinationals and the very rich structure
their affairs so as to avoid the bulk of taxation (while not actually living
in these offshore jurisdictions)

Is it right? It's reasonably legal (the difference between evasion and
avoidance is a very grey thing). According to the book linked above, we give
less in aid than countries lose in not being able to tax effectively.

Not quite sure how you fix it, probably fewer laws and more transparency. But
it'll be quite the fight, there are more than a few $$'s at stake.

------
ellio
For what it's worth to the people saying "we (as in the US or the
international community more generally) have no interest in this and shouldn't
trample on sovereign nations," I respect your opinion and your disdain for
heavyhanded, imperialistic behavior, but don't ignore the evils that these
banks perpetuate. They are opportunistic and protect and facilitate some of
the worst people on earth, including arms traffickers and dictators who commit
atrocities against their own people. Maybe exerting pressure against these
banks isn't the right solution, but I have no sympathy for the sort of people
who helped the Sudanese commit genocide, and anything that works against them
I'm inclined to support.

[http://www.bloombergview.com/articles/2015-10-20/shh-
credit-...](http://www.bloombergview.com/articles/2015-10-20/shh-credit-
agricole-kept-its-sudan-business-quiet)

~~~
rrggrr
Except - they also serve as a safehaven for wealth created in countries where
its very likely to be confiscated by totalitarian and unstable governments.
Think Nazi Germany, Rhodesia/Zimbabwe and unfortunately, possibly, hopefully
unlikely - China.

~~~
dredmorbius
Most of the wealth "created" in totalitarian states is in fact extracted by
kleptocratic rulers. Ferdinand Marcos in the Philippines, numerous African
dictators, Vladimir Putin, current the 3rd richest person in the world.

If you want to create exceptions for financial refugees, that's well and good.
But global protection for every drug lord, terrorist, and petty dictator ain't
the right way to do it.

~~~
mjn
Even closer in the neighborhood, most of the Greek kleptocrats have their
money in Swiss banks too. Some of them are now being prosecuted, with
information that only came to light because an employee of HSBC took some
account lists home (in violation of Swiss law). The French police later found
these in a raid, and turned them over in part to the Greek police [1]. I
wouldn't be surprised if Swiss banks are also handling the money from
organized crime in Bulgaria and Romania.

I think eventually, like the US has, the EU will succeed in pressuring
Switzerland to cooperate more with European police investigations and turn
over this kind of information. Despite not being an EU member, Switzerland is
too economically entangled in EU treaties like the common market, to entirely
ignore what the EU thinks, at least in cases where the EU actually agrees on
what it thinks and is willing to make an issue out of it.

[1]
[https://en.wikipedia.org/wiki/Lagarde_list](https://en.wikipedia.org/wiki/Lagarde_list)

