Life’s two certainties (being sold out by the Swiss may be one of them)
As yesterday’s New York Times reports. Lost in the universal focus on the credit crisis, we have seen a somewhat troubling change taking place in Switzerland’s longtime bank secrecy laws.
Switzerland’s tax authorities, under pressure from a growing United States investigation into the Swiss bank giant UBS, are expected to hand over confidential data on wealthy American clients of UBS to the Justice Department, two people briefed on the matter said Tuesday.
The move would represent a significant shift in Switzerland’s banking secrecy laws, whose tradition dates to the Middle Ages.
Swiss neutrality (which is irritable to some) and stability has enabled its banking sector to become a source of prosperity for the nation. Reasonable exceptions to their secrecy laws for actual criminal activity should be allowed, but forcing banks to share private information on its clients merely for ’suspicion’ of tax evasion (something often disputable due to folks scrounging through the complicated tax code to reduce liability) seems quite dangerous. Especially since Swiss tax law has a different view of tax evasion than the U.S.
Swiss law makes disclosure of client data or names a crime unless the Swiss authorities think that the client has committed a serious crime, like money laundering or tax fraud. Unlike in the United States, Switzerland does not consider tax evasion to be a crime, though both countries have largely similar definitions of tax fraud.
And the Swiss are capitulating! In direct contradiction to their own legal view of tax evasion. Even though some may argue that this is moot because the U.S. does not consider a financial transaction as something beholden to privacy rights, the Swiss do–and besides, the U.S. view is wrong. A person’s financial records should be considered as sacred as their medical records.
Every citizen should maintain a healthy distrust of its government, after all, we have seen federal bureaucracies used to abuse the rights of citizens in many ways by many different regimes. If the government has the power to search through someone’s private financial dealings in another country solely on suspicion, where does our right to privacy stand? In terms of what constitutes law-breaking in one country as opposed to another, can the U.S. impose its view of a crime on another sovereign nation? Here, the U.S. Justice Department wants to see foreign bank records of thousands for the suspicion of committing an act NOT considered a crime in the country in which those records are held (I know, it happens).
Under pressure in recent months from the Justice Department, Switzerland’s justice ministry, taxing authority and banking regulator have adopted the view that some American clients of UBS may have committed tax fraud.
Note what this says, “Under pressure…[from the DOJ],” Swiss officials “have adopted the view…” that sees, contrary to their own law, these folks as criminals–because the DOJ ’suspects’ that they are.
So where does this lead? If the DOJ can pressure a foreign authority into ignoring its own legal views, where does this leave the U.S. on other issues, namely environmental and other laws that seek to usurp national sovereignty (there are a few)? What’s worse, under U.S. tax law, a U.S. citizen can still be taxed on income he earns outside of its borders and cannot renounce his citizenship solely to avoid taxes (how they’d find out who knows)–which is in my opinion just wrong–leaving you with the IRS and DOJ chasing down every red cent of your money they feel entitled to. Add to that some of the invasive banking provisions of the PATRIOT Act, and you have further intrusion into people’s lives and business by a government that knows no boundary. This is not a “pro-rich” or pro-tax cheat view, but a pro-civil rights and sovereignty view.
-GH
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Kentucky Bill Targets Online Anonymity
The latest attack on anonymous online speech comes from Kentucky State Rep. Tim Couch (R), who proposed legislation last week to ban posting anonymous messages online. Couch’s bill requires users to register their true name and address before contributing to any discussion forum, with the stated goal of cutting down on “online bullying.”
The right to speak anonymously is protected by the First Amendment, and the Kentucky proposal raises serious Constitutional questions. In Talley v. California, the U.S. Supreme Court overturned a Los Angeles ban on the distribution of anonymous handbills on First Amendment grounds. However, the Court has yet to directly address the question of anonymous speech on the Internet, as few existing laws target online anonymity.
The Kentucky bill comes on the heels of controversy over the growing popularity of JuicyCampus.com, a “Web 2.0 website focusing on gossip” where college students post lurid — and often fabricated — tales of fellow students’ sexual encounters. The website bills itself as a home for “anonymous free speech on college campuses,” and uses anonymous IP cloaking techniques to shield users’ identities. Backlash against the site has emerged, with Pepperdine University’s student government recently voting to ban the site on campus.
Under current law, websites like Juicy Campus cannot be sued for user-posted messages. As Adam Thierer mentions in a recent post, Daniel J. Solove of George Washington Law School has offered some insightful analysis on anonymity in the digital age. Solove points out that under the Safe Harbor provision found in Section 230 of the Communications Decency Act, providers are immunized from liability if they unknowingly distribute libelous messages so long as they remove libelous postings upon receiving a take-down request. This issue was further clarified in 2006 in Barrett v. Rosenthal, in which the Court found that website operators are immune from liability when distributing defamatory communications.
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