Switzlerland

UBS and IRS reach an “agreement”

by Gary Howard on August 13, 2009 · 1 comment

in International, Legal, Personal Liberty

Yesterday my colleague at CEI, John Berlau, released a statement about the recently announced deal between Swiss bank UBS and the IRS.  It is being reported that the bank may end up turning over at least a portion of the over 50,000 names just to get the U.S. off its back.  As it seems, any agreement reached in this case will be the result of UBS being bullied by the IRS to divulge its customers names simply because it says so.  The potential slippery slope is evident.  In this scenario, the Federal government can persuade foreign companies to ignore the laws of their home nations basically by force.  Berlau makes the point that I have  been making in all of my blog posts on this issue, that advocates of civil liberties:

“should be alarmed by the U.S. government’s sweeping disregard of privacy interests in its demands to the Swiss”

These actions by Federal authorities are setting a bad precedent for the privacy of American citizens.  When the government can demand to know every detail of your financial life, what is there to stop it from exerting control over it? In addition, as I have said in past posts (and here), the disregard for the sovereignty of fellow nations exhibited by these demands is also concerning.  I agree with Berlau in his assessment that being in a similar situation, the U.S. might not be so willing to allow American companies to ignore its laws in order to acquiesce to another nation’s demands.

If  UBS stood firm by making an agreement that doesn’t violate Swiss law or the privacy rights of those U.S. citizens,  maybe long-standing privacy protections will hold up for now.  But it is doubtful this is the case.  It is more likely that UBS has capitulated, at least to a degree, and the slope begins to slide into scary territory.  Unfortunately, some will frame this in class warfare terms, and declare that we should have no sympathy for folks with secret Swiss bank accounts.  Because its unfair, accordng to the feds, that they are cheating and getting out of paying taxes like the rest of us have to.  Except for the fact that we don’t know if that is completely true, and maybe the question we should be asking is whether the taxes we pay are fair at all.

UBS agrees to deal with the devil

by Gary Howard on February 19, 2009

in International, Legal, Nanny State, Personal Liberty, Regulation, Trade

I revoke my previous apology to the Swiss, and reiterate my previous disapproval.  As evidenced by the latest outcome in the U.S. tax case involving UBS, we have moved beyond troubling and into something much worse.

...the world’s largest wealth manager in terms of assets, agreed to pay a $780 million fine and disclose information about some of its clients to settle a landmark U.S. tax case.

As I said in my older post: “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.”

And with an eye toward history, let us not forget:

One issue of the time that reinforced the passage of this law [Swiss Banking Secrecy Act] came during the era of Hitler when a German law stated that any German with foreign capital was to be punished by death. Swiss banks were watched closely by the German Gestapo. It was after Germans began being put to death for holding Swiss accounts that the Swiss government was even more convinced of the need for bank secrecy.

Reading the comments on left-leaning blogs, you hear cheers and a tinge of jealousy about the whole thing.  No matter if UBS did or did not help people avoid U.S. taxes, I cannot read this without envisioning a slippery slope argument.  If the current climate continues, it won’t be too far-fetched to imagine laws like that of WWII Germany criminalizing and imprisoning people for choosing where to put their own money.  And I won’t even mention the new Treasury Secretary. Oops