Swiss Banks Making Concessions On Secrecy 325
Aryabhata writes in with news that should chill the hearts of evil dictators and tax cheats everywhere: one of the last bastions of strong banking secrecy, Switzerland, is bowing to international pressure and agreeing to cooperate with some foreign investigations of wrongdoing. "...the Swiss government announced on Friday that it would cooperate in international tax investigations, breaking with its long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars. Austria and Luxembourg also said they would help. ... The famed 'numbered accounts' that do not bear the owner's name will still be available for clients willing to pay for added anonymity. ... Over the past month, leaders have made similar promises in Singapore, Liechtenstein, Bermuda, the British islands of Jersey and Guernsey, and tiny Andorra... other 'offshore' banking centers are still available in the Caribbean, Panama, Dubai and elsewhere."
Re:Tax Cheats? (Score:4, Interesting)
Remind me again what minimal government in a rational society attempted a system of voluntary taxation but failed completely.
Oh, that's right, it hasn't happened yet, because governments invariably end up being bloated and unpopular, so must force people to pay taxes at the point of a gun. And it all works because of a vast cadre of useful idiots like yourself, the disciples of authoritarianism.
Nothing that has been achieved could not be achieved with a smaller government to which productive citizens willingly pay for service. Indeed, I spent a lot of time pretty much entirely avoiding paying tax, but willingly give to charities (neither political nor religious!), foundations, veteran/law enforcement benevolent funds, etc. I care about those who protect me and those who are weaker than me, but I hate you because you want to make me your slave.
Fortunately, I've probably got enough wealth behind me that I can use accountants, lawyers and friends in the right places to keep me going as I am. I'm sad that I can't help even more people, rich and poor, to go through life as I do.
Re:Tax Cheats? (Score:4, Interesting)
Brace yourself, you're in for a real shocker. The USA did not have an income tax prior to 1913 ! *gasp*
The only role I see for government in a free society is preserving freedom. The courts and the police do need to exist in order to deal with those members who would inflict harm upon others, and to act as an arbitrator, when requested, to settle contract disputes. Everything else, you do not need a government to private... and you do not need an income tax to pay for the judiciary.
"I guess you can do without public roads, you'll just build your own?"
All over the US there are private roads and people voluntarily pay tolls to travel them because, brace yourself again, they provide a much more pleasant commute. They deal with traffic congestion immediately, they undertake repairs and maintenance quickly and effectively, without bloated government bureaucracy making repairs and improvements take years and cost tax payers millions of dollars and they do it with their own money.
"You can also pay for your kids school? Health care?"
Government involvement in those two institutions has railroaded both of them straight into the ground. In Canada, for example, there is no law preventing private schools from operating but they're virtually unheard of because everyone is forced to pay taxes to send other people's kids to public school. If government got out of the school system entirely you would have lots of schools opening and competing with each other, forcing prices down. It would be in every school's best interest to increase enrollment and student loans with reasonable, market-determined interest rates would become common for poor students. The level of charity would increase as well. As far as health care is concerned, you should listen to some of what Ron Paul has to say. He was a practicing obstetrician long before he entered politics, and long before medicaid, medicare and government got it's hands on the system. According to him charities and churches would build hospitals and even in the private for-profit hospitals no one was ever turned away because they couldn't afford to pay. It's precisely because we are taxed and regulated so much that these things get so expensive to begin with.
"If you get permanently disabled somehow and can no longer work for a living, I assume you'll have enough savings to last a lifetime?"
Again, if people are allowed to keep what they work for, and if government does not try to interfere with who people trade with and how and why and under what circumstances the economy prospers, people have a lot more personal wealth and charities become much more common. Insurance will also still exist. This goes straight back to medical care. No one will bother to take out insurance plans to cover the occasional doctor's visit, but insurance will still exist to cover extreme unforeseen chronic illness. Employer-provided benefits would also still exist as a way to compete with other businesses for labour and attract employees. As long as it's optional and not mandated by "pro-labour" government regulation it's a boon to society and not a hindrance.
"Oh and can I assume that don't care one bit what happens to those who cannot pay for all this on their own (ie. at least 50% of the population)?"
I urge you to read a bit on economics. Read up on the work of Ludwig Von Mises, F.A Hayek, Murray M. Rothbard and start to ask yourself WHY there is so much poverty. The answer is almost always institutional. During the 1800's the USA economy grew at a tremendous rate. The country was seen as the land of opportunity where you could make it with a bit of hard work. Gradually the government started to expand and intervene with programs sold to the public as a way to help overcome the problems that they perceived in the system. Problems which are all relative. If you compare today's standard of living with that of 1700 England under Serfdom, or even 1930 in Russia and Germany under socialism, you realize just how much the free market
Re:Tax Cheats? (Score:4, Interesting)
So taxation is necessary for civilization? Pretty big assumption if you ask me.
Re:Secretary of Treasury (Score:4, Interesting)
Well, if cheating on taxes becomes less profitable ...
You may want to enlighten yourself on how easy it is under intense scrutiny by those in charge or otherwise wielding power to be judged non-compliant. Chances are you'll discover that in the area of tax law, "cheating" is not synonymous with "filing incorrectly", "foretting to pay", or "being advised that additional taxes are payable". Granted, people in the public eye should know better, or cover their asses better, but I doubt that you or most other individuals believe it necessary to have on staff a full-time lawyer (let alone a qualified tax attorney), or pay the monthly fees of a large accounting company just so they can file their taxes.
Quite frankly, your comments smacks of trollishness and reminds me how people misuse words in the immigration debate to make disingenous comments. The naturalization process is horrendously complex and the bureaucracy is slower than dirt (not unlike the IRS in many respects). Forgetting to pay a fee, fill out yet another of any number of thousands of possible forms (or doing so incorrectly), or engage in typically innocent or benign behaviour (getting married, stepping out the country for a visit) are mostly technical violations. They do not, in most cases, deserve a characterisation of "illegality", "illegal immigrant" or a "cheat". Unless you're Lou Dobbs, of course.
Re:and who ISN'T going to pay up? (Score:5, Interesting)
If "due process" becomes the same sort of joke internationally that it is in the USA (and elsewhere) (border laptop confiscations, random car searches and paper checks, warrantless wiretapping, surveillance face recognition, ...), then it seems reasonable that people will (1) legitimately stop paying taxes to a government that has broken its end of the contract (eg. the Constitution in the USA), and (2) look for large and powerful entities that will actually respect their contracts. If banks have their own fair and reasonable judicial system, it's no less sad that governments don't, but at least someone powerful does. At least for now...
Yes, I've just painted a scenario in which the police go to the bank and demand a client's records, the bank says "let's see your evidence", and the bank decides whether or not there is enough evidence to warrant allowing an investigation. I realise that that is not what is going on in this case. But it's interesting to think about.
War, security, health care, clean water, etc., are all being privatised. Why not justice?
Re:A prettied-up version of organized crime (Score:3, Interesting)
Though I don't necessarily disagree with the point that banking secrecy can be abused (as can all forms of anonymity), one should perhaps consider that it's the Swiss' right (and I am not Swiss myself) to have whatever laws they want in their own country. The Swiss believe strongly in the rights of the individual and have accepted that with this extended freedom, which you do not enjoy in for example the US or most of the EU, there will be a price to pay. I would dare argue there is a price to pay for the deteriorating rights of the individual that we see in most countries today as well.
In Norway for example, every citizen's taxes are available publicly to everyone else online (you can google the taxes of any Norwegian). They argue that without this practice (i.e. with secret wages and taxes) you will have fraud, inequality and a lack of transparency. This is further towards the other end of the spectrum. I presume you're American, which puts you in the middle. That doesn't mean I think I can tell you that you should post your taxes and salary online, nor hand over the details of your bank account to the first public servant who asks, though the (US in this case) government would probably catch a couple more tax avoiders that way.
Re:Tax Cheats? (Score:5, Interesting)
You won't get any arguments from Libertarians claiming that a true free market has ever been put into practice. The only thing every approaching it could be the USA right after independence, but even that wouldn't be entirely accurate since the 2nd president, John Adams, created the first central bank. So in that sense, maybe it is Utopian. But so what ? Are we afraid of ideas now ? I strongly refute Marx and Engels ideas but I listen to everything that they have to say first.
Austrian economics grew out of a battle with socialism during World War II. The simple idea is that if you let people be free they will create their own prosperity. That might be Utopian but it sure sounds like something worth investigating. I don't claim to be an expert economist, but I have actually gone out and read the books published by the Austrian economists and have also read contrary views such as those published by Marx and Keynes in order to ensure that I'm not just absorbing some ideal without getting the whole picture. The Austrian economists make the most sense to me.
According Austrian economists depressions and involuntary unemployment can be explained very convincingly by applying their principles to interventionism. Fiat currency and credit expansion cause the boom / bust cycle which create depressions, and regulations interfere with competition. It's worth reading what they have to say before you condemn them as Utopian dreamers. If I could recommend only one book to anyone it would be "Human Action" by Ludwig Von Mises. If that book does not challenge your views then nothing I will ever say or do could ever convince you to give what I have to say a second thought.
I've never been to the Scandanavian countries. I really wish that I could comment directly. The only thing I can say on the subject is vague: how do you know that your standard of living would not be even higher without those institutions in place ? I will point out that I'm actually Canadian. I live on a border town with the US / Canada and so I have been exposed to both cultures and conditions in both countries. Most of where I'm coming from deals in principle. I am self employed but I am very much middle class (lower middle class is probably more accurate) and I having been exposed to the writings of the Libertarians I can't help but wonder if economic growth and prosperity is being held back by governments. Until you study the subject you can not claim that everything that they say is false. There was a time when all we knew was Serfdom and despotism. Yet it would have been false to claim that Liberalism in some form could not work because it's never been tried. At least socialism and communism have been tried and have proven to fail. They are no longer Utopian dreams, they are failed experiments. I argue very strongly against the notion that laissez-faire has been tried and proven a failure.
Re:and who ISN'T going to pay up? (Score:4, Interesting)
What legal search warrants?
Technically when a court of country A wants something done in country B, they ask a correct court in country B to help them.
The US authorities did not like the idea that the Swiss banks take privacy seriously, they prefer way more the "US way of administration", where the peons have no rights.
notice that the majority of cases in the US do not get to the trial by jury stage. Wonder why? Simple, risk management for the accused. Would you prefer 6 months in a low security place to the risks of of decades in a high security place, especially if you do not have the resources to prepare your defense?
Generally, you have to consider the following things:
For the accused (irrelevant if one is innocent):
-) you can loose, and you are in deep shit.
-) you can win, and still go bancrupt.
-) you will most certainly loose quite a bit of money defending any case.
For the state:
-) you can loose. Consequences: Most certainly none. Hint: to get any censure the system you work in would have to do the censuring.
-) you can win. You can win, and gets all benefits.
So the whole system is stacked against anyone that gets into to sights of any official.
Public examples that come to mind would be M. Jackson => he was cleared by the court, but it certainly did cost him.
What personal costs (stress, money, negative consequences) did have his accuser, which in this case, btw, had no victim?
Btw, the cards are quite stacked in the US, but they are stacked, in some ways stronger, in some ways less, elsewhere too. Basically, mistakes by the state are usually with no or only minimal consequences to the persons involved in the "error".
E.g. how many police officers get prosecuted for crimes with video proof? Btw, notice that many states in the US made it illegal to tape police officers to avoid this embaressment, of having proof of criminal behaviour. (http://de.wikipedia.org/wiki/Rodney_King)
Re:Facts & fiction (Score:3, Interesting)
Re:and who ISN'T going to pay up? (Score:3, Interesting)
The client could have transfered the money through several foreign banks already before wiring it on to his Swiss account
It doesn't work that way. If there is an account with a Swiss bank at one point the account owner must identify himself in person. You can't just wire money, which is then withdrawn by Joe Shmoe as per order by the Sinister Bank of Panama. They want to see Mr. Shmoes passport before the money is wired.
any reasonably sophisticated person and certainly most intelligence agencies around the world would quite easily be able to conjur up a fake person identity (with supporting documentation) out of thin air
This may be possible in theory, but there's not only the identity that is looked at, but surrounding circumstances too. A trivialized example: If Mr. Shmoe opens an account and then suddenly gets 250M Euros wired by a bank from a country considered suspect Mr. Shmoe will be asked a few hard questions. If the bankers have doubts they will severe all relotionships with Shmoe and inform the authorities. (Swiss banking secrecy is not absolute)
If there is a will then there is a way given enough money.
Sure, provided you find a crooked banker willing to break the law. This will be very hard to achieve with any of the major Swiss banks (including private banks).
Re:and who ISN'T going to pay up? (Score:2, Interesting)
At the risk of getting downmodded for a me-too post, I'll back up olesk's statement by saying that I, too, work for a large Swiss bank (in the IT department) and I can tell you that we have several pretty large IT systems specifically devoted to checking out customers. Obviously, I can't go into details but I can say they were expensive to build and they cost the bank money to keep running. Big banks are by nature hyper-conservative and rarely spend money unless it will result in more money...either directly or by avoiding fines or minimizing risks. The customer-vetting systems are of the latter sort.
The lesson: Swiss banks are insanely strict about the customers they take on, yet some "bad apples" do get through the firewalls. As I understand it, it's these bad apples that they're working with governments to ferret out (and in the end, it will benefit the *bank* by shining their already bright reputations...reputation is everything to these firms!).
My gramma did the mattress bank thing (Score:3, Interesting)
Quick story. My grandparents were just starting out during the Great Depression so it left them with a big distrust in banks. They both worked hard through their lives and ended up purchasing and running a couple motels later in life, then selling them and handling the mortgages themselves -- which means, the people who bought the mortgages were sending their monthly payments directly to my grandparents, for 30 years.
In cash. Because my grandmother was probably a tax cheat. But that's an aside.
Here's the thing: her kids and grandkids didn't know about any of this. I'm not even sure her husband really did because granddad was a great guy and a lot of fun but he didn't get involved in the day-to-day finances of the household because, well, he was a little flaky and would give money to down-and-out strangers, so gramma just made sure he only had what he needed. He passed away and she went on living in the house.
Then she had a couple of strokes that left her blind, and was still living in the house, and at some point we were cleaning out some of the 50 years' worth of crap she'd accumulated so she woudn't trip over stuff walking around the house while blind, and she mentioned that while we were cleaning, we maybe should get the money out from under her mattress. She said there was a lot of money, maybe even $10,000, under her bed. We were like, "dude." We thought it was a crazy, dangerous thing to keep that kind of money in the house.
So we lifted up the mattress and found an enormous pile of manila envelopes, put them in a trash bag, went home, and started counting. It came out to more like $100,000 in cash. It was crazy: we felt like drug lords. We had some issues depositing it in her account, actually, because that kind of cash gets people very interested in where it came from.
And the point of this whole story is that about three months after we did this, a nice guy knocked on her front door and said he was from the city and they needed to know where the water line had been run through the front yard so they could dig an underground power cable through and she walked out in the front yard and talked to him for ten minutes, and when she went back inside she noticed all the drawers were open in the kitchen (because she ran into one) and her bedroom had been searched, including under her mattress.
(And as an aside, even in a crappy bank account bearing 3% interest, even in a bad economy, that same amount of money would've been worth enormously more had she not stuck it under her bed.)