By Testosterone Pit: The arm-wrestling between the US, Switzerland, and Swiss banks over
funds that US citizens have stashed away in Swiss bank accounts has been
going on for years to the point where the Swiss are now actually
cracking down on US citizens, or at least aide them in circumnavigating
the reporting requirements. In Germany, a similar fight has broken out,
albeit with more consideration for the rich. Other governments,
desperate for moolah, are also going after their own with funds in
Switzerland. Turns out the Swiss themselves, long praised by their
politicians for their tax compliance, do what others do: evade
taxes—which is part of the human DNA. In Switzerland, however, it’s “officially silenced to death.”
Now Margret Kiener Nellen, Swiss National Council member, former
President of the Finance Commission, and member of the center-left
Social Democratic Party, has thrown down the gauntlet when she declared with some bravado, “The Federal Government, cantons, and municipalities are deprived annually of 18 billion.”
With bravado, because there aren’t any real numbers. And
that’s part of the problem. To arrive at a number at all, she had to do
her own calculations; neither the Federal Tax Administration (ESTV) nor
the Finance Directors of the cantons have current estimates, laments
Kiener Nellen. They purposefully don’t have them.
“The extent of tax fraud by the Swiss has no numbers,” declared ESTV
boss Urs Ursprung before a parliamentary commission when some
politicians wanted to find out. In June, however, Finance Minister
Eveline Widmer-Schlumpf fired him for his involvement in a scandal over the acquisition of a data system.
So Kiener Nellen did her own math, as inadequate as that might
appear. The basis was a 2006 study, “Tax Evasion in Switzerland,” by
economists Lars P. Feld und Bruno S. Frey, that concluded that 23.5% of
gross household income remained underground. She applied an annual tax
rate of 20%, a “conservative” estimate, to the household income of 2009
as published by the Federal Statistics Agency. Hence her 18 billion
Swiss francs.
Other countries aren’t that shy about studying the extent of tax evasion. In France,
it costs the state €50 billion annually, according to an inquiry by a
Senate commission. Another study estimated that €600 billion in French
assets were hidden in tax havens.
And so France is half-heartedly trying
to get its hands on some of that dough.
Germany’s planned tax agreement with Switzerland would allow Germans
to declare their hidden assets, pay taxes on them at a relatively low
rate, and avoid prosecution. Recalcitrant tax evaders have six months to
move their assets out of Switzerland, and thus beyond the scope of the
agreement. The deal caused a ruckus in some corners due to its leniency.
Germany also acquired
five CDs for €8.9 million. They contain, it is said, data of German
clients at Swiss banks. The CDs became a casus belli in Switzerland and
scared the bejesus out of tax evaders. Despite rumors that they didn’t
actually exist, they allowed the government to collect €2.5 billion—a
Google-esque return on investment—at least in part from people who
turned themselves in. Fear is a strong motivator, along with greed. But
it’s just a rounding error: €500 billion in German assets are estimated
to be hidden in Swiss banks.
The Swiss bank secrecy laws were “designed for dictators” and the
upper crust, “not for normal mortals,” a commenter pointed out. Workers
“get paystubs, and every rappen is declared and taxed.”
Hence the unfairness of tax evasion. When Kiener Nellen demanded some
answers in 2010, the Federal Council said that tax ethics in
Switzerland had deteriorated significantly between 1988 and 1996, but
because there have been no studies since then, it was unknown if the
trend continued. Then the topic was pushed aside because “rich tax
evaders are part of their voter base”—the reason why crackdowns in the
US, Germany, and other countries took decades before they began to grow
fangs. Politicians don’t want to step on the toes of rich donors voters.
But Kiener Nellen doesn’t mind stepping on toes, apparently. She is
demanding new measures from the Federal Council and from the ESTV to
fight tax evasion by the Swiss. “Tax fraud is theft from the people,”
she said. Upon which a commenters replied, “The only theft from the
people is executed by the state itself. Through overly high taxes
without compensation.”
And so it goes. Switzerland, surrounded by the super-taxed Eurozone
and its debt crisis, is keeping a wary eye on it. So they listened with
some anxiety as Jean-Claude Juncker, head of the Eurogroup, was
jabbering on TV about Greece’s exit when suddenly dark pessimistic
floodgates opened. Read.... Top Euro Honcho Juncker: “Europeans are dwarfs.”
And here is.... The Eurozone Crisis Between Euro-Morons And Zombie-Bankers, by George Dorgan.
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