Originally published at care2.com on March 16, 2009
You may have more power than you think.
I have been called naïve recently for my positive take on our government’s response to the economic crisis – stimulus bill, earmarked budget and financial bailout included.
You see corruption; I see reform. I see problem solving; you see problem government.
And yet here I go again.
News this week that Swiss banks have been forced to comply with international banking standards that require release of information to stop tax evasion on the two trillion dollars of foreign assets located in Swiss banks.
Now if you are an anti-government fanatic you may say, “keep the government away from that money.” But if you are willing to look a little closer, you will see that there is more to the story than the big bad government wanting people’s money.
Funds from illegal drug cartels, third-world government embezzlement and hidden (to put it nicely) corporate income wind up in secret Swiss accounts. The Swiss and a few other European institutions are favorite hideouts for those seeking a shelter from government authorities because they are secure, stable and sworn to secrecy.
Generally, in the past, if the U.S. government prosecuted a criminal case against the owner of the account, the bank will cough up the information. But if the government doesn’t know enough to prosecute or doesn’t know about the account, the bank doesn’t either, if you know what I mean.
Upset that tax dodgers don’t face the same income taxes that the rest of us face? I am.
The U.S. government estimates that it loses $100 billion in revenues per year because of tax havens. By contrast the earmarks for spending on public projects in the 2009 government budget were estimated at $7.7 billion.
The U.S. and other governments have tried to break down Swiss secrecy on numerous occasions. But it’s lucrative for Swiss banks and the Swiss economy, as it is for other nations, which similarly welcome illicit funds. One percent in service fees for the banks is equal to $200 billion of the $2 trillion involved in Switzerland alone. That buys a lot of lobbying, campaign financing and political influence.
So what’s happened?
The American and European publics are enraged over the financial crisis and the anger has been channeled to well meaning and/or worried leaders. G20 Presidents, Prime Ministers and Treasury officials are talking directly about corruption, hidden revenue and financial irregularities along with all the rest of the irresponsible bad behavior.
Like an elephant in the room, it must have been making for some awkward conversations between world government leaders, Swiss officials and Swiss banking executives. Officials don’t want the banks to fail out of fear it would domino through the world economy, yet these same banks now receiving government support are hiding taxable and ill-begotten assets from government benefactors.
And so the heat is on. The banks of Switzerland, Andorra, Liechtenstein, Austria and Luxembourg faced potential blacklisting by big governments as the next G20 meeting in April neared.
At this point, it appears that the Swiss and cohorts are caving into the pressure. Money that is essentially under-the-table-pay to people and corporations that are less scrupulous and more financially able (it requires unscrupulous or at least seemingly less civically responsible lawyers, accountants and advisers to hide big assets) may become part of the regulated economy.
“The beginning of the end of tax havens,” is how UK Prime Minister Gordon Brown refered to the change.
There is still the possibility that the banks wont live up to their aggreements or will force some kind of compromise or watered down version of the rules. The U.S. government has requested information on 52,000 Americans with bank accounts at just one Swiss bank, UBS. So far the bank has only given the U.S. details of 300 accounts.
But I’ll be watching. And I hope you will too. (petition)
Yes, some of the money will leave the Swiss banks for some other off-shore hideout. But it wont be quite so secure, so protected and well managed as what they have enjoyed to date. Other money will stay put, preferring security and taxation like the rest of us do as regulators make their inspections.
Call me dreaming. Pie in the sky.
I never said any of it was a panacea — only confidence-building, problem-solving, reform.
