'The end of the banking secret' was yesterday's headline of 'le temps', the most serious newspaper of the french speaking part of Switzerland. I didn't read the paper, but I watched a debate on television. The main thing that changes is that Switzerland drops the distinction between tax evasion (not mentioning some of your money) and tax fraud (forging documents). Now both are illegal.
This article is weird, it quotes the times of london as its source and gets the capital of Switzerland wrong (it's Berne, not Zurich).
Plus - This isn't really huge news, and the reputation of Swiss bank secrecy is a little outdated - e.g. The US and Swiss authorities have been co-operating around Tax information for some time. Similarly, it's still incumbent on the Swiss to track and act on illegal flows of money (and they do).... It's still far from transparent, but it's not the citadel that some people think.
The main reason for this major change is that even in the presence of information-sharing provisions of treaties, Switzerland refused to provide any information on most account holders that were evading US (or other countries') taxes, on the rationale that evading non-Swiss tax was not a criminal offense in Switzerland. Cooperation was virtually nil, especially in the tax arena.
Depending on the scope of the changes, this could be huge news.
Most (good) lawyers will keep their mouth shut even if they knew the details of a crime that you committed. They will happily burn any documentation before they hand any over to the government.
Every conversation between you and your lawyer, doctor or priest is confidential – and none of them will rat you out.
Banks (in my country at least) will hand over details of your bank statements without your knowledge to the government.
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It is only one part of my problem with banks. Banks generally act in their own interest. When you discuss a contract with a lawyer he will act in your interest. Your doctor will also act in your interest when he prescribes you medicine. A banker is the only entity that will give you "advice" that is more in his interest than yours. A good example is contracts with banks - their "standard" contract is extremely one sided.
I see no reason for secret banking other to subvert laws. Secret banking is an enormous global problem which at its worst enables terrorism and drug trade. At "best" it enables the very wealthy to not pay their fair share. I hope these new changes are the tipping point and within 10 years, there will be no tax havens.
If you have a problem with being overtaxed, the only respectful approach is to be active in managing how your government works. Subverting the process only makes things worse.
And a "good" lawyer should never cover for crimes. It truly is not their purpose and perverts their privilege.
> I see no reason for secret banking other to subvert laws.
Replace the word “secrecy” with “privacy”. I think there are a lot of good reasons to keep your personal banking details private. For example – in my country there is a law that the bank have to inform a government department if there is any deposit above about $1000. Thinking of donating to a political party?
You must show proof of fixed residence to open an account (even if you always have a positive balance). How would a poor person without a fixed address (as defined by government) open an account?
> and drug trade.
Because people voluntary give money to buy drugs and people voluntary sells drugs. What is the problem?
> at its worst enables terrorism
It is a stretch to blame private banking for terrorism. Terrorism will occur regardless of banking laws.
> At "best" it enables the very wealthy to not pay their fair share.
If there was a flat tax regime you can (maybe) try to make that believable. Why is it that rich people pay a higher percentage of their income in tax? It is simple – ten wolves and a sheep deciding who is for dinner. The whole idea of progressive taxation is the mob taking what it wants because of its majority – there is no inherit “fairness” in it.
A politician buys the vote of the poor with the money from the rich (coerced through taxation).
> If you have a problem with being overtaxed, the only respectful approach is to be active in managing how your government works.
In my country there are 4 million tax payers and about 14 million people receiving government “grants” (this will probably quadruple in a year's time in a plan to give everyone a “basic income grant” (BIG)). Is it fair that 4 million productive people subsidise 14 million unproductive people? Is it fair that a young tax-paying couple puts off having a child – yet their tax dollars is used for other peoples' child grants?
> And a "good" lawyer should never cover for crimes.
A “good lawyer should always act in their clients' best interest – whatever it may be.
In summary my argument is as follows:
1.There are plenty of reasons why banking should be private.
2.IMHO tax evasion by overtaxed people (i.e. when the tax percentage is progressive) is not morally wrong.
I generally agree or fail to disagree with most of your post, but on the particular topic of progressive taxation, it's not fair to simply dismiss it as "10 wolves and a sheep": marginal utility is at play.
With all goods, the more of it you have, the less valuable it is. Individuals allocate goods to satisfy their most critical needs first. Ipso facto, the first unit of the good is worth the most, the second unit less so, and so on until the final unit is worth the least.
And money is simply a good, more fungible but otherwise no different than any other. The greatest utility of money is achieved by providing the necessities of life: food, drinking water, shelter. The next greatest utility is achieved by providing the basic comforts of life: showering water, clean laundry, furniture. After that comes longer-term goals, and so on (roughly mirroring Maslow's hierarchy of needs).
Now imagine two people, A and B, who earn $20,000/year and $80,000/year respectively. It's more unethical to take $200 from A than it is to take $800 from B. Why? While taking money from either one should be minimized (or preferably eliminated), in all likelihood A's $200 was going to meet a more critical need than B's $800.
As an argument ad absurdum, imagine that instead of taking away a flat percentage (1% of annual income for both), a flat absolute amount were taken instead ($500). The total amount taken would be the same, but now it would be evenly divided among both A and B, regardless of income. This would be the most fair arrangement of all, would it not? If a progressive tax is less fair than a flat percentage tax, then surely a flat percentage tax is less fair than a flat absolute tax. The flat percentage tax is still "punishing" B for making more money than A, when instead it "should" treat them equally and not care what their incomes are.
Clearly, though, this line of thinking is absurd, because A will be harmed disproportionately. Whereas taking $200 from A might prevent A from paying the electric bill, taking $500 from A might instead prevent A from paying the rent. The result is that, relative to the flat percentage tax, A has lost the fulfillment of a more critical need, while B has gained the fulfillment of a more minor need.
> Now imagine two people, A and B, who earn $20,000/year and $80,000/year respectively. It's more unethical to take $200 from A than it is to take $800 from B. Why?
Just taking money is wrong. The usual argument is that the government takes money from people to provide a service. If the government takes more money from you and provides less of a service (i.e. it is busy with wealth redistribution) it is wrong - it is simple theft by the masses.
> As an argument ad absurdum, imagine that instead of taking away a flat percentage (1% of annual income for both), a flat absolute amount were taken instead ($500).
The argument for flat tax is usually that in order to make money a person uses the infrastructure (roads, ect...). If he makes more money the argument is that he used the public services more. While this is not correct (lower income groups disproportionately use public services) it can be argued as such. There is however no defence for progressive taxation - other than wealth redistribution.
katz, I hear you. Perhaps some of your rational applies to people living in countries that do not have the same government infrastructure as we have in the U.S. Your perspective may be different for that reason. But for the U.S., secret banking only serves to do illegal things.
I'm not talking about privacy. I am talking about secrecy. Governments do have a right to tax. Secrecy from governments only allows the process to subverted.
I don't get it - taxes are a percentage of your overall income... so how can you have to work 6 months for taxes?
I do realize that you have to work more to be able to make a living, but keep in mind that:
- By working in any state, you are also subject to their rules/laws/customs. That means you have to pay taxes, and you don't pay them for nothing, but you get something in return.
- If you disagree with the tax system in your country of choice, feel free to move somewhere else. But don't be a jerk and take the advantages (health care, free education up to a certain degree, ... the list goes on) without the disadvantages (giving a (admittedly quite considerable) part of your income to the state in the form of taxes).
So, I rest my case. If you need a secret account, something with your attitude towards finances is wrong. Period.
And on a more anecdotal level, let me say that I am by all means not someone who encourages a very restrictive government in terms of economy. E.g. I'm going to university in Sweden (though not from Sweden), but I'll never work here, simply because, while living here is great, taxes get ridiculously high when you earn more than the average. But tell you what, I'm not going to open a secret bank account, cheat the government and deceive the Swedish people.
"I don't get it - taxes are a percentage of your overall income... so how can you have to work 6 months for taxes?"
Well, if the percentage is 50%, then...
More concretely, in Maryland, my last paycheck had about 31% taken from it before I got it, and there are many places with higher tax burdens on the state and local levels, even in the US. Add sales taxes, property taxes if you own a house, and you could easily get to 40% in the US. We're constantly hearing about how much higher taxes are in many other parts of the world, so 50% doesn't seem unlikely for some countries.
The only reason that we can afford this much government, of course, is that we're all so incredibly rich by the standards of yesteryear that the losses have been sustainable so far. We'll see if that continues to be the case (my bet is that it will).
Remember, in America you can be sued by anyone for any reason at any time. Judgment can be rendered against you in an almost random fashion and all of you assets can be seized. If I were a medical doctor in the US, I would absolutely have hidden assets.
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From a BBC News article:
"while it will now abide by international rules on bank data sharing, it said it would only respond to "concrete and justified" requests." http://news.bbc.co.uk/2/hi/business/7941717.stm