More Swiss banks are dropping out of the U.S. banking program that the IRS supposedly uses to prevent American citizens from stashing cash overseas to avoid taxes. Known for 100 years as the original tax haven, free from the prying eyes of governments around the world, Swiss banks have provided banking services that guaranteed anonymity to arms dealers, Nazis, and law-abiding Americans alike.
Offshore banks, especially Swiss banks, are not generally used to evade taxes, however. The government already has enforcement mechanisms in place to prevent tax evasion by the use of offshore banks by American citizens. No smart, rich person, with competent advice, would attempt such a thing. Instead rich people—like the few doctors left who have money-- use offshore banks to protect assets from lawyers and lawsuit seekers who would try to take those assets away. If assets are stashed overseas, they are generally immune from attachment by lawyers. In the asset protection world, this is known as a lawsuit avoidance strategy.
But using this as an excuse their hunt for tax cheats-- and the war on terror-- the United States has been pushing overseas banks for access to private banking information from banks with no legal obligation to cooperate with a government that has no jurisdiction over them.
Like banks in Switzerland.
Now, however, some Swiss banks are having second thoughts.
At least 10 Swiss banks have withdrawn from a U.S. programme aimed at settling a tax dispute between them and the United States, Swiss newspaper NZZ am Sonntag said on Sunday, quoting unnamed sources.
Around 100 Swiss banks came forward at the end of last year to work with U.S. authorities in a programme brokered by the Swiss government to help the banks make amends for aiding tax evasion.
The key here is the phrase “make amends”. There is no mention of illegality here because Swiss banks fall under Swiss laws. But instead we are presented with a “Golly, gee, we sure are sorry that we broke no laws that we are bound to enforce, so have some cash anyway”-type pledge from Swiss banks that make it seem like the U.S. government and Swiss banks are really swell friends who need to make up.
And since U.S. banks are playing the same game with Obama and Eric Holder, I think the Swiss banks ought to be applauded for stopping that type of nonsense. No one should evade taxes, but the heavy hand of the government is prying into areas into which they have no legal right to go.
Like Switzerland. And home mortgages.