Swiss govt folds like a lawn chair

Eddie Braverman's picture
Eddie Braverman - Certified Professional
Rank: The Pro | banana points 21,049

Citing the potential for the collapse of the entire Swiss economy, the government of Switzerland has ordered UBS to comply with an IRS order to divulge secret client information and has broken one of the most fundamental trusts ever established in the financial world.

That the American government used the economic downturn to bend an allied government to its will should give everyone of means and intellect pause. Big Brother is a reality folks.

UBS agreed to a $780 million fine and to reveal the identities of 250 numbered-account holders to the IRS. Emboldened by this capitulation, the feds are now insisting the bank give them the identities of all 52,000 American account holders.

"At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes," John DiCicco, acting assistant attorney general for the Justice Department's Tax Division, said in a statement.

We have already witnessed the death of personal responsibility in this country, so I guess it stands to reason that the death of privacy can't be far behind. I just find it personally offensive that it will be at the hand of pencil-dicks like John DiCicco, who make $75,000 a year and probably live paycheck to paycheck.

These are sad times for anyone with any ambition in life. Sadder still is the fact that it is all premeditated by a government that realizes it has written checks it can't cash, and needs the ability to grab your money.

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Comments (25)

Feb 19, 2009

The US government is going to make what, a few billion at most from this?

And at the expense of incredibly more inherent value in the form of trust and basic privacy.

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Feb 20, 2009

You are wrong on so many levels I don't even know where to begin. Although I completely agree with the concept of client privacy, that should not be a means for tax evasion. You find it personally offensive that someone is doing his job? If DiCicco gets paid (out of my tax money) to ensure that people are taxed properly, then I say good job to you, sir. Since when is it a sad time for someone ambitious when laws can no longer be broken? I find your post completely ridiculous. And while I don't know the details of the issue at hand, I think it's appalling that you take this stand and belittle someone who is obviously worthy of admiration. Or since there's a star by your name now everyone that makes under $200k a year is a "pencil-dick". Maybe if there were more people like DiCicco, scandals like Madoff's or Stanford's would have never happened.
To conclude - that money was never YOUR money. If you choose to live in a country and take advantage of everything it has to offer, then you shall abide by its laws. It's not a one way street. So if the law says you need to pay x% in taxes on earned income, than so you shall. If you don't want to so that, you're free to move elsewhere.

Feb 19, 2009

Every dollar counts

Feb 19, 2009

DiCicco is just doing his job, youngmoney is right, but it is the Swiss gov't and UBS who I believe Edmundo is correctly directing his anger towards

Feb 19, 2009

So Edmundo is mad at the ASSISTANT ATTORNEY GENERAL for the TAX DIVISION for attempting to determine who is actively engaging in TAX EVASION?

Hilarious.

Feb 19, 2009

youngmoney: thank you

Feb 20, 2009

According to your profile, you're 23 years old. This is not a shot, so please don't take it as such, but I doubt you'll be such a vocal apologist for wage slavery after you've been earning a living and fighting these fuckers every step of the way for more than a couple of years.

To gently correct you, it is MY money, just as it is YOUR money and every other individual's money. It is not THEIR money. It is money taken by force, just like any other robbery, and if you don't think so try not paying your taxes. Voluntary my ass.

Perhaps you could explain to me how our country survived for 126 years without a permanent income tax? Or did your professors overlook that fact while they were cheerleading for an omnipotent central government?

You see, youngmoney, talented people create value. It doesn't matter where they live or what flag flies over their local courthouse. Government robs value. A perfect example is the failure of the bailout that we are witnessing presently.

As for your argument that if you don't like it you can leave, if you've read my posts for awhile you know that I have done just that. I began planning my escape on a September morning in 2001 when I watched the leader of the free world stare blankly into the camera and finish reading My Pet Goat while our country was under attack. It is thanks to the draconian measures put in place through the ridiculous Patriot Act that UBS finds itself in this position today.

But leaving doesn't end your tax woes. And this is something you'll never read about in the media. It used to be that if an American renounced his citizenship, the government (most of the time) accepted the renunciation and let him go about his business (albeit outside the U.S.). In the cases where the IRS determined the citizen was renouncing to avoid taxes, they reserved the right (though I can't tell you whomever granted them this right - certainly not the tax payer) to go after the person's income for the next ten years.

Over the past decade, however, the number of renunciations annually has skyrocketed. I believe it is somewhere on the order of a 900% increase. In other words, America's best and brightest are running for the exits. Why the sudden increase? In addition to the sea change in American philosophy, it is to get ahead of proposed legislation that will no doubt be passed in secret that will require a renouncing citizen to turn over 35% of their WORLDWIDE holdings to the IRS upon renunciation. Not a tax, a lump sum payment to the feds of 35% of everything you own on the planet.

Now I ask you, and this is a question you should be asking yourself as well, if America is such a great place to live, such a beacon of hope and a land of opportunity, WHY DO YOU HAVE TO PAY TO LEAVE?

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Feb 20, 2009

I didn't say America was God's gift to man. Far from it. It does, however, present some advantages over other economies in the world (not to mention social advantages compared to almost everyone except Europe and possibly Australia). The time period to which you are referring to, the 126 years or tax free America, means nothing. Do you really want to live in a 21st century quasi wild wild west again? Don't get me wrong - I am a capitalist and by no means a left wing advocate. However, I do believe in some extent of government protection for the unemployed (system which I admit is not perfect), government enforcement of laws, safety programs and the ability of government to protect its people against enemies. All of this is done through taxation. I admit that the tax code is not perfect - but I see it as a part of the evolution of man (as opposed to the tax free era) that the rich bear more of the burden than the poor.
I like having a highway to drive on when going to see my gf. I enjoy knowing that the neighborhood I live in has good schools and is kept safe by the tax money people pay for programs such as education and law enforcement. Government doesn't rob value, as you say - government, with all of its flaws, creates the environment that allows for talented people to create value.
You are right in saying that you shouldn't pay tax on foreign earned income in order to leave. But you must realize that taxes are a retroactive concept - you are obligated to pay taxes for the time period during which you've enjoyed the privileges of creating personal wealth in a certain economy. So if you've created this personal wealth in the US, while taking advantage of the environment created by the government here, then you shall pay due taxes.

Feb 20, 2009

The tax you pay on a gallon of gas pays for that nice stretch of road you're driving on - NOT INCOME TAX

The property taxes homeowners pay go to pay for the schools (though I defy you to identify a public school that would rank as "good" in the traditional, i.e. literate student body, sense) - NOT INCOME TAX

Property taxes cover law enforcement as well, except for the jackbooted thugs at the federal alphabet agencies (ATF, DEA, FBI, etc...).

With the exception of providing for the common defense, almost every other use of federal tax money is a blatant usurpation of state and local government.

And yes, I would much prefer the Wild Wild West to the current Nanny State. The fact that you actually believe that the federal government is entitled to commit these abuses is proof positive that all the stolen money funneled to the teachers' unions over the past decades is finally paying off for the feds.

Feb 20, 2009

I wonder if you've ever lived in another country as a basis for comparison. And I wonder how well you think your employer would fare in a Wild Wild West environment. Nobody likes to pay taxes, myself included. The difference i guess is that I see taxation as necessary to provide for the rights we take for granted. Nonetheless, i think that this is a good discussion.

Feb 20, 2009
youngmoney:

I wonder if you've ever lived in another country as a basis for comparison. And I wonder how well you think your employer would fare in a Wild Wild West environment. Nobody likes to pay taxes, myself included. The difference i guess is that I see taxation as necessary to provide for the rights we take for granted. Nonetheless, i think that this is a good discussion.

I've lived in Mexico, the Pacific Islands, and now I live in France. Hard to say how my employer would fare in a Wild West environment because I haven't had an employer since I retired from commodities trading a couple weeks before my 30th birthday (yes, that's bragging). I'll be 40 in a couple months.

I believe there is nothing any government can provide (national defense included) that private industry could not provide better and cheaper. The U.S. government seems to be proving my case for me, as their reliance on mercenary soldiers has reached unprecedented levels in the current conflicts.

Taxation is a mafia-style protection racket, nothing more. You pay because they tell you that you must and that bad things will befall you if you don't. Believe me, you would only notice the absence of a federal government by the increase in your quality of life. If everyone agreed to stop funding these brigands, they would just go away. Government only exists in the minds of the governed.

Feb 20, 2009

I think the OP might have missed a small but perhaps important detail.

According to an article I read in the WSJ (http://online.wsj.com/article/SB123506522244024485...),the reason that the Swiss govt asked UBS to fork over the information was because the IRS was investigating a case of tax FRAUD. Under Swiss law, the banks are required to divulge information regarding such cases. However, the IRS is now stretching and asking for the names on 52,000 accounts that could potentially be investigated for tax EVASION. Under Swiss law, this kind of crime does not require banks to divulge information.

I'm no accountant and I certainly know nothing about the specifics of Swiss law, but I believe they could use this argument to avoid complying with the IRS's request.

Only two things are infinite, the universe and human stupidity, and I'm not sure about the former.

Feb 20, 2009
v:

I think the OP might have missed a small but perhaps important detail.

According to an article I read in the WSJ (http://online.wsj.com/article/SB123506522244024485...),the reason that the Swiss govt asked UBS to fork over the information was because the IRS was investigating a case of tax FRAUD. Under Swiss law, the banks are required to divulge information regarding such cases. However, the IRS is now stretching and asking for the names on 52,000 accounts that could potentially be investigated for tax EVASION. Under Swiss law, this kind of crime does not require banks to divulge information.

I'm no accountant and I certainly know nothing about the specifics of Swiss law, but I believe they could use this argument to avoid complying with the IRS's request.

That's an interesting distinction - my understanding at this point is handing over the 52,000 names would violated Swiss privacy laws, while not doing so could void the settlement they reached. Tricky position to be in, but I doubt the IRS will accept the argument. That said, I'd definitely prefer to see UBS cling to whatever gumption they have left.

Feb 20, 2009

Any word on CS?

Feb 20, 2009

Edmundo - I agree with you from a purely ideological standpoint. However, I don't think it's that simple. Private industry favors people with capital. As such, decisions would be made for the benefit of the few. And not that government has proven to be much good with respect to this, but excesses like the recent ones on Wall Street would also be much more prevalent. Moreover, you'd have no one to cushion the fall when things turn sour, like governments all over the world are doing today by injecting billions in capital for ailing banks (the results of this remain to be seen).
The problem is that not all people are like you and I. Not all people are driven and ambitious (congratulations by the way on your extremely early retirement, and I do mean that sincerely). Not all people believe in the power of capitalism, and to give that power to only the few would result is mass social upheaval when people with money make decisions that only benefit themselves (I believe that there are plenty of examples of this in other parts of the world). So to that extent, some transfer of wealth is necessary. And while I agree that in a purely ideological world, my hard earned money should go to me and not to pay someone else's unemployment check, i see the alternative as worse.
But now we digressed from the initial post and we're talking about something completely different. All debate aside, though, all my respect for what you've accomplished.

Feb 20, 2009

First of all, thanks for the kudos. I know I sound like a douche when I tell people I retired at 30.

I think you might be discounting the fundamental goodness of mankind. I could be completely wrong, though. I believe that human nature dictates that we take care of one another and help those in need, despite the millions of examples to the contrary. Perhaps it is my personal delusion. I really think that enlightened self interest solves more problems than government mandated charity.

At our core, we are all free men. Government subverts our inalienable right to attempt to achieve all we desire and, by extension, our ability to help others to do the same.

Feb 20, 2009

I just had to make a comment here. Edmundo, congrats if you really are 40, rich and retired, although I can't imagine why anyone who has been out of the business for 10 years and rich would bother with this site, or even know it exists. Frankly, given your almost textbook Randian ranting, I'd guess you're 19 and just read the Fountainhead and are going through the obligatory "Ayn Rand is a genius - my version of youthful rebellion is to latch on to an impractical philosophy and be angry at the world" phase that almost every financial undergraduate goes through, particularly if they can't get the dream job to which they feel entitled.

For full disclosure, I'm a 30-year old Associate in restructuring who is looking at nice bonuses going forward and who pays what I will agree with you is an outrageous tax bill that will only go up to fund this economic mess. I really only come here to try to find intelligence on what bonuses are at other firms, but since this site is aimed at the 19-25 year-old set, I almost never get responses to my inquiries. When I see posts like this I just have to respond through.

Privacy and trust are paramount to a functioning capitalist democracy; however there is no excuse for breaking the law. It's easy to rant about government holding people down, but as I mentioned earlier, it is a highly impractical philosophy to do without government. In fact, contrary to your ranting, government serves the interests of the rich, even if politicians must pander to the masses before every election. Imagine a world with no government. Poor people, who are far more numerous than commodity traders who retire at 30 (and who's source of income comes from a regulated business that relies on the threat of government enforcement to maintain trust) would storm your Mansion and take what they want without fear of punishment. If you hired private security to mow them down, what would keep the security from turning on you and taking your wealth themselves? Okay, so you keep the court system and property protections (that is the libertarian purpose of government) - but to do so, you need the buy-in of the masses. How do you get the buy-in of the masses to protect property rights, which benefits the rich most? You given them social services, and subsidize them, much like the Roman emperors of old gave free bread to the masses of Rome to keep them docile. Thus, the whole argument for no government collapses on itself.

Feb 20, 2009
nrc_chicago:

I just had to make a comment here. Edmundo, congrats if you really are 40, rich and retired, although I can't imagine why anyone who has been out of the business for 10 years and rich would bother with this site, or even know it exists. Frankly, given your almost textbook Randian ranting, I'd guess you're 19 and just read the Fountainhead and are going through the obligatory "Ayn Rand is a genius - my version of youthful rebellion is to latch on to an impractical philosophy and be angry at the world" phase that almost every financial undergraduate goes through, particularly if they can't get the dream job to which they feel entitled.

For the record, I am everything I claim to be. I am also a paid contributor to this site, which explains what I'm doing here. Plus, I really do enjoy many of the conversations that take place in this forum.

You are spot on about the Ayn Rand thing. I'm certain I went through a Rand phase at some point in my life. Fountainhead notwithstanding, central government always has been, and always will be, a bad idea.

Feb 20, 2009

I hate taxes with a vengeance.

That said, I see no reason why this is a bad thing. This is what's wrong with the tax system--people like me have to pay it; once you get really rich though you can just pay to avoid it. So of course liberals love taxes on the rich...really rich liberals don't actually pay them.

This isn't an issue about privacy. If you were laundering drug or arms money through swiss bank accounts, your privacy wouldn't be protected, nor should it be. Same goes for tax evasion.

If you're rich and you don't like the law, you can always donate money to conservative politicians...otherwise go to hell and pay up. Or go to jail. It's all the same to me.

Feb 20, 2009

Edmundo, let me explain.

The US govt is investigating possible, indeed likely, violations by US citizens of US laws pertaining to tax fraud and tax evasion. According to UBS's own documents filed in federal court, UBS bankers, many operating in the USA, conspired with their American clients to evade US taxes and otherwse defraud the IRS.

And you're upset that the not-very-nice US authorities are demanding that UBS turn over client names? That's what prosecutors do to persons and firms that aid criminal wrongdoing. They threaten them with sanctions.

UBS, being a Swiss firm, is of course free to tell the US authorities to F-themselves.

Which will prompt the US govt to revoke UBS's right to do business in the USA.

After all, banking is a regulated activity and if UBS's banking business in NY is nothing but a conspiracy to violate US tax law . . . . well, let them conduct their business from Switzerland where those activities are legal.

Of course, if UBS can't do business in the USA they are effectively out of business. That's why UBS is turning over the names.

It's the duty of US authorities to enforce US laws as they apply to US citizens and others with a US tax liability or who otherwise fall under US jurisdiction. UBS actively conspired to violate US law and now they're in trouble -- and rightly so.

Why is the issue so difficult for you to comprehend?

Feb 21, 2009

Edmundo, are you serious? Lol, what an idiot. A retired trader? That explains your never-ending rants. As you know first-hand, we (real bankers) laugh at traders who think they are God's gift to earth. Congradulations on being a professional gambler for part of your life, but you still cannot earn the respect of the finacial field.

I find it quite compelling that a 40-year old man, or perhaps boy, berates teenagers and college-aged kids in regards to taxes. I guess the financial meltdown has been messing with your head, maybe one more big trade... haha.

Sure, I am "only" an analyst, but I don't go around bragging that my bonus last year was more than most household's annual income, nor do I critize the views of those half my age.

Congradulations, however, for being a "paid-contributer"- when I feel like hearing more bullshit, we can negociate a price-quote.

I hope you enjoy the tax system in France. I hope you love paying health-care and 65% of salaries to pregnant workers, and 3 months of severance pay for laid-off employees. I guess when you live in a country where people earn less than half of americans, then taxes are arbitrary. The thing is, the government takes taxes BEFORE you get paid, meaning you never actually pay much taxes, it is just reflected in your meager wages ( I know you get paid in Euro's..yayyy)

Feb 21, 2009

MoneyKingdom, you must be Blumie's alter ego. I would have thought HR screened candidates a little better. But congraDulations on your analyst position (the first time it's a typo, the second time you're a fuckin moron).

Maybe you can negoCiate a raise at your next review. Or do janitors even get reviewed?

Feb 21, 2009
Edmundo Braverman:

MoneyKingdom, you must be Blumie's alter ego. I would have thought HR screened candidates a little better. But congraDulations on your analyst position (the first time it's a typo, the second time you're a fuckin moron).

Maybe you can negoCiate a raise at your next review. Or do janitors even get reviewed?

You know who else checks my spelling? My secretary. Yup, she also books my flights and orders dinner for the office. Only you would know HR procedures. Get off this site old timer!

Feb 22, 2009
Feb 22, 2009