Swiss retaliation in UBS row?

eh who really cares. with obama and clinton, we'll find another country to do our diplomatic dirty work. i find it hard to believe that switzerland is really that important to US diplomatic policy. after all, their whole neutrality thing makes it hard to be actually partisan towards us.

i'd rather have the tax dollars. if the swiss don't like it, UBS can get the hell out of town. more work for MS/GS/JPM etc.

Just how much do US think they can squeeze out of UBS et al?

Not that much, surely?

I think it's more to do with US trying to frighten other people who've been withholding paying tax to come clean, rather than trying to crush UBS.

Just my 2c.

you're right, not worth alienating the Swiss. But they needed to send a message i guess

I think it's absolutely stupid to try and piss off Switzerland for some tax money. Switzerland has a long tradition of bank secrecy. Even if they succeed in breaking Switzerland on this, there are other tax havens where people can put their money. I don't really care at all about these people cheating on their taxes, the question we should ask is why they even see it as worth their while to take the risk in the first place. The US (and other European countries even more...Germany, France etc.) should just create the right incentives by lowering taxation so that people won't feel the need to cheat on their taxes and to send their money overseas. Overtaxation is really the root of the problem, it's all about incentives.

And Switzerland is important diplomatically to the US, no question about it. It's exactly their neutrality that makes them so important.

Haven't heard from you in a while. Hope you're well and enjoying this spring weather.

Even if they lower tax rates I doubt people will stop cheating, I would be surprised if that would solve the problem.

Honestly, the Swiss should be penalized for helping people dodge the IRS for so many years. It is ridiculous. If they want to operate in our country then they need to follow our laws. And the whole "neutral" thing they have going on makes me want to spit at them.

Let the Swiss cry all they want; they won't do anything about it. If they do they will quickly remember just how much money they off their US relationship and they will make amends very shortly.

In the first of what is probably several sanctions, the Swiss are blowing off the U.S. invite to the Senate hearings on banking privacy:

http://apnews.myway.com/article/20090222/D96GP50G0.html

Edmundo: Have been pretty busy lately, so not much time for WSO. And yep, the spring weather has been great.

What US interests can Switzerland harm? Besides pointing to the rantings of a Swiss political party, can anybody actually tell me how Switzerland is so important to our diplomatic, military and economic interests? And how them "sanctioning" us is going to matter in the least? I'm looking for specifics that show some knowledge of their actual importance to the US economy and security structure, beyond your preference for having a haven where you can avoid US taxes and break the law.

After all, they sure as hell aren't China.

xqtrack,

You are correct in stating that our economic and security dependence upon Switzerland is negligible. The thing that should be of concern to all Americans, however, is the consequence of this attack on sovereign Swiss banking laws.

While these types of things normally cause unintended consequences, I have to believe the U.S. Government fully intends the consequences this action will produce. What I am speaking of specifically is the message this sends to the rest of the world as it pertains to dealing with American assets abroad. The sad fact is that it is probably already too late.

Other countries will take this aggression very seriously. Very few countries have the deep pockets and stable economy that Switzerland enjoys, and if the Swiss can be brought to heel by the IRS, no other country will be willing to shield American assets. I'm afraid this is already the case in all but the most marginal island tax havens.

Why this should be of concern to the average American is that the noose is tightening. The federal government is a big, dumb animal. It is wounded, and has been since the Reagan administration. And wounded animals only have one instinct. The government is attempting to make it impossible for Americans to move their assets out of America. If you think it is just a tax thing, you are deluding yourself.

Whatever your opinion of me, you owe it to yourself and your family to take the steps necessary to protect whatever wealth you've managed to accumulate. No longer is it enough to diversify among asset classes. It is now paramount to diversify among nation/states.

Believe me, they realize this. And they will do anything to stop it.

I agree with you Edmundo about the noose tightening.

I guess where I disagree though is the point about the "average American". Truth is, the only people who can afford to have offshore tax havens are far from average; far even from above average. My understanding is that offshore tax accounts only really become efficient when your net worth is in the millions at the least (but I'm not an accountant and have no special knowledge, so if any PWM people who do understand this kind of stuff want to chime in, please do). People who only make 600k per year are left out.

So why does this bother me? Not, actually, because I think the rich should be paying more taxes (I don't). But rather because the availability of an escape clause is what allows rich people to support politicians that are only going to make the situation worse--it assuages their conscience (hey look at me I vote for income redistribution!! more welfare! expand government! damn all those rich people!!), and doesn't affect their pocket book.

It's one of the same reasons I support there being equal taxation for PE/hedge fund partners (ie income taxation on performance fees). There should be equity in the system, if only because it will force those who have to carry their share of the equity to actually pay attention to whom they donate 50k to.

I can understand your point of view (and if your situation is as nice as you make it out to be, renouncing citizenship is a great way to go while you still can); it's definitely more in the self-interest of individuals to be able to evade taxes (more in yours, more in mine). But I just don't think it's in the interests of the nation as a whole for certain classes of people to be able to do this while others can't.

Just to stop any wild rumors in their tracks, I don't have the kind of dough that requires an offshore tax haven. While I have done very well in the course of my career, Paris Hilton isn't calling me for lunch money.

Where I think the average American needs to be concerned is that the restrictions never end with the rich. The noose always tightens further and further until everyone gets choked out. Once the government gains a piece of ground, they never give it up.

I'm also not in a position where renouncing my U.S. citizenship would be a great financial benefit. Unfortunately, my only other citizenship is with the U.K., and their tax situation is even more fucked than the U.S.

Moving to France at least enabled me to shield my first $80,000 in annual income from U.S. taxes thanks to an expat exemption that still exists.

And, just to add...anyone can open a bank account in Switzerland and hide some money there. You can even do that over the internet for very little money, just google it. So yes, I agree that the people that the US government is after are far from "average American", but tax havens are not just for the super rich. If you want to have bank accounts in Switzerland, Guernsey, Jersey and the Cayman Islands, you can open one in all these places without even going there and even if you only want to put very little money there. More and more poor people in European countries have begun opening bank accounts in Switzerland in recent years because their respective governments can't scrutinize those and take away the little money they have left through outrageous taxation etc. So all these restrictions will most certainly not just hurt some rich guys who just didn't want to pay their taxes.

As expected, the party is moving to the court-room.

http://www.businessweek.com/ap/financialnews/D96HD8680.htm

I'm quite curious what the judge will decide. My money is on allowing UBS to have more time to prepare their defense.

This was just filed on behalf of American clients of UBS:

http://www.cnbc.com/id/29385606

Auto - You are clueless. UBS has already settled its criminal complaint for $780mm. This is a civil matter, not a criminal matter and no felony charges can be brought about. The criminal matter has ALREADY been settled with the Justice Department. In reality, a politically motivated judge is trying to make a name for himself and scare some people out. A settlement has already been reached and UBS is not going to release any of the names. Get a clue before you start claiming this is the end and spouting incorrect BS.

You're right. I forgot that UBS paid the fine. I thought they still faced criminal liability (Did it cover the UBS bankers who risked for arrest if they traveled to the US?) My mistake. I stand corrected.

But to claim that what's still to be decided is nothing more than grandstanding by a judge misses the point. We still have 51,000 tax US cheats who are not by any means out of the woods. I predict that in the end UBS will release the names. Or be forced to make a deal by which they pay more fines.

BTW, I hate the Swiss. That they would consider conspiracy to violate US laws to be a routine business practice -- well, what can you expect from scumbags who helped finance Nazi Germany while refusing to honor insurance policies taken out by Jews because the heirs lacked the proper paperwork.