Another Swiss Bank to Pay a Big Fine to the U.S. Government
Swiss bank Zuercher Kantonalbank (ZKB), the biggest Swiss cantonal bank, will pay a fine of over $700 million to the U.S. government. It's a lot of money, but at least they get to keep their doors open.
When Wegelin, Switzerland's oldest private bank, was similarly scrutinized by the U.S. government, they only paid $74 million, but in their case criminal charges were levied and the bank essentially decided to close its doors. It seems ZKB's deal will be similar to that of UBS, which paid the U.S. government $780 million, but was not subject to criminal charges.
The common thread here is that all these banks are accused of helping Americans evade taxes. And if you've been following the story, the U.S. (and the UK) have been on the war path for years tracking down those who would dare to try to hide money from the respective governments' taxing authorities.
Politicians play all this up by trying to turn fellow citizens against these tax dodgers. They're "rich" people who don't pay taxes, and so we average schlubs ought to resent their attempts to "get away" with avoiding taxes. But what's never discussed is the fact that the U.S. is the only country in the world that demands that Americans pay U.S. taxes no matter where they live in the world, no matter where they work, no matter where they keep their money. The U.S. government taxes worldwide income in a completely comprehensive manner. I don't even think the UK is as thorough.
A legitimate question we could ask is why should the U.S. government do this. Why can't Americans who don't live in the U.S., nor work in the U.S., who don't keep their money in the U.S. have to pay taxes on their income not earned in the U.S.? Most other countries don't hunt their citizens down when they live overseas and make damned sure they pay taxes on whatever they earn or on whatever money they have outside the home country that earns interest or dividends. They just don't do it.
In any case, years ago it became apparent that the U.S. and UK would be relentless in finding so-called "offshore" accounts and punishing not only their citizens but the institutions with which they did business. And so it continues with ZKB.
When Wegelin, Switzerland's oldest private bank, was similarly scrutinized by the U.S. government, they only paid $74 million, but in their case criminal charges were levied and the bank essentially decided to close its doors. It seems ZKB's deal will be similar to that of UBS, which paid the U.S. government $780 million, but was not subject to criminal charges.
The common thread here is that all these banks are accused of helping Americans evade taxes. And if you've been following the story, the U.S. (and the UK) have been on the war path for years tracking down those who would dare to try to hide money from the respective governments' taxing authorities.
Politicians play all this up by trying to turn fellow citizens against these tax dodgers. They're "rich" people who don't pay taxes, and so we average schlubs ought to resent their attempts to "get away" with avoiding taxes. But what's never discussed is the fact that the U.S. is the only country in the world that demands that Americans pay U.S. taxes no matter where they live in the world, no matter where they work, no matter where they keep their money. The U.S. government taxes worldwide income in a completely comprehensive manner. I don't even think the UK is as thorough.
A legitimate question we could ask is why should the U.S. government do this. Why can't Americans who don't live in the U.S., nor work in the U.S., who don't keep their money in the U.S. have to pay taxes on their income not earned in the U.S.? Most other countries don't hunt their citizens down when they live overseas and make damned sure they pay taxes on whatever they earn or on whatever money they have outside the home country that earns interest or dividends. They just don't do it.
In any case, years ago it became apparent that the U.S. and UK would be relentless in finding so-called "offshore" accounts and punishing not only their citizens but the institutions with which they did business. And so it continues with ZKB.
Switzerland, the biggest haven for offshore wealth, has been in talks with the U.S. for more than two years to resolve a Justice Department investigation of at least 13 financial firms that allegedly helped Americans hide money from the Internal Revenue Service. Switzerland wants to prevent another Swiss bank from being indicted after Wegelin & Co. pleaded guilty in a Manhattan federal court in January to conspiring to help conceal more than $1.2 billion from the IRS.More...
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