Rejecting US threats, the National Counsil tossed “Lex USA”. The big question now is if the US will follow through with its threats of destroying 18 banks, and how many innocent people will be harmed in the process. Yesterday, Postfinance expressed great fear that it might be the target of US wrath since it is one of the last banks which still accepts US clients living in Switzerland. My best guess is that the US needs to use Switzerland as a scape goat to scare the world into joining FATCA, since FATCA would otherwise fail.
The general view in Switzerland seems to be that if some banks did wrong, then they should be held responsible for their actions without the parliament being involved, while those in favor of Lex USA generally feared the American blackmail.
A lot of commentary that I have read so far in the US seemed to lean more in favor of Switzerland. There were a few calls for war, kicking Swiss out of the US or prohibiting Americans living in Switzerland from having a local bank account, but otherwise many individuals showed an interested in respecting personal privacy and resisting foreign powers.
The votes can be seen here.
This new American chocolate which does not melt is a bit like #LexUSA, containing inside secret materials.
— Marie P Bender (@mariebender) June 19, 2013
What has people scared in Switzerland is the wide-spread belief that merely the filing of a lawsuit will cause the banks to go under as was the case with Wegelin. Some say that being cut-off from the US markets which could cause a domino effect. If the US pursues these lawsuits aggressively, we may see a trend of more parallel markets in the future outside of the US. Switzerland is already worried about other future targets (i.e, the raw material trading in Geneva).
So, that is a good way to put it, but of course, most Americans will go “Huh”? Now, lets see how much additional systemic risk the U.S. is willing to add to the banking industry with belligerent continuation of its Threats against Switzerland. They they accomplish what the Gestapo did not! I almost hope that a Global GATCA and reciprocity is imposed back onto America just to feel some of their own medicine, but then, of course, we and the economy will suffer.
More here:
http://www.swissinfo.ch/eng/politics/Swiss_parliament_kills_divisive_US_tax_bill.html?cid=36198434
I can’t see crushing Switzerland’s banks into little pieces is going to intimidate the likes of Russia and China. I really don’t know why they just don’t let Switzerland get on with sorting out how they’re going to cope with FATCA next year. Some sort of deal will be done, it just won’t be one that the US has shoved down their throats.
And yes, Just Me, the global GATCA is coming and America is going to have to sign up to it eventually. Having made such a fuss about FATCA other countries are not going to be pleased when the US turns around and says “oh we couldn’t possibly do that” while wanting other countries to give them info. They’ve given the other cash-strapped countries the blueprint of how to go forward and they will expect the US to be willing to put up as necessary. If it costs the US millions/billions so what? It’s costing the other countries to do it so why should the US be given an opt-out.
You reap what you sow.
Reciprocity is being asked by several governments now. The latest being Jamaica:
Look at this article entitled “Let’s do the reverse of FATCA for Jamaica”
http://jamaica-gleaner.com/gleaner/20130619/lead/lead5.html
That’s interesting. They call reciprocity “a countermove”, but it’s not clear if it’s against the US, or against their own citizens possibly hiding money in the US. And they might see reciprocity as a way to get some money back. We see quotes like:
“In terms of impact on the Jamaican economy, hopefully, if there are Jamaicans who have funds abroad and are trying to evade taxes by putting it in the US, the Government could seek to boost its resources through that method,”
“That is not at the forefront of it, but that could be a by-product (of FATCA),”
And the last quote is scary, because they say that they’ll also report people below the threshold. But we already know that the threshold was BS.
“Yes, it is going to be expensive because we are going to have systems built to go back and comb historical records to determine who is an American,” said Jarrett. “We will have to have systems to monitor, on an ongoing basis, the database of customers, whether or not they meet the threshold levels.”
And here’s another article that shows how Jamaica feels bullied:
http://jamaica-gleaner.com/gleaner/20130617/cleisure/cleisure3.html
One thing I don’t understand about Switzerland is under which authority these trials happen and how can they force Swiss only banks to pay anything. Wegelin did not have branches in the US.
How could they have been forced to pay those huge fines?
At some point, it seems that a global authority (IMF? OECD?) about these attacks on Switzerland, and the systemic risk to the global economy, should the US force more Swiss banks to close.
As Marcel Pagnol said in one of his movies: “Comme on est faible quand on est dans son tort”.
“How weak you are when you have done something wrong”. Switzerland feels weak because they promoted tax evasion, but it’s in no way right for the US to destroy their economy, at some point, I think a third party should get involved.
Chris I don’t think that is what Mr Jarrett (Jamaica National building Soc.) said.
Try this:
“We will have to have systems to monitor, on an ongoing basis, the database of customers, (as to) whether or not they meet the threshold levels.”
Is this something to do with just Jamaicans or is it everyone?
“US-born residents and persons with green cards, who hold accounts in that country, are subject to the requirements of the FATCA Act. Persons who do not hold green cards might also be subject to the act, if they travel to the US for at least two months each year.”
So if anyone non-US/green card spends over two months in the US they could be liable for tax? Where did that one come from?
Good second article from The Gleaner there Chris. Should be sent to everyone in the US government.
If the US does manage to cause further closures of Swiss banks I think the Swiss government should sue the US for loss of future earnings.
With this no vote from the Swiss parlement you have to look at the big picture. If they had voted yes, this would have been a major precedent of implementing extraterritorial US law and disregarding Swiss law. The lawmakers realize that this no vote could result in economic damage to the finance industry. However contrary to clichés in a James Bond film, the banks account for only around 4% or even less of the Swiss economy. Switzerland has already been threatened economically by the US on numerous occasions. (I.e., in the 90’s with the WWII accounts, individual companies faced lawsuits in the US such as ABB which almost went under, etc.). Many Swiss are convinced it will happen again; therefore, they don’t want to let Swiss law be completely surrendered to the US. Just read the comments in Swiss newspaper articles and many call for withdrawal of doing business with the US. Such poor relations are damaging for the US as well.
@Chris, I’ve seen no evidence that Switzerland promoted tax evasion. The general view in Switzerland is that those bank managers who were involved in such should be held responsible for their actions.
@Southerner, the belief is also that if they yield to America, then all the other nations in the world will follow the American lead with the same demands.
This situation is very similar to one following WWII where the US forced Switzerland to pay millions.
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@SwissPinoy, “The general view in Switzerland is that those bank managers who were involved in such should be held responsible for their actions.”.
We’ve heard stories about bank managers coming to the US trying to attract customers promising them tax free return and bank privacy. That’s what I meant when I said that Switzerland promoted tax evasion. That assessment was too broad. Sorry.
@Chris, the bonus system is often argued to be responsible for that, where employees were rewarded for bringing in more money. Your guess on who is responsible for that is probably about as good as that of most in Switzerland. How far up was the management responsible?
The U.S. has declared war human freedom, democracy and the sovereignty of most countries of the world. Resistance to the is necessary and inevitable. The longer the world waits the more expensive the resistance will be.
Switzerland is currently setting a good example for the rest to follow.
I wonder, how many now think that Obama deserved that Nobel Peace Prize. How do you like your freedom now?
@SwissPinoy, honestly, my view on this is that the banks are not the ones to blame. I would put the entire blame on the whale who knowingly participated in tax evasion. Do the banks have the responsibility to report their customers to their corresponding tax jurisdictions? No, right?
Right now, the blame is put on them because they actively sought rich customers outside of their borders, encouraging them to use their services, and saying that the accounts would remain secret. But the crime is entirely commited by the customer.
I’ve made the parallel before, but people say I’m wrong, with gun and ammo manufacturers. They provide goods that can be used legitimately or for commiting crimes. Yet, gun and ammo manufacturers are not sued each time a crime is commited using the goods they sell. Why should the banks be?
@Chris, I totally agree. One of the many minor reasons why I renounced US citizenship is because I didn’t want for my citizenship to cause my bank any problems.
It’s part of the USA’s do as I say, not as I do policy. While there may not be US based bankers transporting diamonds in toothpaste tubes, I can’t imagine that law firms and financial services firms aren’t actively marketing the “benefits” of a Delaware, Nevada or Wyoming corporation the same way the Swiss were marketing the secrecy of their jurisdiction.
Jason Sharman studies tax havens at Griffith University. He says all that due diligence is relatively new. Lately, he says big, rich countries have gotten together to crack down on tax havens.
“In the rest of the world the United States is seen as taking a very robust and aggressive line towards tax havens, ” says Sharman.
The way an academic like Sharman studies tax havens, is by doing exactly what we did. He’s been in touch with hundreds of providers in many different countries, and he says his experiences were all very similar to ours, with one big difference. Sharman says there was one country where he was almost never asked for documentation: the United States.
“The easiest place in the world to register a business anonymously is definitely the United States,” say Sharman. (http://www.wbur.org/npr/157421340/how-to-set-up-an-offshore-company)
“You’ve got a building in the Cayman Islands that supposedly houses 12,000 corporations. That’s either the biggest building or the biggest tax scam on record.” (Barack Obama, 5 January 2008)
Meanwhile, 1209 North Orange Street in Delaware must be the world’s biggest building because it houses 285,000 corporations according to the NY Times (http://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html?pagewanted=all&_r=0) Surely it couldn’t be 23.75x bigger than “the biggest tax scam on record”?
Obama winning the Nobel Peace Prize is just more evidence that we live in an Orwellian World, not that he actually deserved it.
A good commentary was posted on Linkedin that I recommend you reading…
http://lnkd.in/Smx_Wg
Switzerland: is a “PR blunder” from DoJ compromising the chances of FATCA?
And with this initiative, the DoJ has turned general mood sour. Besides, there are already voices that a popular referendum would start in case the Parliament accepted, which would automatically suspend the law until it goes to the vote… which means the law could not enter into force on 1st of January 2014. And of course, those who are untertaining that idea, are now getting exposure and feel they have acquired legitimacy.
Had the DoJ kept a lower profile, none of this would have happened. Furthermore, when one is holding a gun, they should also be willing to shoot. Is the US Federal Government really willing to down banks with tens of thousands of small accounts, at the risk of creating not only a banking rush, but also a wave of panic and resentment throughout the rest of Europe — not unlike in Cyprus? I believe they did not contemplate for one second that things could ever go that far.
@Edelweiss
Thanks for posting that Planet Money story on the Biggest Tax haven. They showed an interest for a while, but still have NOT reported on FATCA. We need a popular outrage story as is happening in Switzerland right now, to get FATCA onto the media radar…
http://lnkd.in/Smx_Wg
When the two houses started debating about this, it stopped being a matter of banks and taxes. Angry discussions started about sovereignty, democratic rights and national pride. To make things short, the lower house trashed the law with a majority of 2/3.
Of course, that does not change the pending action by the DoJ. But in order to work best, a court settlement should be quiet and confidential. The matter is now splattered all over the tabloids, and news websites have been giving a minute-per-minute of the proceedings in parliament, quoting representatives who were asking for details of the deal.
@Edelweiss and Bubblebustin,
Obama is a fraud and the world is finally starting to figure it out. More important however, is that the USA is the biggest fraud of all. Land of the free??? What a crock of shit!
“Nobody is more enslaved than those who falsely believe they are free.” – von Goethe
Can the David of Swiss Human Rights Withstand the Goliath of IRS Extraterritorial Tax Enforcement?
Because we live in an upside-down world, Switzerland is being persecuted for being a productive, peaceful nation that has a strong human rights policy with regards to privacy.
More specifically, politicians from high-tax nations resent the fact that investors flock to Switzerland to benefit from good policies, and they are pressuring the Swiss government to weaken that nation’s human rights laws so that governments with bad fiscal systems have an easier time of tracking and taxing flight capital.
@Just Me
It’s amazing how Switzerland has not really been removed as the epicentre of offshore tax evasion.
“In most countries FATCA agreements are still at executive level,” as they currently are in Canada. Let the sh*t hit the fan!
I think the actions by the Swiss are right on target and I applaud them for doing the right thing. Canada also needs to do the right thing for its dual Candian/US citizens and residents.