Closure is disclosure

WE SAY United States should take necessary actions against UBS to get names of tax evaders.

A tentative agreement between the U.S. and Swiss governments has been reached about the disclosure of the names of Americans suspected of hiding away money in Swiss bank accounts. To avoid paying taxes on all of their earnings, some Americans have been illegally stashing their money offshore. Specifically, the United States is targeting 52,000 Americans believed to be evading taxes using UBS, Switzerland’s largest bank.

But, until recently, Switzerland had said that it would block UBS from complying with the U.S. demands to disclose those clients suspected as tax evaders.

It’s easy to understand the U.S. position on the matter. Obviously, it wants to collect all the receipts it deserves. The revenue lost from undisclosed income overseas could be spent on a laundry list of necessities.

Switzerland’s tough position is a little harder to understand, but the Washington Post correctly analyzes its conundrum: “If Switzerland agrees to disclose names and account details, the settlement will be a major blow to its reputation for bank secrecy, which has helped make it a banking powerhouse.”

To make matters worse, banking is one of the main industries of Switzerland, accounting for 10 percent of its GDP, according to the Post.

Aside from the economic implications of disclosure, the two countries are also at an impasse because in this situation their legal codes conflict with one another. It is partly the job of the Internal Revenue Service to track down tax evaders. However, handing over the names of Americans suspected of caching their money in UBS is illegal according to Swiss banking secrecy laws.

The situation boils down to a single question: What is more important – the financial freedoms of Switzerland or the integrity of the United States tax system?

Switzerland might have extensive privacy rules for money, and privacy can be a good thing, but it’s been exploited rather than utilized. The country leads the world in attracting deposits from abroad precisely because Swiss bankers go to great lengths to attract wealthy Americans, according to the Post, referencing a UBS insider. There’s plenty of evidence of intentional wrongdoing. UBS has admitted to scheming to defraud the U.S. government of tax money.

It’s straightforward logic that Americans using overseas bank accounts are still subject to American law. Otherwise, U.S. law becomes meaningless – we’re no longer bound by the collective principles that make up our laws. Although some might complain that the tax rate for top earners is too high, that doesn’t justify them breaking the law and skipping out on their social responsibilities.

To maintain the integrity of our tax system, these evaders must be pursued. Hopefully, UBS will disclose the names voluntarily, without the U.S. government having to seize its U.S. assets.