Go Bye Swiss Bank

Wealthy Americans seeking to take advantage of Switzerland's famous banking secrecy laws to avoid paying even more takes to the federal government are finding harder as many Swiss banks are starting to turn down U.S.-bases clients.

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The move by Swiss banks, large and small and private and public; comes as a result of the tough scrutiny that United Bank of Switzerland (UBS) came under by Congress and the Internal Revenue Service (IRS) for sheltering Americans avoiding their tax obligations.

The U.S. Congress is irate that in a time of great national deficits, wealthy Americans are "robbing" the U.S. government of much needed revenue and instead are placing it idle in secret Swiss bank accounts.

This is rich. The money of an individual belongs to an individual, not the government. The rich already pay more than their fair share, they have every right to place their money in private Swiss bank accounts. Good for them! I can exaggerate how angry it makes me to see self-righteous politicians behave like they have first dibs on someone's money so they can redistribute it to their campaign by way of, say, farm subsidies. The only one engaging in robbing here are the greedy pols.

So it is a shame then that Swiss banks seeking to avoid any trouble with the federal government - UBS, for instance, will most likely to have to pay a heavy settlement in order to protect its 52,000 American clients - for fear to being taking to court for abetting tax evasion or having their license revoked.

At least four Swiss banks have placed tough standards on U.S.-based clients that include mandating that a foreign home address be maintain - some even demand a joint account with one foreign national - and that all contacts regardless of form must never originate in the United States.

Some Swiss banks - like Zurich-based Zurcher Kantonalbank - have stopped opening any accounts with U.S. clients entirely.

This new policy will end up hurting U.S. tax payers more than draining funds from Swiss banks. ZKB, for instance, stated that U.S. funds account for only 1% of its $114 billion assets.

The Swiss-American Chamber of Commerce is seeking to work out a new agreement that will allow for U.S. clients to continue to do mostly unhampered business in Switzerland.

The efforts of the American government are ultimately futile here. As long as people are overtaxed, they will always seek a way to justifiable avoid the tax man. If not Switzerland, then Monaco, then Luxembourg, then . . .

Instead of exhausting resources in hunting down tax "cheats," the government should just cut taxes.

Source: Swiss Banks Freeze Out U.S. Clients. The Wall Street Journal.