What to make of UBS (formerly Union Bank of Switzerland) caving in to U.S. demands to identify their American secret bank account clients?
Well…obviously….this is not your father’s Switzerland.
The first wave of expatriated wealth transferred to Switzerland from America was ignited by the confiscation of private gold holdings during the first activist days of the new Roosevelt administration in 1933, and a generation earlier when the income tax was instituted in 1913.
The sheer scope and magnitude of this brazen looting was a wake up call that no private source of wealth was exempt from state theft.
It would have been no different if the U.S. government had suddenly nationalized all private farmland in order to consolidate control and production, and eliminate “wasteful” competition.
Why not? This worked for the Bolsheviks in Russia–after the liquidation of millions of Kulaks (prosperous farmers) in Ukraine to further revolutionary ideals.
Even today, numismatic and bullion coin dealers speculate on the hoards of coins that were sequestered in Europe after private gold holdings were made illegal.The transfer of accounts to Switzerland gained momentum when the Swiss wealth management teams at their national banks targeted the new wealth unleashed by the supply-side economy ignited by the Reagan era tax cuts.
Still, it’s hard to gin up any sympathy for those caught in this new dragnet.
For decades now, there has been a small checkoff box on all 1040 returns, asking the taxpayer if they had any foreign domiciled bank accounts.
If they checked yes, and reported any income from these foreign sourced accounts, they have violated no law.
If not….they had best line up an expensive, white shoe tax defense law firm and come forward during the amnesty window to confess their sins and settle their obligations. The meter will continue to run, and the IRS can layer on past due interest and penalties that make compliance delay both futile and pointless.
It’s amazing how poorly the rich have stumbled in their pursuit of preserving wealth.
Not just the clumsy attempt to hide behind Swiss bank privacy laws, but in their rush to private equity and hedge funds that outrageously overcharged and under performed. Not to mention their moth to flame attraction to the oily Bernard Madoff and his “too good to be true” money machine.
They could have operated well within the law, and preserved much of their fortune by prudent diversification among equities, muni bonds, cash, and real estate.
But that would not provide the cachet of having the Swiss account…and bragging rights at your next round of golf.
In the end, the Swiss capitulated because they did not want to pick a trade fight with the world economy’s 800 pound gorilla.
Instead, they calmly decided to cut their losses…and simply rat out their clients.
Maybe now the Swiss can even be persuaded to restore the fortunes stolen from European Jews who trusted the Swiss to protect their money during the period up to and including the holocaust. The Swiss have taken the logical position that “no one has come forward to claim the funds” which would then escheat to the state or the bank.
Why would you ever entrust your money in the first place to such morally repugnant gnomes?