Wednesday, 02.27.08
The End of Secrecy?
Photo by Flickr user Kurtz under a Creative Commons license
Since Germany revealed that it had bought, for $5 million, the names of 1400 tax evaders sheltering income in Liechtenstein, the hunt has been on for tax evaders on both sides of the Atlantic. The thing has all the ingredients of a reasonably entertaining caper film. A disgruntled ex-employee seeking to use confidential banking records as a bargaining chip against the government of Liechtenstein. Secret databases passed from government to government. Wealthy scofflaws scrambling for cover.
It seems rather odd for a liberal democracy to resort to the purchase of information which, after all, was obtained illegally -- and even stranger to publicly announce that it had done so. But western governments, particularly in Europe, are fed up with tax havens. The increased mobility of both labor and capital are already making it harder to maintain Europe's high tax rates. Leaders muttering darkly about "harmful tax competition" while glaring in Ireland's direction are in no mood to suffer little Liechtenstein's penchant for helping their wealthier citizens avoid the tax man.
The OECD has been pressing, with mixed success, for long-time tax havens to change their secrecy laws. Liechtenstein is one of three countries that has refused to make even a pretense of complying. Germany may simply have wanted to signal that it was prepared to go after tax evasion By Any Means Necessary. Now that massive client files can be transferred to a DVD or USB drive with the click of a mouse, bank secrecy may no longer be the ironclad guarantee it once was.
Tiny nation, big messThe Economist summarizes the issue, and wonders whether Germany's Byzantine tax code is partially to blame. |
Mercy for VaduzBronwen Maddox confesses "a flicker of sympathy" for a little country that did nothing but keep its taxes low and its banks respectful of clients' privacy. |
Come git me, taxmanMichael Estrin tells you how to set up an offshore account. |
Rough neighborhoodHarry de Quetteville says the inquiry poses an existential threat to Liechtenstein. |
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That is apalling. I wonder if Germany thinks its ok when an employee steals design files and sells them to a competing company....
I wonder how this all plays out 20 years from now. With an even more powerful hegemonic EU forcing compliance from either its members or enacting stiff penalties on its members who do not obey.
Euro Civil war?
This won't effect the use of shell corporations as tax havens, and I'm sure that some island nation can be counted on to continue offering these types of services.
Did Mercer Reynolds, III, the top money wrangler for Bush '04, and later appointed ambassador to Liechtenstein and Switzerland, pursue the issue of tax evasion while he was there? What did Reynolds pursue with the bankers of the two most secretive banking systems in the world? What was Reynolds success in gaining access to the records of tax evaders?
Posted by fougasseu | February 28, 2008 9:13 AM