"Switzerland Reportedly Ready To Help U.S. Crack Down On Tax Cheats"
Switzerland is close to striking a deal with the United States to resolve ongoing investigations into its banks regarding their role in tax evasion by wealthy Americans, but reports conflict on the details. According to the New York Times’ Dealbook blog, the agreement would include disclosure of the names of the tax evading bank clients to U.S. authorities. A Reuters story disputes that claim, saying the Swiss government will allow banks to disclose information about their own employees’ activities in aiding clients, “but not identities of clients except under conditions already authorized by bilateral agreements.”
Both outlets report that the agreement includes a one-time fine, perhaps as high as $10 billion, to be paid to the U.S. Treasury by the Swiss government (which would likely in turn penalize the banks in question to raise the funds). Investigations of Swiss banks have yielded both fines and client name disclosures in recent years, and the reported effort at a blanket settlement comes after the largest private bank in the country shut down after pleading guilty to charges in the U.S.
But the reported $10 billion blanket fine is less a drop in the bucket than a water molecule inside that drop. Tax evasion, in its various forms, cost the U.S. over $3 trillion from 2001-2010, according to a report by Demos (click to enlarge):
85 percent of that lost revenue, or $2.6 trillion, comes from individual tax evasion rather than corporate cheating. Demos adds that most of those individual tax evaders are in the highest income brackets, and typically underreport business income.
While it remains to be seen if the Swiss settlement will provide U.S. investigators sufficient information to track down individual evaders, the drumbeat of tax cheating crackdown news continues. Last week, the disclosure of Apple’s entirely legal tax avoidance schemes helped refocus policymakers from either side of the Atlantic on the need to reform corporate tax law.